(Bloomberg) -- Altice USA Inc. dropped MSG Networks from its Optimum cable-TV lineup on New Year’s Day, meaning subscribers in the New York area can’t watch games from teams such as the Knicks and Rangers.
Sphere Entertainment Co., which owns MSG Networks, said Altice was trying to push its sports programming into a more expensive package costing $160 a month, almost 70% more than what customers paid before. Sphere, run by New York billionaire James Dolan, offered Altice the option of paying less for its programming, according to a statement from the company.
Altice, which operates under the Optimum brand, disputed the percentage increase and cost of its package, saying in its own statement that Sphere’s offer would mean subscribers who don’t want to watch sports would still have to pay for them. Instead, Altice is offering lower-cost, non-sports packages, and is referring sports fans who want to watch the games to online options, such as the Gotham Sports app, which is partly owned by MSG Networks.
The impasse highlights the fraught state of play between content providers and distributors as customers cancel traditional cable and satellite-TV packages in favor of streaming services. The battles are especially intense for regional sports networks, which have long depended on the cable companies for revenue.
On Thursday, Diamond Sports Group, the largest owner of regional sports networks with 16 channels, emerged from bankruptcy after shedding almost $8.8 billion in debt. It was renamed Main Street Sports Group.
MSG Networks is negotiating with creditors on $829 million in debt after failing to make a payment in October, according to Sphere’s quarterly financial report.
Researcher LightShed Partners estimates that the MSG channels cost Optimum about $10 a month per subscriber. In a note Thursday, the firm cautioned investors to “not expect a resolution anytime soon, if at all.”
Sphere’s two channels, MSG and MSG Sportsnet, also broadcast the New York Islanders and New Jersey Devils, as well as some New York Giants and Buffalo Bills games.
Altice, which has about 1.94 million TV subscribers overall, is suggesting subscribers sign up for the Gotham app, which costs about $42 a month for a package that also includes games from the New York Yankees and Brooklyn Nets. Gotham, which launched last year, is a joint venture of MSG Networks and the YES Network. Altice has also partnered with FuboTV Inc. to offer customers a free trial and then 30% off the first two months of that company’s service.
“These sorts of distribution disputes are endemic of a larger issue of fans moving elsewhere to watch sports,” said Lee Berke, a longtime sports media consultant. “Now, all it takes is for somebody to say, ‘OK, I’m going to go on Gotham Sports and buy the package and watch the game tonight.’”
--With assistance from Reshmi Basu.
(Adds Fubo offer in penultimate paragraph. A previous version corrected name in last paragraph.)
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