At issue is the amount which the three companies pay to Altitude.
The way the market is structured is like this: subscribers pay their cable company their monthly bill. The cable company, in turn, takes that payment and splits it amongst the 200 or so channels based on popularity and demand. Some channels, like ESPN, command big fees - ESPN gets $7.21 each month per subscriber. Less popular channels, like the Tennis Channel, go for only $0.15.
According to Altitude, Comcast and the other companies recently requested "a substantial and economically unviable reduction in fees." Altitude also answered questions today from subscribers about the potential viability of a streaming-only service for fans of the Nuggets, Avs, and Rapids. In short: that's a no go. Altitude's president, Matt Hutchings has told viewers that there's no way to make a niche product like that profitable - it would cost so much that subscribers would almost certainly not pay for it.
Setting the issues of the money aside, what it all amounts to is that Colorado Rapids fans living in Colorado have no idea whether they will be able to watch the final six games of the season, or how they will watch the 2020 season at all.
Normally I would shrug and assume all of this was a form of one billionaire corporation engaging in an act of brinksmanship in order to squeeze a few more pennies from another billionaire corporation, except that Rapids play-by-play man Richard Fleming issued this tweet earlier today:
I'm not a media conglomeration expert or a mole inside a major financial services company specializing in hedging mergers and acquisitions. I'm just a guy that watches soccer and studies Talmud. But from what I see, Altitude and the Rapids have roughly four options to pursue in order to move forward and be on television this year and next.
Option 1: Play the hand they've been dealt
While attempting to get the best terms possible, Altitude might have to acknowledge reality: many cable subscribers are not watching Nuggets, Avs, or Rapids games. And thus, it isn't worth it to pay through the nose for Altitude. Either Altitude would need to get put into a special, higher tier package that fewer subscribers would elect to pay for, or it would stay in the basic package but at a reduced rate.
The impact of that on the KSE would be significant. With less revenue coming in, all three teams might need to consider cutting costs. Which is a depressing concept when you consider that the Rapids Avs and Nuggets have always been among the more frugal teams in their respective sports. Stan Kroenke has always been a bottom line guy. He's not in it for vanity or trophies; he wants to turn a profit. It's hard to figure out what his next move would be if all of his major Denver assets were guaranteed to run into the red for the forseeable future.
Option 2: Call their bluff
There's an assumption by Comcast, Dish, and DirectTV that Altitude cannot live without them - an assumption that millennials have been challenging in droves. That assumption is that sports fans need a cable or satellite package to get by. I personally cut the cord in 2012, and I haven't looked back. I watch more sports now through ESPN+ and NBC Sports than I ever used to.
Smart TVs, tablets and laptops have made cutting the cord easier than ever. But it would be up to Altitude to take the leap into the future, and the early indications are they are reticent to do so. Altitude TV's president Matt Hutchings tweeted that a streaming service "would not have sufficient revenue". I think that's both premature and shortsighted. Nobody imagined that Netflix, a DVD-by-mail racket a decade ago, would eventual evolve into an Oscar and Emmy-winning movie studio that distributes its product exclusively via streaming today. Sure, maybe cable is considered an necessary evil for current Nuggets fans. But it ought not be so forever. LAFC games are only watchable in the LA area via YouTube Red, and they seem to do just fine. Grow a pair, guys. Take a risk.
Option 3: Sell Out
If being a small-time regional sports network that is restricted to just one market has become a financial unviable path for Altitude, then maybe it's time to stop being a small-time regional sports network, and be absorbed into the collectivized Borg of nationally conglomerated sports networks. Most local US sports teams are carried on cable by Fox Sports, NBC Sports, or AT&T Sports. Not to give you an economics lesson, but that kind of massive corporate power allows for both monopolistic weigh-throwing and economies of scale. You can get Toyota to buy a lot more ads when, instead of selling Rapids games broadcast to Aurora and Longmont, you are selling 11 MLS games in 44 major metropolitan areas. You also can employ fewer ad execs and consolidate them into fewer corporate offices.
Maybe Altitude was a good idea, and a profitable one, and it worked for a while. Maybe in the Colorado market, with the product they're selling, it just isn't a viable entity anymore. Maybe it's time for KSE to just do sports teams instead of trying to be a TV company too.
Option 4: Turn out the lights, the party's over
A sports team doesn't need its own media company to distribute its games on TV and sell ads, too. A sports team owns its own broadcast rights and can choose to sell them to the highest bidder. And maybe the best way forward is to simply shutter Altitude TV and let each of the KSE teams to work out their own broadcast deal. The Nuggets could go to Root with the Rockies; the Avs could be on the CW; the Rapids could be on Youtube Red or ESPN+ or FloSports. Fans would get to watch their teams. The teams would collect revenue directly. The market would determine the winners and losers.
Some would argue that reduced access on TV to a local team would hurt ticket sales, and that might be true. But most baseball teams have long since left being broadcast on local over-the-air stations and can only be seen on cable, and ticket sales are still doing fine in most markets. For MLS teams like the Rapids, this probably wouldn't make that big an impact - team revenues in MLS come primarily from ticket sales, followed by merchandise, and then tv revenues; and much of that TV money comes from the league splitting the national tv contract up to all 24 teams. The local money is nice, but it isn't the largest revenue source for the Rapids.
Maybe you're interested in sports finance. Maybe you want the Rapids to financially succeed beyond the wildest of expectations in hopes that a profitable Rapids would see reinvestment of that profit back into the team; more ticket sales and tv revenue would beget better player transfers which would beget more ticket sales and tv revenues ad infinitum. It's a circle, Simba.
Or maybe you just want the damn Rapids to be on TV without using some janky illegal stream or buying a VPN to magically inform the ESPN+ firewall that you're actually watching the game from Duluth Minnesota and not Highlands Ranch, CO. I get it. We all want the team to figure this out.
Let's hope they do it, and soon. There's only four days left till the next time the Rapids are on Altitude again.