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Steve McCaskill | How can RSNs adapt in the streaming era?

SportsPro's technology editor explores how regional sports networks (RSNs) can survive and thrive as the industry shifts.

23 January 2023 Steve McCaskill

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We often talk of winners and losers in the shift to DTC. Most commentators put regional sports networks (RSNs) in the latter camp.

As one of the biggest beneficiaries of ‘the bundle’, whereby cable customers pay for a suite of channels regardless of whether they want them all, the RSN business model is one that is especially vulnerable to cord cutting. The number of cable connections in the US has fallen from nearly 100 million in 2016 to around 76 million today, reducing the fees paid to RSNs by providers.

Amid declining revenues, many RSNs are examining the DTC route so that cord cutters can still access local sport. But unlike with the bundle, RSNs have to actually seek out subscribers, and this requires additional investments in technology, customer service, and marketing.

Even then, technology is only part of the puzzle. RSNs must ensure they have the relevant rights to stream live events, while also ensuring they don’t alienate cable partners who might seek to renegotiate carriage fees if they have to compete with DTC services.

NESN becomes first RSN to launch a DTC streaming service

NESN 360 is a DTC version of its cable RSN (Image credit: NESN)

RSNs owned or part-owned by franchises, such as YES, MSG Network, and NESN, have had more success so far, whereas the 19 Bally Sports RSNs owned by Sinclair’s Diamond Sports Group (DSG) have a more difficult contractual landscape to navigate.

Its efforts to go DTC with Bally Sports+ have been hampered by the fact that it only had the streaming rights for five Major League Baseball (MLB) teams at launch, with the league holding out for additional fees. Meanwhile, Sinclair’s relationship with MLB, the National Hockey League (NHL) and National Basketball Association (NBA) had been described as ‘adversarial’.

Bally Sports+ is viewed as crucial to the future of DSG. Sinclair paid Disney US$10.6 billion for the former Fox Sports Networks back in 2019, but the business is now worth around US$3 billion. The scale of the division’s debt is such that bankruptcy speculation has persisted for more than a year.

Most agree that the model that has served RSNs for decades is no longer sustainable but that doesn’t mean the decline of DSG is near or even inevitable.

There is still likely a viable model to be found, not least because it is in no one’s interests for the business to collapse. RSNs have been a crucial source of revenue for teams in all the major US leagues except the National Football League (NFL), and 42 franchises in total have deals with DSG.

Two recent developments reflect the reality of this situation and the need to find a viable strategy on both sides.

MLB expands Google Cloud partnership as MLB.TV sets viewing records

New York Yankees record breaker Aaron Judge is a star on the YES network (Image credit: Getty Images)

Firstly, Sinclair is no longer involved in the day-to-day running of DSG. NBC Sports and ESPN alumni David Preschlack has been appointed as chief executive of DSG, tasked with building relationships with partner leagues and identifying a path forward.

Meanwhile, MLB has hired Billy Chambers, who was previously chief financial officer and chief operating officer of the Bally RSNs prior to Sinclair’s takeover, to fill the newly created position of executive president of local media.

At the top of his in-tray will be how the league monetises its local rights. A report last year linked MLB, the NBA and the NHL with a full takeover of DSG, allowing the leagues to regain certain broadcast rights, strengthening their own DTC platforms or allowing individual teams to go it alone – much like the NBA’s Los Angeles Clippers have done.

But such a course of action would require significant expenditure, threaten revenues, and transfer the risk from broadcaster to rights holder. 

One solution could be to restructure deals to ease DSG’s debts and even give the leagues a stake in the business to further intertwine the fates of all parties. MLB could give DSG the rights to stream matches on Bally Sports+ in exchange for lifting local blackouts that prevent certain matches from being streamed on MLB.TV, for example.

There is no clear-cut solution, and there are pros and cons to each approach. Major League Soccer (MLS) has abandoned the RSN space, believing it can generate more revenue and exposure through Apple’s ecosystem, even if it has to assume the production costs.

Even with the rights in place, RSNs must still contend with the fact that not everyone who received their service on cable will want to subscribe to a DTC service. But they are not alone in this transition.

While the likes of CBS, Disney, NBC and Warner Bros Discovery have pushed ahead with their mega-streaming services, other beneficiaries of the bundle have sought to offset falling revenues by partnering with emerging aggregation platforms like FuboTV, Hulu or YouTube TV that cater to cord cutters who still want a linear experience.

RSNs have traditionally been too expensive for these platforms to consider, especially when the point of switching from cable is to reduce costs, but there might be some wiggle room. Sports-focused FuboTV is adding Bally Sports back onto its platform after a three-year absence, while Google could offer a new tier that includes RSNs when it starts showing the NFL’s Sunday Ticket.

These platforms have a fraction of the subscribers of legacy cable services, but could be in line to grow as cord cutting becomes more widespread. Nine in ten US households subscribe to at least one streaming service and sports-specific OTT revenues will increase by 73 per cent to US$22.6 billion over the next five years. Competition is fierce, and aggregation could be on the cards, but there is some long-term potential.

The status quo can’t go on forever, but the game is far from over.

Apple and the Premier League? How convenient

Last time, we speculated as to what Apple’s next move would be after it lost the race for NFL Sunday Ticket to Google. A report this week has linked the company with a move for the UK rights to the Premier League when they come up for grabs later this year. It would be a bold gambit by the iPhone manufacturer to drive take up of Apple TV+ and music to the ears of league executives eager to attract tech giants to the party and drive up revenues.

Apple’s interest may well turn out to be genuine, but much like when the company was linked with a swoop for the ATP and WTA tennis rights last year after Amazon pulled out, isn’t it a little convenient that these stories are emerging now?

The show must go on

This is an extremely serious newsletter, dedicated to reporting and analysing all elements of sports broadcasting. So it is our duty to cover an incident during the BBC’s live coverage of the FA Cup 3rd round replay between Wolves and Liverpool and definitely not just an attempt to secure cheap laughs.

As Gary Lineker previewed the game with his pundits, audible pornographic sounds drowned out any discussion. Interruptions continued throughout the pre-game show and unlike a commercial broadcaster, the BBC could not cut to an ad break.

Twitter was awash with speculation as to what might be the cause of the noise as interruptions continued throughout the pre-game presentation.

Eventually the game got underway and Lineker posted an image of the culprit on Twitter. A prankster, who later claimed responsibility on YouTube, had hidden what looked to be an ancient feature phone in the studio and changed the ringtone to the offending soundtrack.

The BBC has apologised, and you can be assured that every floor manager at every broadcast will be conducting routine checks to prevent any similar attempt at sabotage in the future.

Even if it was very funny.

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