The regional sports network landscape is in for an imminent change.
Warner Bros. Discovery said Friday that it is getting out of the RSN business. Ten MLB, NBA and NHL teams have distribution deals with the company through AT&T SportsNet, and Warner Bros. Discovery has informed those teams that they have until the end of March to reach a deal to take back their distribution rights.
In a statement to Sports Business Journal, the company said, “AT&T SportsNet is not immune to the well-known challenges that the entire RSN industry is facing. 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 set to be the four teams most affected by the announcement, given that the March 31 deadline comes before the start of the 2023 MLB season. AT&T SportsNet also has deals with the NBA's Houston Rockets, Portland Trail Blazers and Utah Jazz and the NHL's Vegas Golden Knights, Pittsburgh Penguins and Seattle Kraken. But with the end of the season quickly approaching for those teams, they’ll need only a short-term solution before the offseason.
Per SBJ, the AT&T SportsNet channels would file for Chapter 7 liquidation if they can’t reach rights agreements with the teams.
The impending RSN reckoning
The SportsNet announcement comes on the heels of news that Diamond Sports Group is prepping to file for bankruptcy this spring. DSG owns and operates the Bally Sports regional networks and holds the local television rights for more than 40 MLB, NBA and NHL teams. Dozens of teams across the country have multiple years remaining on their current rights agreements with WBD and DSG.
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 21st Century Fox acquisition in the late 2010s. Diamond’s purchase wasn’t profitable from the start. The company has $8 billion worth of debt and has struggled to get widespread distribution for its RSNs amid consumers’ changing television consumption habits. DSG networks are not available on YouTube TV and other television services.
MLB commissioner Rob Manfred said earlier in February that MLB will handle team broadcasts in 2023 if DSG misses rights payments. Manfred’s comments came after Diamond said it would miss a $140 million interest payment in what’s widely seen as the first step toward bankruptcy proceedings.
If the Bally Sports network crumbles ahead of the season, Manfred said MLB “would go directly to distributors — meaning Comcast, Charter, the big distributors — and make an agreement to have those games distributed on cable networks.” He also said teams would have more flexibility to stream their games. Right now, consumers can view games in local markets only through Bally’s streaming service or a television provider.
A big decline in rights fees?
An SBJ story 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 cut by as much as 70% over the next several years” as the local TV landscape changes. Regional Sports Networks were once the pillar of cable television, but with more and more consumers switching to streaming-based entertainment options and the dwindling distribution of those networks, the channels are far less profitable than they used to be.
The seemingly quick fall of RSNs across the country could make Major League Soccer look prescient, at least in the near term. The MLS season begins Saturday, and all of the league’s games are available through a streaming package on Apple TV. The new MLS package has no blackouts, and consumers can access every game on Apple TV for one price.
Could similar ideas be on the horizon for MLB, the NBA and the 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 broadcasts of marquee games.