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New York–area Optimum customers rang in the new year without MSG Networks as part of their cable package.
The network, which airs games for the Knicks, Rangers, Devils, and Islanders was dropped by Optimum parent Altice after the carriage agreement expired Dec. 31. A new deal, or lack thereof, has massive financial implications for both companies’ books and comes during the Knicks’ nine-game winning streak and the Devils’ sitting second in the Eastern Conference standings.
The two sides had negotiated for weeks to reach a new deal, but Altice walked away after the network “demanded exorbitant programming fees” and “required Optimum to make MSG channels available to the vast majority of video subscribers, whether they wanted the content or not.”
MSG Networks responded to Altice’s statement by accusing the cable provider of “trying to charge their customers more and give them less. … We offered Altice a number of fair and reasonable proposals that called for Altice to pay us less than last year. Altice rejected all of them, including our offer to keep MSG Networks on the air while we continued to try to reach a deal. We remain ready to negotiate in good faith.”
“MSGN is one of the most viewed television offerings in the New York metro area,” the network said in an updated statement Thursday. “This is a pure and simple price gouge from Altice. An attempt to add over $10 a month right to their bottom line—a $10 rate increase on top of a 50% rate increase. We remain ready to negotiate in good faith to get our programming back on Optimum.”
MSGN had agreed to more flexible packaging from Optimum, according to a source close to the negotiations. The agreement was similar to a new deal the network negotiated with another major New York–area cable company that included similar flexible tiering moves and lower overall revenue, the source said.
Optimum pushed back on MSGN’s claim that it raised rates by 50%. A company spokesperson told Front Office Sports in an email it’s “completely inaccurate.” A source with knowledge of the company’s programming said only a third of Optimum’s customers watched a game on MSGN over the past year and less than a quarter of all customers with access to MSGN received any rate increase, with most customers receiving none.
Optimum users who turned to MSG Networks on Wednesday found a blue screen with the text: “MSG Networks is no longer available on your TV lineup.” A QR code appeared to offer options to stream the network through Fubo at a 30% discount as long as customers retain Optimum’s internet service. Altice USA, Optimum’s parent company, has nearly two million residential cable TV subscribers, according to a Sept. 30 filing.
The feud comes with an odd twist: Optimum was founded under the name Cablevision in 1973 by Charles Dolan, who recently passed away at age 98. In 2016, Altice bought Cablevision and Optimum from the Dolans for $17.7 billion. Dolan’s son James is governor for the Knicks and Rangers, and he is CEO and chairman of MSG Networks—meaning he’s fighting his family’s former company.
In July, Dolan criticized the NBA’s new media-rights deal for broadcasting more games nationally, which would hurt revenue for regional sports networks such as MSG. He said the new media-rights deal “threatens to completely eliminate” regional sports networks “without a comparable replacement.”
Dolan is at odds with the NBA and Altice while potentially also seeing further cord-cutting already impacting his business.
But a parting of ways could help both companies financially.
Altice isn’t the only telecom giant having issues with MSGN. Comcast took the network off its package in 2021, so New Jersey and Connecticut customers don’t get to watch the Knicks or Rangers with their cable packages.
MSG Networks is part of Sphere Entertainment, the publicly traded company containing Dolan’s non-sports businesses. Madison Square Garden Sports is the parent company of the Knicks and Rangers. Sphere Entertainment has been in default on $830 million in loans and agreed to a forbearance agreement in the fall that expires Jan. 10.
MSG Networks will pay $187 million to broadcast Knicks and Rangers games in 2025, part of a 20-year agreement that was signed in 2015, according to the company’s public filings.
A prolonged fight with Optimum could bankrupt MSGN while also providing financial relief for Altice, according to a report from LightShed Partners, a media analyst company.
Altice could threaten a total drop of MSG Networks as a leverage play in negotiations and trade a customer drop for more revenue.
“When you drop an RSN, you lose about 5% of your customers but your revenue increases nearly 20% since you save money by not paying for that channel,” an RSN executive told the New York Post.
Filing for bankruptcy would allow MSGN to renegotiate its deals with the Knicks and Rangers and likely pay a lower rights fee. It would also boost Sphere Entertainment’s stock price by addressing the massive debt on its balance sheet, LightShed Partners said in a report.
Regional sports networks’ struggles go far beyond MSGN as they combat cord-cutting while trying to serve consumers in a rapidly changing media landscape, as evidenced by the Diamond Sports Group bankruptcy fallout.
MSG Networks can be streamed through MSG+ and the Gotham Sports app, a partnership with the YES Network that broadcasts the Yankees and Nets. MSG+ costs $29.99 a month, and the Gotham package costs $41.99 per month. With the Optimum change being just a day old, it’s too early to gauge whether the streaming options will benefit from the carriage dispute, but it’s likely given the Knicks’ recent surge.
The NBA deferred comment to the Knicks.
