Collapse of Regional Sports Networks (Diamond Sports Group files bankruptcy, Warner-Discovery looking to leave business, Xfinity drops Bally)

[CHRDANHUTCH]

I think you're confusing networks and companies/corporate structure a bit...

ESPN wouldn't be facing any kind of dissolution if they were packaged by Disney as the company of ESPN and sold to, say, Apple. Every single thing about every single "ESPN-owned sports property and channel" would be the same (EXCEPT the "ESPN on ABC" content. All that would just be on the ESPN channel instead of the ABC channel).

The SEC Network, ACC Network, Longhorn Network... still ESPN. It's just that Apple owns ESPN instead of Disney owning ESPN.

The Disney company (with ABC and other cable networks) would have to replenish their sports content, because it was sold to Apple. They'd have to create an "ABC Sports Division" within their company, like Fox, CBS and NBC have --

-- It doesn't matter that NBC shut down NBC Sports NETWORK. NBC Sports is a division within the company that decides what NBC is going to bid on with sports, hires producers/directors/talents for the game broadcasts, etc. ("ABC Sports" was shut down by ABC because it was redundant: The division of the company called "ESPN" was doing the same job as "ABC Sports") --

ABC would need a new sports division, so they'd hire away executives from ESPN (VPs) to build it. They could launch a sports network (like how Fox/FS1, CBS/CBSSN) or use an existing cable channel under their ownership and put sports on it (like NBC/USA).


There's no comparison between RSNs and ESPN's empire of sports networks. RSNs sell to local market only, and ESPN is national. They both have huge rights fees and declining cable subscribers, but ESPN has a more marketable streaming platform because they have a bazillion teams on it and RSNs have... three.

The rights fees ESPN pays are high, but one way they've addressed it by DESTROYING COLLEGE CONFERENCES to save themselves like $1.5 billion over the years.

nope.... why was this thread first proposed.... Kev.... what does Apple have to do with the dissolution announcement made by WBD IN THE midst of merging the two companies into one..... it has nothing to do with ABC Sports returning since it was dissolved in 2006..... my point is and remains to be seen would the SEC/ACC Networks who were forced on to must carry legislation would they currently exist if not from either Disney or ESPN BACKING BOTH TO BE added to most cable systems.... Longhorn exists, but in name recognition because it's not a linear network carried by either Comcast or Charter.... whereas SEC/ACC are carried by Charter, in fact SEC has its primary/alternate channels on Charter systems re channel capacity.

my point is would either have become linear networks without ESPN footing the bill whether startup or operation-wise

 

[KevFu]

The concept of value for college sports properties is totally backward right now.

Because NBC, CBS and Fox waited so long to try and compete with ESPN, you don't have a "competition from the networks for the rights to a conference based on the 'Worth' of that conference to TV networks."

What you have is the conferences are AUDITIONING for a financial INVESTMENT FROM ESPN.

- ESPN says "you'll get more investment from us if you add these schools. So they do.

The number of times ESPN told one property to raid their other property is staggering. And then ESPN turns around and "drops the loser."

- But now NBC, CBS and Fox CAN'T invest in other conferences because they're definitely worth less than ESPN's properties. That's anti-competitive.

 

[CHRDANHUTCH]

The concept of value for college sports properties is totally backward right now.

Because NBC, CBS and Fox waited so long to try and compete with ESPN, you don't have a "competition from the networks for the rights to a conference based on the 'Worth' of that conference to TV networks."

What you have is the conferences are AUDITIONING for a financial INVESTMENT FROM ESPN.

- ESPN says "you'll get more investment from us if you add these schools. So they do.

The number of times ESPN told one property to raid their other property is staggering. And then ESPN turns around and "drops the loser."

- But now NBC, CBS and Fox CAN'T invest in other conferences because they're definitely worth less than ESPN's properties. That's anti-competitive.

nope, disagree with that.... why did Comcast divest itself of NBCSN as a cable network, Kev, then did the same exact thing with their Olympic Channel.... forcing all those contracts to USA/CNBC because Peacock is now essentially running NBC Universal.... although where's that linear version of Peacock......

