The Cubs are in the process of trying to get bids on the WGN-TV portion of their TV contract, which expires at the end of this season. As noted a few weeks ago, one idea they've been floating is to create their own TV network on subchannels of various broadcast outlets throughout the Midwest. You can see, though, the potential issues with doing something like that.
Monday, it was revealed by Jon Greenberg of ESPN Chicago that TV ratings are way down for the CSN Chicago portion of the Cubs' TV deal:
Both the Cubs' and White Sox's local cable ratings at the All-Star break are in the bottom five of the 29 U.S.-based teams, according to a Sports Business Journal study of Nielsen ratings for regional sports networks. The last-place Cubs rank No. 25 with a 1.48 average rating, that's down 7 percent from this point last season and 8 percent overall, according to information provided to ESPN Chicago by Sports Business Journal writer John Ourand.
And it's not just this year, either. Last year was just as bad, if not worse:
Last season, the Cubs ended with a dismal 1.6 rating, while the White Sox were essentially last with a 1.14. Only Houston, which had major carriage problems with its RSN, CSN Houston, was lower. Comcast SportsNet Chicago senior director of communications Jeff Nuich told ESPN Chicago that Sox ratings are up 30 percent, compared to 2013 final numbers, in the key adults 25-54 demographic. The Cubs are down 11 percent in that demographic.
The article goes on to note that back in 2008, when both the Cubs and White Sox were in the playoffs (seems like a lot longer than six years ago, doesn't it?), ratings were very good. Obviously, if the Cubs start winning again, people will start watching them on television again. While the ESPN Chicago article doesn't have any information on WGN-TV ratings for Cubs games, an Ed Sherman article in the Tribune a few weeks ago talks about WGN-TV's big money losses and the tough spot in which Cubs President of Business Operations Crane Kenney finds himself:
WGN, which pays the Cubs in the neighborhood of $250,000 per game, reportedly is losing as much as $200,000 per telecast because of record low ratings in recent years. The station wants to continue its long relationship with the Cubs, but also is anxious to stem some of the financial bleeding. Sources say WGN has offered the Cubs a new deal that would include a small rights fee and a revenue sharing component. Fees would remain low for poor ratings during the rebuilding process, but they could be much higher if viewers return in droves for a contending team. According to sources, Kenney isn't eager to sign a deal that would give the Cubs considerably less in guaranteed money, especially at a time when the Dodgers are doing a multi-billion dollar local TV contract. One industry insider said it would be "tough for Crane to go back to WGN for less than what he had originally had."
That's all true. The Cubs certainly don't want less money for their TV rights than they're getting now. But you can surely understand why WGN-TV wouldn't want to pay even the same rights fee they're paying now, if they're losing $200,000 per game. You can probably safely assume that CSN Chicago is losing a comparable amount of money.
Again, if and when the team starts winning again and people start watching and ratings go up, a higher rights fee could well be justified. But how does the team sell future "hope" to a TV network that wants to make money now, or at least stop losing money now?
Cubs TV ratings aren't likely to go up for the rest of this year, and even if they start edging toward contention in 2015, unless they suddenly got off to a hot start next year, people aren't likely going to tune in in droves, at least not right away.
You can see the dilemma here for the Cubs. It might be until after 2019, when they can sell the entire TV package as a while and (presumably) will be a better team, before they can reap the big TV money that some teams are getting -- and that's if the rights-fee bubble doesn't burst before then.
It can't be a happy time in the Cubs business offices these days regarding this issue.