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When the local rights to broadcast NBA, NHL, and MLB games go up for grabs, tensions are rising between broadcast station owners and pay TV providers.
As long-held media rights for teams on regional sports networks unravel, broadcast station owners like E.W. Scripps Co., Gray Television, Nexstar Media Group, and Sinclair have been in talks with leagues and clubs about possible partnerships to carry games on free over-the-air channels.
Since the early 2000s, regional sports networks have held nearly all local sports rights, but their future is now in jeopardy as tens of millions of Americans have stopped using cable television.
The industry that saw teams and leagues gain large revenues would be completely upended by a switch to a model centred around broadcast stations and direct-to-consumer streaming. Also, it might make cord-cutting more rapid and give broadcast station owners more negotiating power during carriage talks.
The negotiations follow Diamond Sports Group’s bankruptcy filing and suspension of paying rights payments for some of the teams on its channels; Diamond Sports Group has the largest portfolio of RSNs.
A few more teams are now available after network owner Warner Bros. Discovery said it will leave the industry by year’s end.
The insiders stated that after Diamond filed for bankruptcy in March, the leagues and teams started making backup plans.
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Sports Broadcasting Wars
The chance to broadcast regional NBA, NHL, and MLB games is seen by broadcasters as an unanticipated method to increase the costs they pay pay TV providers like Comcast, Charter, or DirecTV for the privilege of carrying their stations.
When broadcast corporations renegotiate contracts with pay TV carriers, they frequently connect all of their stations together. Local sports are therefore unusually valuable.
Sports rights are likely to be used as leverage by corporations like Gray or Nexstar to increase costs for all of its stations if they are able to secure them in a number of locations.
The station groupings can threaten to mute the games if pay TV operators object to price increases. Typically, leagues try to prevent local blackouts because they dissapoint sports enthusiasts.
The people stated that this dynamic has caused distributors, who have also shown interest in short-term deals to carry games, to voice their concerns to the leagues regarding the possibility of more games going to local broadcast stations being made available for free to viewers without a paid package.
They worry that the broadcasting of local sports may hasten the cord-cutting trend.
If RSNs are to drop teams, top DirecTV executives, including President Bill Morrow, are anticipated to speak with NBA and NHL officials in the upcoming weeks as part of an ongoing discussion concerning local games.
In order to maintain regional sports in the package, pay TV providers are also looking into alternatives. To give customers more options, Charter Communications will launch a less expensive TV bundle in the fall without RSNs.
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Source: CNBC