 

[KevFu]

Your posts are hard to follow. Lemme see if I got this...

would the SEC/ACC Networks currently exist if not from either Disney or ESPN BACKING BOTH TO BE added to most cable systems....

my point is would either have become linear networks without ESPN footing the bill whether startup or operation-wise

Those networks ARE ESPN Networks, so splitting ESPN from Disney changes nothing.

Without Disney saying "You have to carry ABC, so we're demanding you carry ESPN's family of networks too" Cable companies are going to keep carrying ESPN and their family of networks because it's ESPN. ESPN is a behemoth due to the sheer volume of sports fans. Without ESPN, cord cutting rises drastically.

And if cable companies in some states stopped carrying SEC/ACC, it's because they're in places WITHOUT SEC/ACC teams!

 

[CHRDANHUTCH]

Your posts are hard to follow. Lemme see if I got this...



Those networks ARE ESPN Networks, so splitting ESPN from Disney changes nothing.

Without Disney saying "You have to carry ABC, so we're demanding you carry ESPN's family of networks too" Cable companies are going to keep carrying ESPN and their family of networks because it's ESPN. ESPN is a behemoth due to the sheer volume of sports fans. Without ESPN, cord cutting rises drastically.

And if cable companies in some states stopped carrying SEC/ACC, it's because they're in places WITHOUT SEC/ACC teams!

right. because we recognize ESPN isn't heading down the road that WBD has elected or says that's their intended plan.... with Bally Sports or when Fox had owned it the regional Fox RSN's (which NBC Sports Boston briefly was at one point, before corporately reverting to Sportschannel production-wise);

would SEC/ACC Networks exist as a linear network without the broad reach than is ESPN, Inc.

 

[KevFu]

nope, disagree with that.... why did Comcast divest itself of NBCSN as a cable network, Kev, then did the same exact thing with their Olympic Channel.... forcing all those contracts to USA/CNBC because Peacock is now essentially running NBC Universal.... although where's that linear version of Peacock......

I don't understand what you can possibly disagree with. ESPN IS DOING exactly what I described.

You're talking about NBC shutting down NBCSN and moving content to USA and Peacock and the difference between linear TV vs streaming that the entire industry is trying to figure out to combat subscription loss...

IF THESE COMPANIES HAVE PREMIUM CONTENT THAT VIEWERS CAN'T LIVE WITHOUT, THEY WILL HAVE SUBSCRIBERS.

By not competing with ESPN in the sports marketplace for decades, the other networks literally allowed ESPN to take what WAS premium content and make it NOT premium content.


CBS, NBC and Fox viewed sports as "weekend and big national event" programming. ESPN built an empire on "fans like sports 24/7" while the networks stayed on weekends and the playoffs.

By 2008, ESPN was so huge, they dictated terms! I.E. - They told the NHL to screw off and what marketplace was left for the league? OLN. OLN proved to NBC that sports works and that's when NBCSN and FS1 waded conservatively into the game.

Competing with ESPN is far too risky and expensive that the other networks don't try.
Even if they go get big time properties (like Turner and Fox have), they don't have the internal publicity machine that ESPN has with ABC broadcast AND SPORTSCENTER.

ESPN sets the opinion of the viewers. What they promote (NBA, NFL, SEC) people view as important. What they ignore, people view as unImportant.

 

[eddygee]

Interesting Convo Hutch by you and Kev but you are both right in aspects Kev has a bit better points. But if I can redirect you guys for a moment here's a damn good YouTube video released 2 days ago that sums up the issue with RSN and Major Sports Leagues. This is the issue at hand. Beware the sunshine pumping from some in the sports industry ecosphere that means sports media reporting beat writers etc are all largely propped up at heart by the RSN model and their close relationships with teams. RSN troubles will trickledown the food chain.

The Death of Regional Sports Networks

 

[KevFu]

I know the college sports stuff was SEEMINGLY a bit off topic. But you can partly blame ESPN in the fall of RSNs, too.

RSNs used to have a ton of college games, which they paid very, very little for. (The college teams wanted the exposure and the alternative was games not on TV)

There were 14 conferences who's games MATTERED and ESPN had deals with all 14; picking the best games for ESPN, ESPN2 and ESPNU. Any game not on national TV, the schools were free to sell locally (T2 rights).

