One of the key elements that enabled Washington to land the Montreal Expos -- the creation of a regional sports network that would televise Expos and Baltimore Orioles games and funnel most of the revenue to Orioles owner Peter G. Angelos -- does not exist yet.
None of the principals has disclosed what such a network would look like, even though it must be up and running in time to broadcast Expos spring training games in March. During a conference call yesterday, Major League Baseball Commissioner Bud Selig said the terms of the deal "would remain between us."
Angelos's cut is likely to be healthy: The Orioles would receive the majority of the new network's revenue, according to sources familiar with the discussions who spoke on the condition of anonymity. Typical regional sports networks return a profit margin of 30 to 40 percent annually on revenues in the tens of millions of dollars, industry experts said.
Regional sports networks are usually owned either by cable companies and broadcasters or by the teams themselves, such as the Dallas Cowboys, which just launched its own network.
The networks often feature a year-round roster of professional and college sports and tend to be anchored by a Major League Baseball franchise, which provides programming for half the year. In the Washington area, Comcast Corp. controls the rights to the Capitals and Wizards (each through 2012), strengthening its hand in any negotiations to establish a network for the city's new baseball team, industry analysts said.
The arrangements can be lucrative. The teams make money by either selling their broadcast rights to a cable company or network or by running the network itself and charging the cable company a fee to carry the games. The broadcasters and cable companies make money from subscription fees and advertising sold on the regional network.
The Orioles, for example, sold the rights to Comcast to show 87 games this season -- and the rest to local stations, such as WDCA-TV. Such rights are expensive. Fox Sports Net pays the Seattle Mariners $30 million per year to broadcast the team's games, said Lee Berke, who has advised several teams on the creation of regional sports networks.
Comcast -- the cable industry's largest company with 22 million customers, including about 2 million in the Washington area -- already has Comcast SportsNet channels in the Washington-Baltimore region. It also runs networks in its home city of Philadelphia and one set to be launched in Chicago on Friday.
Some industry experts said what may emerge in the Washington area is a hybrid network that would be part-owned by the teams and part by Comcast, a model similar to the one in place in Chicago. That network was created by Jerry Reinsdorf, owner of the Chicago Bulls and White Sox.
Reinsdorf is the head of Major League Baseball's relocation committee, which chose Washington for the Expos. Reinsdorf also is co-owner with Comcast in the company's new SportsNet Chicago, which will show 100 of Reinsdorf's White Sox games and 48 of his Bulls games.
Comcast has not revealed its Washington plans.
"While we pride ourselves on providing quality sports programming for our customers," Jack Williams, president of Comcast SportsNet, said in a statement, "the decision to bring the team here has just been finalized and we have not yet held any discussions regarding carriage of the new team's games."
Comcast's contract to broadcast Orioles games expires after the 2006 season, leaving the team free to join a regional sports network created for the Expos. Such a network would likely need Comcast's participation, given the cable company's dominance in the Washington area.
"Comcast controls a lot of subscribers" in the Expos-Orioles market, Berke said. "In order to make the network successful, you have to have Comcast as a major distribution partner."
The other major cable providers in the Washington area are Cox Communications Inc. and Starpower Communications LLC, both of which said they would like to broadcast next year's Expos games.
Broadcaster-owned regional sports networks have been the standard in the industry. When the NBA moved the Charlotte Hornets to New Orleans in 2002, the city worked with Cox, that city's largest cable provider, to build a regional sports network.
But team-owned networks are the new trend, Berke said; about 25 major league teams now run their own network. In Dallas, the Cowboys put together a channel that shows preseason games, press conferences with head coach Bill Parcells and other fare, but no regular-season Cowboys games, because the NFL controls those rights.
If owned by the team, the networks typically charge cable companies, such as Comcast and Cox, about $1.20 per subscriber per month, Berke said. That cost is passed along to the cable subscriber. The cost of sports programming has been a thorny issue between teams, and sports channels and cable operators. Last year, Cox balked at ESPN's proposed price hike to more than $2 per subscriber before the sides eventually settled.
The Yankees Entertainment & Sports Network, considered the gold standard of team-owned networks, is worth $1.2 billion, said Berke, one of the co-authors of YES's original business plan.
If the regional network is owned by an entity other than the cable company, it can become a source of tension with the local cable provider.
In Minnesota earlier this year, the Twins owners started their own regional sports network, called Victory One Sports, but Time Warner and other cable operators refused to carry it, saying the Twins were charging too much -- dooming the venture and keeping Twins games off the air for a time last spring, angering fans. The Twins pulled the plug on the nascent network and re-upped with Fox's regional sports network in May.
Staff writer Thomas Heath contributed to this report.