Broadcast station owners and pay TV providers are experiencing tensions as they compete for the local rights to air NBA, NHL, and MLB games. Traditionally, regional sports networks have owned these rights, but the rise of cord-cutting has threatened their viability. As a result, broadcast station owners such as E.W. Scripps Co., Gray Television, Nexstar Media Group, and Sinclair are in discussions with leagues and teams to potentially carry games on free over-the-air channels. This shift could disrupt the current business model and give broadcast station owners more leverage in negotiations, while also potentially accelerating the trend of cord-cutting. These discussions come on the heels of Diamond Sports Group filing for bankruptcy, Warner Bros. Discovery exiting the sports network business, and the ongoing impacts of the pandemic on the sports industry.
Broadcast station owners view carrying local NBA, NHL, and MLB games as an opportunity to increase fees from pay TV operators like Comcast, Charter, and DirecTV. By securing sports rights in multiple markets, companies like Gray and Nexstar can use those rights as leverage to negotiate higher fees for all of their stations. In response, pay TV operators are expressing concern about more games being broadcast for free, as they fear this could lead to further cord-cutting. Top executives from DirecTV are expected to meet with NBA and NHL leaders to discuss the future of local games. Pay TV providers are also exploring alternatives to keep local games in their bundles, such as introducing cheaper bundles without regional sports networks. While discussions have primarily focused on the NBA and NHL, MLB teams are also at risk as the industry looks for new revenue streams.
The regional sports network business model has come under pressure due to the rise of streaming and cord-cutting. These networks have traditionally paid fees to leagues and teams, but the shift towards streaming has impacted their profitability. Additionally, Sinclair’s acquisition of Diamond Sports in 2019, which resulted in a significant debt load, led to Diamond’s bankruptcy and the need to restructure media rights deals. While networks like Bally Sports now offer direct-to-consumer streaming options, the industry is exploring other revenue streams to ensure their content reaches as many homes as possible.
Some deals have already been signed, such as the Phoenix Suns and Utah Jazz reaching agreements with local broadcast networks owned by Gray and Sinclair, respectively. Broadcast station owners need to have stations in the same footprint as teams and an affiliate station in the area that isn’t a top-four broadcaster. In some cases, new broadcast stations may need to be started, while in other cases, affiliate networks like the CW Network or Scripps’ Ion can be used. Nexstar’s CW has shown interest in obtaining more sports rights, including for local games. The wider reach provided by broadcast stations offers more visibility for fans and opens up revenue opportunities through advertising.
While the focus has been on the NBA and NHL, broadcast station owners have also shown interest in airing local MLB games. However, MLB team territories are much larger, making negotiations more complex. Despite the challenges, the industry is exploring different revenue opportunities to ensure the sustainability of teams and media outlets.
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