• by Wayne Friedman , February 26, 2023

On the heels of Diamond Sports Group's financial issues, another regional sports network owned by Warner Bros. Discovery is facing major challenges and intends to leave the business, according to reports.

Warner Bros. Discovery's AT&T's SportsNet, sent a letter to teams saying “the business will not have sufficient cash to pay the upcoming rights fees,” according to reports.

WBD operates three regional sports networks under AT&T's SportsNet, a business it acquired when it bought WarnerMedia in 2022.

WBD has also reportedly told teams it wants to negotiate agreements for the teams to take back the rights to air the games. If a deal cannot be reached, a bankruptcy filing is likely.

AT&T SportsNet has channels in Denver, Houston and Pittsburgh, and a minority stake in the Roots Channel in Seattle.

Teams across all those networks include MLB's Houston Astros, Seattle Mariners, Pittsburgh Pirates, and Colorado Rockies and the NBA's Portland Trail Blazers,  Utah Jazz, and Houston Rockets; and the NHL's Seattle Kraken, Pittsburgh Penguins, and Vegas Golden Knights.

Sinclair Broadcast Group, Diamond Sports , which owns the 19 Ballys-branded regional sports networks bought by Sinclair Broadcast missed a payment on part of its $8 billion in debt resulting from the $9.6 billion purchase in 2019.

Diamond Sports has had issues with renewals and new carriage agreements with legacy and virtual play TV providers -- including YouTube TV, Hulu + Live TV, and Sling TV.

Many pay TV providers have complained about ever thinning profit-margins which are making RSN carriage less attractive.

This also comes as legacy regional sports networks are continuing to lose overall subscribers due to industry-wide cost cutting.

"AT&T Sportsnet is not immune to the well-known challenges that the entire RSN industry is facing," according to a statement from a Warner Bros. Discovery Sports representative. "We will continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions.”