The buzz of the sports media world has revolved around Diamond Sports and the possibility of them filing for bankruptcy. The outlook of the Regional Sports Network industry isn’t looking great, and that could affect the bottom lines of many MLB, NBA, and NHL teams.
Sports Business Journal’s John Ourand and Terry Lefton reported that teams in those three leagues “have been told to expect their local media rights fees to be cut by as much as 70% over the next several years.” That’s a massive drop for something that’s a sizable portion of annual revenue for teams. Regardless, NBA teams aren’t panicking. At least not yet.
On the NBA side, Sports Business Journal paints a scenario that’s not as dire as some would believe; but could eventually be a cause for concern. One important thing for NBA fans to know is that no matter what happens, games will continue to air. That’s according to Orlando Magic CEO Alex Martins, who said, “In a worst-case scenario, our games will still be on the air.”
The Magic is one of the teams under the Sinclair/Diamond Sports/Bally Sports umbrella. Diamond Sports let leagues and teams know that they plan to “continue producing and carrying games even after it has entered into bankruptcy protection.” For what it’s worth, the NBA renewed its digital deal with Diamond Sports last week, but the NBA can walk away if Diamond Sports files for bankruptcy.
MLB, NHL, and NBA teams have a conundrum on their hands. A partnership with an RSN is more lucrative but has limited distribution. That distribution is getting more and more limited due to cord-cutting. Working out a deal with a local affiliate or streamer would result in wider distribution, but result in less money coming to the team. SBJ revealed that an NBA team president said that revenue would drop “from the mid-$30 million range per year to around $8 million” if games move from an RSN to a DTC service.
Given the future of the RSN market, at some point, the limited distribution and the expected drop in RSN rights fees will eventually bring about some sort of change in local rights.
It’s not just Diamond Sports feeling the pinch. Warner Bros. Discovery reportedly fell short of making payments to baseball teams on three of their four AT&T SportsNet RSNs.
This is a pivotal time for local sports rights. No one knows for sure what will happen, but no matter what, local games will be available somewhere.