But with ESPN guiding conference realignment, over time they put more and more of the leagues they invested in on TV, and less and less of everyone else. THEN you had TV networks for Big Ten, SEC, ACC and Texas launch.

The T2 rights of power conferences dried up and RSNs lost a ton of cheap and popular content. That really hurt RSN advertising revenues even before today's cord-cutting/streaming landscape.

Interesting Convo Hutch by you and Kev but you are both right in aspects Kev has a bit better points. But if I can redirect you guys for a moment here's a damn good YouTube video released 2 days ago that sums up the issue with RSN and Major Sports Leagues. This is the issue at hand. Beware the sunshine pumping from some in the sports industry ecosphere that means sports media reporting beat writers etc are all largely propped up at heart by the RSN model and their close relationships with teams. RSN troubles will trickledown the food chain.

The Death of Regional Sports Networks

That guy's great. I enjoy most his videos. I don't think that really told us much new info at all though, but he's highly entertaining.

 

[eddygee]

I know the college sports stuff was SEEMINGLY a bit off topic. But you can partly blame ESPN in the fall of RSNs, too.

RSNs used to have a ton of college games, which they paid very, very little for. (The college teams wanted the exposure and the alternative was games not on TV)

There were 14 conferences who's games MATTERED and ESPN had deals with all 14; picking the best games for ESPN, ESPN2 and ESPNU. Any game not on national TV, the schools were free to sell locally (T2 rights).

But with ESPN guiding conference realignment, over time they put more and more of the leagues they invested in on TV, and less and less of everyone else. THEN you had TV networks for Big Ten, SEC, ACC and Texas launch.

The T2 rights of power conferences dried up and RSNs lost a ton of cheap and popular content. That really hurt RSN advertising revenues even before today's cord-cutting/streaming landscape.



That guy's great. I enjoy most his videos. I don't think that really told us much new info at all though, but he's highly entertaining.

No new info I didn't post it for that but to bring to heart the true severity of the situation over the next 5-7 years the period of short term pain as I heard John Ourand descibe it during a guest appearance on a Arizona Radio show. There are some that think oh this will be nothing a couple of moves bing bang bam woo thats over. The real worry will come CBA time for affected leagues, thinking mainly MLB/NHL.

 

[KevFu]

No new info I didn't post it for that but to bring to heart the true severity of the situation over the next 5-7 years the period of short term pain as I heard John Ourand descibe it during a guest appearance on a Arizona Radio show. There are some that think oh this will be nothing a couple of moves bing bang bam woo thats over. The real worry will come CBA time for affected leagues, thinking mainly MLB/NHL.

Well, there's always expansion for owners to off-set the loss of revenue!

 

[eddygee]

Well, there's always expansion for owners to off-set the loss of revenue!

Southern strategy redux. 2

 

[Headshot77]

A cool 2.8 billion for franchises in Quebec, Atlanta, Houston, and Portland because the NHL can't handle not making more profit year over year.

 

[oknazevad]

Kev, the problem with forcing Disney to sell ESPN as a unit is it doesn't really break up ESPN's overly large reach, just who it benefits. Making them sell it whole doesn't change the market at all. A more successful antitrust solution would be to force it to divest itself of the college-conference-specific subnetworks and/or limit the number of college conferences with which it can have a contract.

That said, that only looks at college sports, which are, frankly, not that big of a deal in the broader sports landscape. Sure, college football gets a ton of viewers, but college basketball actually only gets modest viewership outside the men's tournament, which is why theres been talk of expanding it to 90+ teams (!) and which ESPN has no rights to. And the conferences are less significant there as well because the tournament is not conference based. Long and short is that yes, ESPN has an outsize influence on college sports, but there are another outlets which the conferences could work with and they have decided not to, and generally college sports is not seen as a big enough deal to create an antitrust issue.

 

[KevFu]

Kev, the problem with forcing Disney to sell ESPN as a unit is it doesn't really break up ESPN's overly large reach, just who it benefits. Making them sell it whole doesn't change the market at all. A more successful antitrust solution would be to force it to divest itself of the college-conference-specific subnetworks and/or limit the number of college conferences with which it can have a contract.

