In a major development for the regional sports network (RSN) landscape, Warner Bros. Discovery has announced its plans to exit the RSN business. The company owns the AT&T SportsNet channels, which has the local rights to broadcast games for multiple MLB, NBA, and NHL teams in multiple states.
According to reports, Warner Bros. Discovery has informed teams that it will not have enough funds to pay upcoming rights fees owed to the sports leagues, and it will not fund any shortfalls. The company has proposed to transfer ownership of the RSNs to the teams and leagues, and has warned that bankruptcy could be a possibility if it cannot execute on the transfer.
The AT&T SportsNet channels cover the NBA's Houston Rockets and Utah Jazz, the Pittsburgh Penguins of the NHL, and MLB's Pittsburgh Pirates, Houston Astros, and Colorado Rockies. The Colorado Rockies, Houston Astros, Pittsburgh Pirates, and Seattle Mariners are set to be the four teams most affected by the announcement since the March 31 deadline comes before the 2023 MLB season.
Warner Bros. Discovery has been looking to exit the regional sports industry for some time, as it has been negotiating a deal for the rights owned by AT&T SportsNet to shift back to the leagues, according to the Sports Business Journal. The network has told teams that it will allow them to continue using Warner Bros. Discovery production staff and equipment to broadcast future games if necessary.
This move comes after reports emerged that the largest operator of RSNs in the US, Diamond Sports Group, is also facing financial troubles that could result in bankruptcy. Diamond Sports Group, which operates the biggest group of RSNs across the US, missed $140 million in interest payments on debt earlier this month and is reportedly negotiating its options, including bankruptcy.
Regional sports networks have been struggling with their business models in recent years. They have limited scale due to their regional nature, and cord-cutting has weakened their pricing power in local markets. This has resulted in a decline in the profitability of these networks, and may be a sign of future changes in how sports broadcasts are delivered.
The move by Warner Bros. Discovery to exit the RSN business has sent shockwaves through the sports media industry, and it remains to be seen how this will affect the teams and leagues that rely on these networks for local broadcasts. With both Warner Bros. Discovery and Diamond Sports Group facing significant financial troubles, it is possible that other RSNs may also face similar challenges in the future.
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