- RSNs are significant source of revenue for many major league teams outside NFL
- Sinclair bought RSNs from Disney for US$10.6bn in 2019
Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL) are interested in acquiring US media company Sinclair’s regional sports networks (RSN), according to the New York Post.
The report says that amid concerns about the viability of the business, the three major North American sports properties are expected to open talks with Sinclair’s Diamond Sports Group (DSG), which operates the 21 RSNs bought from Disney for US$10.6 billion back in 2019.
Reduced fees from cable carriers as more consumers ‘cut the cord’ in favour of streaming services and other market forces have hurt the RSN business. Speculation regarding DSG filing for bankruptcy has persisted, with the company now believed to have depreciated in value to be worth in the region of US$3 billion.
The Sports Business Journal (SBJ) recently reported that DSG has retained the services of investment banks LionTree and Moelis, with an eye on selling the RSNs.
The rebranded Bally Sports network of channels collectively has the local rights to 14 teams from MLB, 16 from the NBA and 12 from the NHL. The company had hoped these would form the backbone of a successful direct-to-consumer (DTC) streaming service to help stem the tide of losses, but Bally Sports+ has been hamstrung by MLB’s decision to transfer the streaming rights for just five teams, as well as demanding additional fees.
MLB and the NHL did not comment on the report, while the NBA and Sinclair both denied the speculation.
RSNs are an important revenue stream for teams in MLB, the NHL and the NBA but broadcasters have struggled in recent times thanks to a vicious cycle of increased transmission fees and declining viewership.
The acquisition of DSG would help protect teams against the loss of this income should the company go into bankruptcy or be taken over by a third party that would seek to renegotiate the rights deals for a lower fee.
Indeed, many major league teams already have a direct interest in their RSN. The owners of the Boston Red Sox and Boston Bruins control NESN, while the New York Yankees are the largest shareholders of YES.
Direct control would make it easier to launch streaming services that could attract cord cutters. But, perhaps more importantly, the leagues would also regain rights that were sold in long-term deals that potentially did not take into account the rise of streaming. With MLB eager to add in-market games to MLB.TV, this could be a chance to do just that and others could follow suit.