Regional sports networks (RSNs) are the latest battle ground in the contest between streaming platforms and traditional television networks.
Broadcasters airing more than half of professional baseball, hockey and basketball teams in the U.S. could offload their networks in the coming months due to financial reasons. Networks include AT&T SportsNet, which broadcasts games for the Houston Astros and Pittsburgh Penguins, as well as all 19 Bally Sports networks, which shows games for the Tampa Bay Lightning and Chicago Bulls, among others. This presents an opportunity for streaming platforms that are looking to grab a larger share of the live sports market.
“Streaming services are saying a big ‘thank you’ right now to the failure of the RSNs,” said Patrick Rishe, sports business consultant at his own company and director of the sports business program at Washington University in St. Louis, Missouri.
In the last few months, streaming services have made their mark on the sports world as they look to secure properties with a loyal and predictable audience. Apple (AAPL) TV bought the exclusive rights to stream Major League Soccer (MLS) games, which began this month. Amazon (AMZN) Prime Video will exclusively show Thursday night National Football League (NFL) games for the next decade, and YouTube TV will stream some Sunday NFL games beginning this year. MLS’s deal with Apple “has caused every major league property to think about having a bigger presence in the streaming space,” said Rishe. But the recent offloading of RSNs could also be a warning sign for potential buyers.
The companies dumping RSNs are doing so for financial reasons. Warner Bros. Discovery (WBD), which owns three networks that operate as AT&T SportsNet, said it doesn’t have the funds to pay upcoming rights fees, the Wall Street Journal reported Feb. 24. It plans to transfer rights back to the 10 teams impacted in exchange for them not suing the company. If the parties cannot reach a deal by the end of March, bankruptcy for AT&T SportsNet is also on the table, according to the Journal.
Diamond Sports Group, another major RSN broadcaster that operates as Bally Sports, is expected to file for bankruptcy in the coming months. The company is a division of Sinclair Broadcast Group and presents games for more than 40 teams. Diamond took on $8.2 billion in debt to cover its $10.6 billion purchase from Fox in 2019. The payments piled up as its revenue declined by 36 percent to $3.93 billion last year, partially due to the continued cord cutting trend as viewers abandon cable. Its networks will likely sell for a cheap price, said Rishe.
Streaming platforms and cable networks are potential buyers, but “with all the bankruptcy and sales, it’s scary to take that on as a business,” he said.
Streaming platforms could benefit from distributing the games rather than producing them
A potential outcome is that the various sports leagues could take on the responsibility of producing games and sell distribution rights for cable networks and streaming platforms to show the games in local markets. Major League Baseball is considering this as an option, commissioner Rob Manfred said in a news conference this month. If that’s a possibility, it doesn’t make sense for a streaming platform to buy an RSN and take on the burden of producing games when they could just distribute them instead, said Rishe.
While the more established cable networks could have an advantage in securing distributing rights in the short term, streaming services would be the biggest beneficiary of owning the rights, he said. Younger fans are more inclined to consume content via streaming and would give the platforms an opportunity to grow their subscriber bases, he said.
The streaming services backed by Big Tech companies could be contenders for the RSNs, said Kirby Grines, CEO of streaming consultancy 43Twenty, in an email. Apple, Google (GOOGL) and Amazon—all of which own streaming platforms—earn billions in revenue from their other businesses, which makes sports rights affordable. Comcast’s NBC, which owns seven RSNs of its own, could also be a buyer, potentially for its Peacock streaming service.
In 10 years, less than one-third of Americans will pay for a traditional television subscription, he predicted. That’s down from the 56 percent of U.S. adults surveyed by Pew Research Center in 2021. “It is a declining business, and its glory days are over,” Grines said.
