Ivan Provorov # 9 of the Philadelphia Flyers plays the record against Brad Marchand # 63 of the Boston Bruins during the first period in a Round Robin game during the 2020 NHL Stanley Cup Playoff at Scotiabank Arena on August 2, 2020 in Toronto, Ontario.
Mark Blinch | National Hockey League | Getty Images
The NBC Sports Network is closing.
The network will stop operating by the end of 2021, a person familiar with the plan confirmed to CNBC. NBC will transfer its sports media rights, including the National Hockey League, to the USA Network. The person spoke to CNBC on condition of anonymity, as the individual is not allowed to comment publicly on the matter. Both networks are owned by CNBC’s parent company, NBCUniversal.
The plan to halt operations will allow NBC to attract more reach for its sports content. The USA Network is available in 86 million households, while NBCSN has an estimated domestic reach of 80 million.
NBCUniversal initially expected the NBC Sports Network to be its answer to Disney’s ESPN – a cable sports network that could justify high fees for affiliation with pay TV distributors because of its popular sports content. Twenty-first Century Fox developed Fox Sports 1 and CBS introduced the CBS Sports Network for similar reasons.
But none of the cable sports networks have ever seriously threatened ESPN, and the media industry’s move toward streaming video has made linear sports networks anachronistic. NBCUniversal is considering closing several networks, CNBC reported in October, to consolidate its best assets into fewer networks. Closing low-performing cable networks can allow legacy media companies to keep cable bundle shrinkage afloat, while maintaining subscription revenue by raising fees for their existing networks.
The network started in the 1990s as Outdoor Life Network, then was renamed Versus in 2006. Comcast owned the network when it took over NBCUniversal in 2011, and renamed it NBC Sports Network at the time.
NHL playoff games, a selection of NASCAR races and Premier League content will be transferred to the USA Network after NBCSN closes.
The Stamford, Connecticut-based chain took over the rights of the NHL with a 10-year, $ 2 billion package in 2011. The deal runs through the current 2020-21 season.
NBCSN also has a $ 4.4 billion rights package with NASCAR that expires in 2024 and arrives on its renewal option with European Football Premier League rights (worth approximately $ 1 billion). The network transferred some of these games to NBC’s streaming service, Peacock, last year.
Back to the future
Longtime sports media rights consultant Lee Berke said the move is “back to the future” for USA Network sports content. The channel was originally a national distribution arm of the Madison Square Garden Sports Network, broadcasting sports content, including the National Basketball Association, until 1984.
“The fact that the sport is returning to the United States is not a new concept,” Berke told CNBC in an interview on Friday. “Distribution is certainly useful, but this movement reflects a few things – the pay-TV package is shrinking. The subscriber base is shrinking. So that justifies fewer networks being on the air and the other part is the growth in streaming.”
Berke, the CEO of LHB Sports, a sports consulting firm, said that streaming trends are forcing the network to reinvent itself “as consumer behavior changes. There has been a migration of sports from broadcast to cable over the past 20, 30 years ago, when pay TV just got bigger and bigger. And now you’re seeing sports migrating to streaming.
“I think it is a wise move, given the trends that are occurring,” said Berke of NBCSN’s closure. “You are trying to stay ahead of the wave. You don’t want to get behind it and miss it. But it makes sense based on the direction of pay TV and the direction of streaming.”
Disclosure: Comcast owns NBCUniversal, which is the parent company of CNBC.