The landscape of the regional sports network is about to change.
Friday night Warner Bros. Discovery has announced that it is exiting the RSN business. Ten MLB, NBA, and NHL teams have signed distribution deals with the company through AT&T SportsNet, and Warner Bros. Discovery told these teams they had until the end of March to reach a deal to get their distribution rights back.
It is reported by the Sports Business Journal. The company stated that “AT&T SportsNet is not immune to the well-known challenges facing the entire RSN industry. We will continue to have private conversations with our partners in an effort to find reasonable and constructive solutions.”
The Colorado Rockies, Houston Astros, Pittsburgh Pirates and Seattle Mariners will be the four teams hit hardest by the announcement as the March 31 deadline comes before the 2023 MLB season. AT&T SportsNet also has contracts with the Houston Rockets, Portland Trail Blazers and Utah Jazz, as well as the Las Vegas Golden Knights, Pittsburgh Penguins and Seattle Kraken. But with the end of the season rapidly approaching for these teams, they will only need a short-term solution before the off-season.
According to the SBJ, AT&T SportsNet channels will file for Chapter 7 liquidation if they fail to reach rights agreements with the teams.
The Coming Reckoning RSN
SportsNet’s announcement follows news that Diamond Sports Group is also preparing to file for bankruptcy this spring. DSG owns and operates Bally Sports’ regional networks and holds local television rights to over 40 MLB, NBA and NHL teams. Dozens of teams around the country have several years of valid rights agreements with the WBD and DSG left.
Diamond Sports Group was created by the Sinclair Broadcast Group and acquired the former Fox Sports regional networks from Disney after the Fox RSN rights were part of Disney’s acquisition of 21st Century Fox in the late 2010s. Buying Diamond was initially unprofitable. The company is $8 billion in debt and has struggled to achieve widespread adoption of its RSNs amid changing consumer television consumption 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 missed rights payments. Manfred’s comments come after Diamond said it would skip $140 million in interest payments, which many see as the first step towards bankruptcy.
Manfred said that if the Bally Sports network collapses before the season starts, MLB will “go directly to the distributors – meaning Comcast, Charter, big distributors – and make an agreement to distribute these games on cable networks.” He also said that teams would have more flexibility to stream their games. Right now, consumers can only watch games in local markets through Bally’s streaming service or TV provider.
Significant reduction in rights fees?
An SBJ history at the beginning of the week said “many” teams that had deals with regional sports networks were “instructed to expect their local media rights fees to be reduced by as much as 70% over the next few years” as the local television landscape changes. Regional sports networks were once a mainstay of cable television. But as more and more consumers switch to streaming entertainment, and the distribution of these networks is shrinking, the channels are much less profitable than they used to be.
It would seem that the rapid drop in RSN across the country could make Major League Soccer look prescient, at least in the short term. The MLS season starts on Saturday and all league games are available through the Apple TV streaming package. There are no cut-offs in the new MLS package, and consumers can access all games on Apple TV for a single price.
Could similar ideas be on the horizon for MLB, NBA and NHL? Maybe. It won’t take long for baseball’s MLB.TV to serve fans without local power outages, and Apple and Amazon have been mentioned as potential bidders for some NBA TV rights in 2024-2025. If the RSN landscape becomes barren over the next few months, Apple and Amazon may be able to stream games to local fans as part of a deal to stream popular games nationally.
Source: sports.yahoo.com
