Optimum pulled the plug on MSG shortly after confetti rained down on Instances Sq. to ring in 2025 – and Knicks and Rangers followers might be left at midnight properly into the brand new 12 months, The Submit has discovered.
The breakdown in talks over a brand new contract with MSG Networks, which expired at midnight Tuesday, is a part of a wider retrenchment by cable operators seeking to slash the excessive costs demanded by regional sports activities networks, or RSNs.
The 2 sides stay far aside within the high-stakes negotiations which have main implications for each firms, sources near the scenario advised The Submit.
On Wednesday, Optimum subscribers flipping to MSG – which additionally broadcasts Islanders and Devils video games – had been greeted with a blue display telling them: “MSG Networks is no longer available on your TV lineup.”
The Altice-owned cable operator went on to tout a QR code and an internet deal with that provide “options to ensure” they don’t miss any Knicks, Rangers, Islanders or Devils motion.
That choice is a 30% low cost in the event that they subscribe to the streaming service Fubo, which carries MSG Networks, so long as they maintain Optimum’s web service.
The blackout instantly impacted Devils and Knicks video games scheduled on New 12 months’s Day.
Optimum additionally issued a scathing message Wednesday aimed toward MSGN, which is led by Knicks and Rangers proprietor James Dolan.
“MSG Networks demanded that we pay an exorbitant amount in fees to be able to carry its content and that customers who don’t want the content – who are the majority – have to pay for it anyway,” Optimum stated.
“Despite this, Optimum offered to absorb their egregious price demands if we could package MSG Networks in a way that would give more flexibility and control to our customers. … MSG Networks said no and refused multiple offers from us to reach a deal.”
MSGN issued a rebuttal in its personal New 12 months’s Day assertion.
“This is a pure and simple price gauge from Altice,” MSG Networks stated.
“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.”
In an odd little bit of irony, the Knicks proprietor is feuding with the corporate based in 1973 by his dad, cable pioneer Charles Dolan, after which known as Cablevision. It was offered, together with the Optimum model, to European telecom large Altice for $17.7 billion in 2016. Charles Dolan died final weekend at age 98.
Optimum subscribers, in the meantime, had been livid over dropping entry to their beloved groups.
“I really don’t care whose fault it is now that MSG has gone dark on Optimum,” Lou Panico of Manalapan, NJ fumed. “As usual the consumer is caught in the middle between two greedy, dishonest entities.”
MSGN was keen to maneuver from the fundamental Optimum tier the place it was getting a roughly $10-per-subscriber price in 2024, in accordance with a supply near the negotiations.
That’s about the identical charge that nationwide sports activities large ESPN fees cable firms.
The transfer from fundamental cable to a premiere tier might hit debt-saddled MSGN’s backside line by as a lot as 50%, for the reason that majority of Optimum’s roughly 1 million subscribers within the New York Metropolis space would not pay for the channel, an RSN govt working for one more community advised The Submit.
Optimum does face the chance additionally of dropping subscribers to rival cable firms like Constitution Communications and Verizon’s Fios, which has a deal to hold MSG on fundamental cable.
Dolan just lately negotiated a brand new cope with a significant New York-area cable firm by which it was moved off the fundamental tier and accepted decrease total income in return for an extended pact, two sources aware of the negotiations stated.
Nonetheless, Optimum is the one cable choice in massive swathes of town, and as soon as the hard-core sports activities followers bounce ship it might be in no hurry to return to the negotiating desk, a supply stated.
Altice might resolve to play hardball and threaten to drop the channel to extract higher phrases from MSGN.
“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,” the RSN govt stated.
The deadlock might exacerbate the general pattern of cord-cutting that has eaten away at cable’s dominance over the previous decade.
In 2023, MSGN Networks launched a streaming service priced at $29.99 a month. Final 12 months, it teamed with the YES Community, dwelling of the Yankees and Nets, on the Gotham Sports activities app, which prices $41.99 a month if one combines YES and MSG. Clients can nonetheless simply get MSG for $29.99.
However an prolonged struggle with Optimum might drive MSGN out of business, sources stated.
The community, which is a part of publicly-traded Sphere Leisure, has been in default on $830 million in loans since October and has a forbearance settlement with its lenders that expires Jan. 10.
The debt on that mortgage is buying and selling at 5 cents on the greenback, the RSN govt stated.
“A full drop would ultimately bankrupt MSG Networks,” media analyst LightShed Companions stated in a report this week.
MSGN is dropping cash occasion as a result of it’s paying $187 million in 2025 to broadcast Knicks and Rangers video games as a part of a 20-year settlement that ends in 2035, in accordance with public filings.
However the income MSGN will get from cable suppliers, in offers which have a lot shorter time frames, is falling.
If MSGN was pushed out of business, it might renegotiate with the Knicks and Rangers and sure pay a lot decrease rights charges to mirror the brand new RSN market, the RSN govt stated.
An MSGN chapter wouldn’t essentially be unhealthy for Dolan, who controls each Sphere Leisure and Madison Sq. Backyard Sports activities, the father or mother firm of the Knicks, Rangers and operator of the World’s Most Well-known Area.
He would take a success from lowered rights charges for the Knicks and Rangers.
However cleaving away MSGN would possible increase Sphere Leisure, which additionally consists of the $2.3 billion futuristic Las Vegas music mecca.
“This would be good news for Sphere shareholders,” LightShed stated. “Eradicating the $830 million in MSG Networks debt from Sphere’s steadiness sheet ought to imply a big enhance in Sphere’s inventory value.
MSG Networks declined remark about its monetary standing.