That said, that only looks at college sports, which are, frankly, not that big of a deal in the broader sports landscape. Sure, college football gets a ton of viewers, but college basketball actually only gets modest viewership outside the men's tournament, which is why theres been talk of expanding it to 90+ teams (!) and which ESPN has no rights to. And the conferences are less significant there as well because the tournament is not conference based. Long and short is that yes, ESPN has an outsize influence on college sports, but there are another outlets which the conferences could work with and they have decided not to, and generally college sports is not seen as a big enough deal to create an antitrust issue.

That's valid. ABC/Disney could very well say "Welp, it's too risky/expensive to compete with ESPN."

And of course, the damage is also done on the college front. The perception is there's a "Power 2" and then a media three (or four with Big East basketball) and then everyone else.

Once again, the NCAA's lack of vision royally screwed things up. College sports were so much better when conferences were regional peer groups of teams that needed to play each other every year; instead of being just TV inventory packages.


Also, I wouldn't say that "college sports is not a big enough deal for anti-trust." Congress called hearings over Taylor Swift tickets. Congress called anti-trust hearings on MLB when Tampa struck out getting a team (0-for-3 with the White Sox, Giants and expansion, and they had built the stadium in the middle of those).

The Texas government got involved and forced the Big 8 two-team expansion to be a four-team expansion and include Texas Tech and Baylor. The Virginia government got involved and forced ACC expansion from 9 to 12 to include Virginia Tech instead of Syracuse. The California government got involved and is ordering UCLA to pay California annually for leaving the Pac-12 for the Big Ten.

 

[joelef]

That's valid. ABC/Disney could very well say "Welp, it's too risky/expensive to compete with ESPN."

And of course, the damage is also done on the college front. The perception is there's a "Power 2" and then a media three (or four with Big East basketball) and then everyone else.

Once again, the NCAA's lack of vision royally screwed things up. College sports were so much better when conferences were regional peer groups of teams that needed to play each other every year; instead of being just TV inventory packages.


Also, I wouldn't say that "college sports is not a big enough deal for anti-trust." Congress called hearings over Taylor Swift tickets. Congress called anti-trust hearings on MLB when Tampa struck out getting a team (0-for-3 with the White Sox, Giants and expansion, and they had built the stadium in the middle of those).

The Texas government got involved and forced the Big 8 two-team expansion to be a four-team expansion and include Texas Tech and Baylor. The Virginia government got involved and forced ACC expansion from 9 to 12 to include Virginia Tech instead of Syracuse. The California government got involved and is ordering UCLA to pay California annually for leaving the Pac-12 for the Big Ten.

Well if you want purity watch club sports

 

[mouser]

This reminds me of Amazon blocking deep linking between apps on Fire TV. Seems Amazon wants to force Fire TV owners into using the Amazon interface as the main UI and not other "Guide" apps linking multiple streaming providers.

Amazon seems to have crippled universal guide apps on Fire TV

Why Plex's "Discover" feature doesn't work as well on Fire TV devices.

www.techhive.com

 

[Crede777]

Do any of you see the collapse of Diamond Sinclair's Bally Sports RSN as a potentially existential threat to any franchise?

I am concerned that Bally will cut smaller markets to save larger ones. Specifically, I'm concerned that they will cut Columbus as the only team there is the Blue Jackets. Since the RSN deal is approximately 20-30% of a team's annual revenue, that's not a loss that can easily be absorbed by an owner.

That said, Bally Sports has Bally Sports Ohio which covers the Reds in Cincinnati and the Cavs and Guardians in Cleveland, so hopefully that will be Columbus's saving grace as a market. Even if the MLB goes its own way, the Cavs and CBJ will hopefully cause Columbus and Cleveland to be perceived as a valuable market...

 

[KevFu]

Well if you want purity watch club sports

I don't want purity, I want sanity.

 

[KevFu]

Do any of you see the collapse of Diamond Sinclair's Bally Sports RSN as a potentially existential threat to any franchise?

I am concerned that Bally will cut smaller markets to save larger ones. Specifically, I'm concerned that they will cut Columbus as the only team there is the Blue Jackets. Since the RSN deal is approximately 20-30% of a team's annual revenue, that's not a loss that can easily be absorbed by an owner.

