Regional Sports Networks are in deep trouble

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Tom Wolper

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Feb 16, 2023, 5:53:26 PM2/16/23
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I watch a lot of out of market hockey on ESPN+ and I notice that a lot of games are carried on Bally stations. Bally Sports is owned by the Diamond Sports Group which is, in turn, owned by Sinclair. I was surprised to see the article linked below about a press conference given by MLB Commissioner Rob Manfred about what the MLB will do with DSG’s upcoming bankruptcy.

DSG bought the rights to baseball from FOX for $10.4 billion a couple of years ago and took out an $8 billion loan. This month they defaulted on a $140 million interest payment which means they are headed for bankruptcy court and a reorganization. That would make baseball (and hockey) teams that have contracts with them into creditors who stand to get only a fraction of what they are owed under contract.

The reason DSG gives for their financial woes is the drop in revenue due to cord cutting. Apparently AT&T Sports Networks are going through similar problems as they paid baseball teams less than they were owed recently.

Jim Ellwanger

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Feb 16, 2023, 5:59:53 PM2/16/23
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Shortly after seeing this story earlier today, I noticed Bally Sports tweet to promote a sponsored giveaway item that's scheduled for the Tampa Bay Rays game on July 9th. I hope the Rays got the sponsorship money up front. https://twitter.com/BallyRays/status/1626257396002656262


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Bob Jersey

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Feb 25, 2023, 8:58:05 AM2/25/23
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AT&T-SN is now planning to liquidate itself, after the teams (a few of which hold majorities in their respective ventures) buy back their shares.

https://theathletic.com/4250267/2023/02/24/warner-bros-discovery-exits-rsn/ (link, tho ultimately from the WSJ with help from John Ourand of Sports Business Journal)

B

Tom Wolper, Feb 16th, in part:

Tom Wolper

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Feb 27, 2023, 9:16:35 AM2/27/23
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I read an interview with Pirates owner Bob Nutting yesterday. He said they’ve known about the AT&T Sportsnet problems for about 18 months so they weren’t surprised at the announcement.

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Adam Bowie

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Feb 27, 2023, 9:23:24 AM2/27/23
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The Feb 23rd episode of The Town podcast with Matt Belloni is worth a listen for a deep dive into this. 

I come away wondering how on earth Disney managed to get as much as it did when it was forced to sell the Fox regional sports networks as part of their deal to take over other Fox assets. The writing has surely been on the wall for the regional sports business model for quite some time. And apart from the biggest teams (or at least those with the biggest fanbases), I can't see how going direct to fans will make up the difference. Getting one fan to pay $20 a month to subscribe is very different to getting $1 each from 20 cable subscribers as part of their cable package, 19 of whom never go near the channel, but pay for it anyway.


Adam

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Tom Wolper

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Feb 27, 2023, 12:05:05 PM2/27/23
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Last year on the Ezra Klein Show podcast, Ezra talked to an economist about the post-pandemic economy. She said that the economy entered into a phase since the 2008 recession where interest rates were below the rate of inflation meaning a government or corporation could take out a loan and come out ahead when they paid it off. That led to an economy of abundance and a cushion against bad decisions. That changed when interest rates shot up last year (or maybe in 2021) but corporate leaders haven’t changed their thinking to a new scarcity.

So the current economic climate is one of many disruptions. What we’re seeing here are disruptions in the sports business and the media business and there’s going to be a period of chaos until corporate leadership figures out what to do when access to easy money is gone. The decisions teams and leagues make are going to be reactive and are going to be based on staying alive and not maximizing revenue.

Brad Beam

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May 30, 2023, 8:30:07 PM5/30/23
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The first cleat has dropped; starting tomorrow, Padres broadcasts will become an MLB production.
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