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When Will The TV Rights Fee Bubble Burst?

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Baseball teams are receiving billions of dollars in TV rights fees, skewing the balance of power in MLB. How long will it be before this all becomes too expensive?

USA TODAY Sports

The Cubs' deal with WGN-TV expires after 2014; they'll have to wait until 2019 to get a new deal with CSN Chicago, or start their own TV network, and presumably reap some of the big money that teams like the Padres ($1.2 billion), Rangers ($3 billion), Angels ($3 billion) and Dodgers ($7-8 billion) have received from their local TV rights agreements.

This all sounds like a no-brainer to bring more revenue to the Cubs -- eventually -- but Maury Brown at Biz of Baseball says "Not so fast", because this is going to start driving up costs for subscribers:

The first significant case of this is happening with satcaster DirecTV. In August, DTV began adding a $3 a month surcharge for RSNs in markets that had more than one regional sports network. This mostly just impacted larger markets, but now, it will affect all.

Beginning this spring, DTV will expand the fee to all existing customers, meaning a $36 annual increase for consumers. And, DirecTV will not be the only one. As reported by Multichannel News:

Other distributors have followed DirecTV’s lead with the RSN charge – Verizon’s FiOS TV began implementing a $2.42 monthly charge for RSNs in California, Texas and Florida in February, with plans to expand to its remaining sates in March. In Maryland and Virginia, the surcharge will take effect in April.

$2 or $3 doesn't sound like that much... but the Multichannel News link quotes DirecTV CEO Mike White:

White has been a vocal opponent of rising programming costs, and on the conference call, said the surcharge doesn’t come close to covering its RSN costs.

Which raises the question: how high can these surcharges go before fans say "No thanks" and cut off DirecTV or their local cable system? That's the question that remains to be answered, says Brown:

While the financial flexibility is something every sports fan loves to see their favorite club have, if it means a large spike in their cable or satellite TV bill, it comes with a price. The pin is positioned near the bubble. When will it make contact is the question.

The Cubs would love to get in on the multibillion-dollar rights-fee action. The question is: is it already too late?