That said, Bally Sports has Bally Sports Ohio which covers the Reds in Cincinnati and the Cavs and Guardians in Cleveland, so hopefully that will be Columbus's saving grace as a market. Even if the MLB goes its own way, the Cavs and CBJ will hopefully cause Columbus and Cleveland to be perceived as a valuable market...

I'm no legal expert, but I don't think they can selectively decide whom to pay and whom not to pay. Regardless, I don't think the collapse of RSNs will put any team into jeopardy.

They'll make less money, but everyone is totally fine.

Again, we just had a calendar year with zero ticket sales in MLB, the NHL/NBA playoffs, and then limited ticket sales for another few months after that, and almost everyone in all the sports leagues went business as usual. The only teams to drastically cut payroll were the terrible/rebuilding teams who would do so anyway regardless of COVID (Oakland As, Cincinnati Reds, etc). The NHL's total cap usages was sky high with the flat cap.

And of course, the Islanders went 20+ years being a poor financial disaster and nothing happened, and the Coyotes are now in the same boat. Just being a member of the league ensures your survival.

I also strongly suspect that because MLB is not only prepared, but willing to reclaim their rights from RSNs, that could provide the flexibility for the NHL/NBA teams to get paid what they're owed, at least short term.

 

[Crede777]

I'm no legal expert, but I don't think they can selectively decide whom to pay and whom not to pay. Regardless, I don't think the collapse of RSNs will put any team into jeopardy.

They'll make less money, but everyone is totally fine.

Again, we just had a calendar year with zero ticket sales in MLB, the NHL/NBA playoffs, and then limited ticket sales for another few months after that, and almost everyone in all the sports leagues went business as usual. The only teams to drastically cut payroll were the terrible/rebuilding teams who would do so anyway regardless of COVID (Oakland As, Cincinnati Reds, etc). The NHL's total cap usages was sky high with the flat cap.

And of course, the Islanders went 20+ years being a poor financial disaster and nothing happened, and the Coyotes are now in the same boat. Just being a member of the league ensures your survival.

I also strongly suspect that because MLB is not only prepared, but willing to reclaim their rights from RSNs, that could provide the flexibility for the NHL/NBA teams to get paid what they're owed, at least short term.

I took bankruptcy law years ago but am by no means an expert either so keep in mind I may be wrong on this, but...

Under Chapter 11, the business will be able to restructure under supervision of the court. This can allow for the termination of some but not all of the business's contracts. Actions against the business (such as suing to collect debt or for breach of contract) are stayed by the court until the bankruptcy proceedings are resolved which can take years.

How a selective termination of RSN contracts would look is that Diamond Sinclair would likely propose a deal to the court whereby it keeps some market contracts and cancels others with those parties with canceled contracts getting some form of payout that is not quite what they were originally owed. This way the business stays alive and able to pay its existing contracts going forward while parties who have had their contracts terminated get paid something (which is better than nothing, allows them to immediately seek a new agreement with another RSN and saves them from having to wait and then go through legal action).

In terms of equity, this route may not be ideal but the court may see this as better than all counterparties receiving a fraction of what they were owed and Bally Sports going under.

 

[CHRDANHUTCH]

I took bankruptcy law years ago but am by no means an expert either so keep in mind I may be wrong on this, but...

Under Chapter 11, the business will be able to restructure under supervision of the court. This can allow for the termination of some but not all of the business's contracts. Actions against the business (such as suing to collect debt or for breach of contract) are stayed by the court until the bankruptcy proceedings are resolved which can take years.

How a selective termination of RSN contracts would look is that Diamond Sinclair would likely propose a deal to the court whereby it keeps some market contracts and cancels others with those parties with canceled contracts getting some form of payout that is not quite what they were originally owed. This way the business stays alive and able to pay its existing contracts going forward while parties who have had their contracts terminated get paid something (which is better than nothing, allows them to immediately seek a new agreement with another RSN and saves them from having to wait and then go through legal action).

