The landscape of regional sports networks is about to change.
Warner Bros. Discovery said Friday evening that it was retiring from the RSN business. Ten MLB, NBA and NHL teams have distribution deals with the company through AT&T SportsNet and Warner Bros. Discovery informed those teams that they had until the end of March to strike a deal to resume their distribution rights.
In a statement to Sports Business Journal, the company said, “AT&T SportsNet is not immune to the well-known challenges facing the entire RSN industry. We will continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions. »
The Colorado Rockies, Houston Astros, Pittsburgh Pirates and Seattle Mariners are expected to be the four teams most affected by the announcement since the March 31 deadline comes before the 2023 MLB season. AT&T SportsNet also has deals with the Houston Rockets, Portland Trail Blazers, and Utah Jazz and the Las Vegas Golden Knights, Pittsburgh Penguins, and Seattle Kraken. But with the end of the seasons fast approaching for these teams, they will only need a short-term solution before the offseason.
According to the SBJ, the AT&T SportsNet channels would file for Chapter 7 liquidation if they failed to reach rights agreements with the teams.
The imminent calculation of the RSN
SportsNet’s announcement follows news that Diamond Sports Group is also preparing to file for bankruptcy this spring. DSG owns and operates regional Bally Sports networks and holds local television rights for more than 40 MLB, NBA and NHL teams. Dozens of teams across the country have several years left on their current rights deals with WBD and DSG.
Diamond Sports Group was created by the Sinclair Broadcast Group and acquired Disney’s former regional Fox Sports networks after the Fox RSN rights were part of Disney’s acquisition of 21st Century Fox in the late 2010s. Diamond purchase was not profitable from the start. The company is $8 billion in debt and struggling to get widespread distribution of its RSNs amid changing consumer TV viewing habits. DSG networks are not available on YouTube TV and other TV services.
MLB commissioner Rob Manfred said earlier in February that MLB would handle team broadcasts in 2023 if DSG misses the fee payment. Manfred’s comments came after Diamond said it would miss a $140 million interest payment in what is widely seen as the first step toward bankruptcy proceedings.
If the Bally Sports Network collapses before the season, Manfred said MLB “would go straight to the distributors – that’s Comcast, Charter, the big distributors – and make a deal to have these games distributed on wired networks”. He also said teams would have more flexibility to broadcast their games. Currently, consumers can only view games in local markets through Bally’s streaming service or a TV provider.
A sharp drop in rights fees?
An SBJ article earlier in the week said “many ‘teams with regional sports network distribution deals’ have been told to expect their local media rights fees to be reduced by up to $70. % over the next few years” as the local television landscape changes. Regional sports networks were once the mainstay of cable television. But with more and more consumers turning to streaming-based entertainment options and the shrinking distribution of these networks, the channels are far less profitable than they used to be.
The seemingly rapid fall of RSNs across the country could make Major League Soccer look prescient, at least in the short term. The MLS season begins on Saturday, and all league games are available through a streaming package on Apple TV. The new MLS package has no blackouts and consumers can access all games on Apple TV for one price.
Could similar ideas be on the horizon for the MLB, NBA and NHL? It’s possible. It wouldn’t take much for baseball’s MLB.TV to serve fans without local blackouts and Apple and Amazon have been mentioned as potential bidders for some NBA TV rights in 2024-25. If the RSN landscape becomes barren over the next few months, there could be an opening for Apple and Amazon to stream games for local fans as part of a deal for national broadcast of marquee games.