The Collapse of the Regional Sports Network and its Impact on Baseball
The regional sports network (RSN) model of broadcasting has been a cornerstone of the baseball industry for decades, providing teams with lucrative income streams from cable television subscriptions. But with the rise of cord-cutting and streaming services, the RSN model is losing its footing. The result is a potential collapse of RSNs and with it, a seismic change in how baseball teams, fans, and the industry as a whole interact with television broadcasts.
At the conclusion of the 2019 World Series, MLB Commissioner Rob Manfred told reporters that the league had discussed the future of RSNs with owners and predicted “a loosening of that exclusivity” that has long been inherent in these deals. This was a hint that the league was looking for a new way to serve both cable subscribers and cord-cutters, and ultimately, to adjust the economic landscape of the sport.
The promise of streaming technology was discovered early on by MLB and its MLB.tv service, but the blackouts caused by exclusive RSN deals have been a source of frustration for fans. With content consumption increasingly à la carte, blackouts have become a serious barrier in growing the game and chief among fan concerns.
But as local television deals grew to constitute an ever larger percentage of teams’ revenue, the RSN-enabled blackouts seemed intractable. The league bid for the rights that ultimately went to Sinclair/DSG for what the league deemed too steep a price, and it has been monitoring the situation ever since.
In December, at baseball’s annual winter meetings, Manfred doubled down on his allusion to some forthcoming solution to the exclusivity issue. Shortly after, the league announced it had hired an RSN veteran for the newly created role of executive vice president of local media. Then, in January, Diamond Sports Group – which viewers know as Bally Sports and which airs games for 14 MLB teams – missed an interest payment, triggering a 30-day grace period and seen largely as a harbinger of bankruptcy.
Manfred says MLB is prepared to produce and broadcast local games if DSG declares bankruptcy and loses the ability and rights to broadcast games. He also notes that MLB is working on arrangements that will make games available within the cable bundle as well as via streaming. This could constitute a solution to the blackout problem, at least for impacted markets.
The potential implications of the cable bubble bursting extend far beyond the blackout issue. Currently, local broadcasts constitute a significant portion of each team’s revenue. But as Manfred said, if the local TV product was centralized in production and distribution, presumably that revenue would come through the league office and could be distributed more equitably. This could potentially lead to a more level payroll playing field across teams.
Ultimately, it is up to MLB to navigate its way from an already outdated model into something more nimble and accessible. The results of this transition are sure to be legacy-defining for baseball and the industry as a whole.
