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Will The Cubs And WGN-TV Continue Together?

The 2014 season is almost over, and the Cubs still don't have a new TV rights deal for the WGN-TV portion of their contracts.

Courtesy WGN-TV

The Cubs and WGN-TV have been partners through three team ownerships and multiple ownership changes of the TV station's parent, Tribune Company, for 66 years. The first regular-season WGN-TV game at Wrigley Field was April 23, 1948, as the Cubs were shut out 1-0 by the Cardinals.

Another shutout by the Cardinals, Monday night, might be the last WGN-TV game at Wrigley Field unless the Cubs and the TV station reach another deal. (There are two more WGN-TV games this year, Saturday and Sunday at Milwaukee.)

This Tribune article by business reporter Robert Channick sums up the current situation:

With one week left in the season, and its expiring agreement with WGN-Ch. 9, the team has yet to announce broadcast plans for 2015 and beyond. Sources say the Cubs are exploring everything from a private equity partnership to a new regional sports network, but a long-term deal may not be imminent.

"Wait till next year" won't work with advertisers and TV stations. Sources say the Cubs are under increasing pressure to find a short-term solution, perhaps even a return to Tribune Media, with whom negotiations are ongoing.

An announcement is expected as soon as this week, according to sources. Cubs spokesman Julian Green declined to comment.

The article goes on to describe what such a "private equity partnership" might look like:

Sources say the team is in negotiations with TPG Capital, a Texas-based private equity firm with deep roots in sports and entertainment, to be a partner in monetizing broadcast rights.

TPG, founded in 1992 by David Bonderman, manages $66 billion of capital, including a 35 percent stake in Creative Artists Agency, a Los Angeles-based talent agency that represents top actors, musicians and more than 650 professional athletes.

A spokeswoman for TPG declined to comment.

The closest parallel to a Cubs-TPG partnership may be the YES Network, home of the New York Yankees, which formed in 2002 with Goldman Sachs and Providence Equity Partners owning a combined 40 percent of the network. The equity firms divested their stakes this year when 21st Century Fox took majority ownership of YES, a deal that valued the network at $3.9 billion.

I suppose such a system might work -- if it were to carry the bulk of Cubs games, as the YES Network did when it was formed. Also, you'll note in those quotes that there's a considerable amount of "declining to comment" among all the parties involved in these talks. More comment declining here:

Comcast SportsNet Chicago does not have a right of first refusal for the Cubs' cable rights in 2020, according to sources, but it may have the inside track. In addition to its broad distribution — it has 1.54 million subscribers in Chicago, according to SNL Kagan — the network may be able to strike a deal to air the displaced WGN games over the next five years, as part of a back-end agreement to create a second regional sports network.

A spokesman for Comcast-owned NBC Sports Group, which oversees 11 regional sports networks, including CSN Chicago, declined to comment.

This would make a great deal of sense, for CSN to produce the games for the next five years, although as noted, they'd have to create a second channel, much as Fox did in Los Angeles before this year, when it carried both Dodgers and Angels games. The article says that no local over-the-air stations in Chicago other than WGN are in the mix. It would be a mistake, in my view, to put Cubs games on local broadcast subchannels. That idea has been floating around for a while. Many people don't know those channels even exist or where to find them, and some of them aren't broadcast in HD. In the end:

Tribune Media may be the most likely option for keeping the Cubs on local TV, and there are signs of progress in hammering out a short-team deal.

"We're in conversations with the Cubs to this day, we've been their partner for 70 years, and I'd love to see us stay with the Cubs," Tribune Media CEO Peter Liguori said at an investor conference last week. "But, we want to do it on economic terms that make sense to both of us. And you know, (Cubs Chairman Tom) Ricketts and I are in conversation and we hope there's resolution soon."

So, while WGN-TV is in the last year of its current contract, and the Cubs are the ones who chose to opt out (they could have continued, and in my view, made a mistake by opting out, as they aren't likely to get more in rights fees than they had, and very well could wind up with less money), it does make sense for both parties to make a deal to continue, at least until the Cubs become a better team, watched by more people and able to command higher rights fees. That could happen over the next several years. In the meantime, it might be a good thing for the station and the team to re-up on a short-term basis.