It’s early in the MLR season, but two sides could be facing the end of their local broadcasting arrangements.
The Wall Street Journal is reporting that Warner Bros. Discovery intends to exit the Regional Sports Network (RSN) business. The business, which operates under the AT&T SportsNet banner, is facing a cash crunch and its parent company is not interested in funding the firm’s shortfall. This would leave the company without ample funds to meet rights payments.
AT&T SportsNet is the local broadcast partner for the Utah Warriors and Houston SaberCats. It’s worth noting that SportsNet also holds a stake in Root Sports, which broadcasts Seattle Seawolves games. That appears to be a simple equity investment, and (barring additional information) Root Sports’s daily operations should not be affected.
AT&T SportsNet has offered to revert local broadcast rights back to the teams in exchange for immunity from further liability. The company projects a resolution being required by the end of March. Otherwise, the broadcaster will likely liquidate under Chapter 7 bankruptcy. This follows struggles by the largest RSN brand, Diamond Sports Group, which is expected to file for bankruptcy in March.
For the affected MLR franchises, it creates a unique dilemma. It’s widely assumed that local broadcasting financial arrangements mirrors those at the league level: cash flows from the team to the broadcaster, making the broadcast more of a ‘paid program’ than a profitable revenue stream. However, exposure to games can drive interest from new fans and bring butts to seats. As the league continues to seek better broadcasting arrangements, growing the viewership base is crucial. Fans that tune in on local television are more likely to tune in for nationally televised games as well.
One solution could be pairing with local affiliated stations, but it would involve significant drawbacks depending on game times. A local free-to-air station may be willing to sell a time block on a Sunday afternoon (forgoing the revenue from those non-stick pan commercials that are a half hour long), but don’t expect an MLR team to bid high enough to win prime time slots.
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