In terms of equity, this route may not be ideal but the court may see this as better than all counterparties receiving a fraction of what they were owed and Bally Sports going under.

all or none.... but none of the 17 will be transferred to a different RSN.... Bally Sports Ohio was split as well when the original deal was transferred to them.... because it was BS Great Lakes..... from what it appears to be is MLB has the option to operate those under Diamond Sports Group.... as to your original post.... it'll get rebranded again before you'd see termination of contract to those teams affected....no other RSN Contracts exists as Comcast has said no, Charter has said no outside of the 2 Channels it OWNS/ operates in LA

 

[KevFu]

I took bankruptcy law years ago but am by no means an expert either so keep in mind I may be wrong on this, but...

How a selective termination of RSN contracts would look is that Diamond Sinclair would likely propose a deal to the court whereby it keeps some market contracts and cancels others with those parties with canceled contracts getting some form of payout that is not quite what they were originally owed. This way the business stays alive and able to pay its existing contracts going forward while parties who have had their contracts terminated get paid something (which is better than nothing, allows them to immediately seek a new agreement with another RSN and saves them from having to wait and then go through legal action).

AWESOME insight. That's extremely helpful to what I thought probably would happen, because the "Common sense" solution is the legal concept you just laid out....

The worry NHL fans have is that DSG wants to cancel the NHL contracts because MLB/NBA brings them more money as more popular sports, right?

MLB is prepared (they bid on RSNs themselves, lost to DSG, saw the price DSG paid and started planning immediately for this collapse) and even willing and eager to take their rights back.

It makes far more sense for DSG to propose the MLB contracts are canceled (settlement later), MLB launches the initiative they've planned for (on the tech they created and revolutionized streaming), and takes the payment later...

The rights fees for baseball are higher (longer season), and that allows DSG to be able to pay the NHL/NBA teams.

 

[DuklaNation]

Streaming off other sites works better with high speed connections, preferably fibre lines. That exposure is increasing constantly as old neighborhoods are converted. So more pain is likely.

Their business model and TV packages in general were always a ripoff. Basically subsidizing crap you didn't watch. Better to pay a type of fee for what you actually want. In the past, I've bought sports packages where I just don't have the time to watch the games. Its not worth it. Everything benefits networks, teams, players and the fan was screwed.

 

[patnyrnyg]

Thinking about it more, I don’t see the next step as being pure selling direct to consumer. It probably moves to a more pre-cable environment of local over the air affiliates from the various ”independents“ (non-abc, nbc, cbs and fox) picking up a large chuck of games. Teams will need some sort of broad distribution in order to statists sponsorships and to drive fan growth. The local affiliates can probably pay more than fully DTC through advertising and retransmission fees (which will be less than RSNs get). There are already reports of nextstar and scripps gearing up for this.

Now probably not every game gets scooped up with this, and maybe teams adopt a localized version of the MLS model with a DTC pass with every game, but many also simulcast.

Teams would have to take a haircut, but maybe saves them from the 70% haircut and prevents knock on effects.

This is something I was thinking about. For argument's sake, whatever happens with this situation happens. Then, other RSN's slowly start bowing out as contracts expire. Can the OTA's, as you said the non-majors, pay enough for local rights to make the teams/league happy, well at least somewhat happy? As a kid in the 80s, I remember half of the Mets games being on Sportschannel and hald on WOR-9. Yankees were split between Sportschannel and WPIX-11. Rangers and Knicks had WOR-9 as an overflow channel until 1989 when both played at the same time.

 

[patnyrnyg]

Kev:

the open channel capacity on some cable systems are gone.... not with the availability of CI being broadcasted on the digital tier (which is split between MLB/NBA/MLS Depending on season....

Charter aka Spectrum used to do that with the overflow channels.... which then morphed into NESN + as a separate channel in New England.... Spectrum doesn't have that community channel in all markets.... unless you replace Great Falls TV IN Central Maine..... some markets in our state have more than one community channel...

When the Rangers and Knicks stopped using WOR as an overflow channel following the 88-89 season, they had MSG2. Where I was (Nassau County) MSG 2 was not a full-time channel. MSG 2 would get shown on The Family Channel for pre-game through Post-game and then revert back to The Family Channel. Sportschannel did the same as they carried Mets, Yankees, Devils, Islanders, and Nets. If they were carrying more than 1 at the same time, one would be on Sportschannel Plus, which I believe would take over The Weather Channel. This was in the days of the cable box with the buttons. 3 rows of 13 channels, so simply adding a channel wasn't possible.