DISH Network Corp (NASDAQ:DISH) which is one of the major cable companies in the U.S recently revealed that it will be ending its relationship with Regional Sports Networks (RSNs).
Dish executives announced during a recent investor call that it might permanently terminate its relationship with the Fox-owned RSNs. The decision to drop the RSNs might be tied to the high costs associated with having them on Dish cable service and the rocky relationship between the two parties.
“The frustrating thing is, they are not very good economic deals for us. We have real data that tells us that the channels are overpriced,” stated Charlie Ergen, the current Chairman of Dish Network.
Ergen also noted that Fox could overcharge customers when it was part of Dish. The subscription satellite service pulled down the RSNs from its offerings on Friday, which means that Dish customers can no longer access those channels.
RSNs briefly owned by Walt Disney Co (NYSE:DIS) after its Fox acquisition
Disney owned the RSNs for a short while through its acquisition of 21st Century Fox in a deal valued at $71.3 billion. However, Disney decided to divest some of the Fox assets including the RSNs which were taken up by Sinclair Broadcast Group $10.6 billion in a deal that is scheduled to close before the end of Q3.
The RSNs were valued at around $20 billion but Sinclair Broadcast Group managed to secure them at a massively discounted price. Meanwhile, analysts view the decision by Dish to let go of the RSNs as a smart move considering that they were overpriced at a time when cord-cutting has influenced massive subscriber losses for cable networks.
Cord-cutting is forcing cable companies to re-evaluate their strategy
So far the past few years have been tough on satellite TV networks with their subscriber count declining as on-demand streaming services such as Netflix, Inc. (NASDAQ:NFLX) gain popularity. Although cable companies have been losing customers, some such as Dish still have a large number of customers subscribed to their services. The termination of its relationship with the RSNs might also lead to some subscriber losses especially sports fans.