Local Sports Teams' TV Contracts: What's The Value If Diamond Sports Files For Bankruptcy?

We now know regional sports networks and national sports TV-minded networks are two different businesses. One still makes money, and the other -- regional sports networks (RSNs) -- is facing troubling times.

Diamond Sports Group, which operates 21 Bally-branded networks around the country -- around half of U.S. broadcast markets -- continues to have financial issues, possibly nearing bankruptcy status next year, according to one report.

Regional sports networks have been very profitable -- but not recently for video distributors like cable, satellite, virtual and telecom companies.

In recent years, major virtual platforms -- YouTube TV, Hulu+Live, and Sling TV -- have rejected those efforts because those services' profit margins on RSNs are little to nonexistent.

Who will save the RSNs? That's a tough question.



Apparently the likes of Major League Baseball, the National Basketball Association, and the National Hockey League are not all that interested -- especially in the Diamond Sports Group operation.

So what does that mean? While many RSNs are attempting to move quickly into the streaming space, they still make lots of money the old-fashioned way -- through cable/satellite/virtual/telco systems. 

This is similar to what major TV network-based companies are going through: Trying to move quickly to grow streaming, all the while propping up their weakening linear TV business.

RSNs -- like other TV networks -- are continuing to take a hit from big-time cord-cutting.

Consumers don't want to pay for the high price of an $80- to $100-a-month TV package -- and especially those add-on premium networks such as the RSNs, which can charge an extra $15 to $20 a month.

And what if RSNs truly go out of business? Professional sports teams could lose some revenue. In turn, those teams might need to pay athletes less money.

The likes of E.W. Scripps -- which has TV stations and the ION Media broadcast network -- believes that it might be a good alternative -- return airing local teams to broadcast platforms -- local TV stations, or in the case of ION, a broadcast network.

The belief is that sports continues to be a good thing in terms of programming for linear TV, streaming or other digital video platforms. The hope is that in the future, sports rights will have a more modest price tag.

In bankruptcy, those RSN creditors -- local professional sports teams -- might end up just getting way less than those original contracts are worth.

Down the road, they will be forced to consider other lower consumer-priced video alternatives, including streaming -- or perhaps a return to some traditional means like local broadcast TV stations.

Other alternatives of course, sit with cash-rich major digital platforms -- Apple, Amazon, Facebook, and the like -- that are already taking small steps into the high-profile sports leagues such as NFL Football, MLB, and Major League Soccer.

Who will play ball then?

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