RSN Bad Plays: Local Pro Sports Teams' Retro Pull Back To Broadcast TV?

Local professional sports leagues such as Major League Baseball, the NBA and the NHL -- desperate to find a quick remedy for what seems like an oncoming implosion around the financial health of regional sports networks -- are making "frenetic” phone calls to big local TV station groups to find ways to pull in needed revenue.

Nexstar Media Group, the biggest U.S. TV station group, has received many inquiries, now that regional sports networks (RSNs) are suddenly facing issues.

This follows moves by other TV station groups to bring back sports to broadcast airwaves.

Last year, E.W. Scripps Co. started up a Scripps Sports unit in the wake of what it sensed was trouble among the RSNs carried on cable, satellite, virtual and telco providers. Gray Television is also interested.



Almost immediately after Sinclair bought 19 Fox regional sports networks back in 2019 for just under $10 billion, its new Diamond Sports Group encountered huge issues in paying down its $8 billion debt.

This was accelerated when new virtual pay TV providers -- Hulu+Live TV, YouTube TV, and Sling TV -- rejected RSN deals due to ever-thinner profit margins -- conditions that worsened as cord-cutting by pay TV subscribers increased.

Although Diamond Sports immediately looked to shift gears and start up streaming networks, analysts worry that all this is too little, too late. To make things worse, there is a crunch in the streaming marketplace as consumers look to pare down their streaming apps.

Regional sports networks can typically cost $15 a month via legacy TV providers. That is on the extreme high end of what modern TV consumers can pay per month for an individual service. For example, Netflix standard service is priced at $15.49 a month.

And this week AT&T SportsNet, another RSN group, also voiced concerns about its financial stability.

Now, pro sports teams are turning to the possibility of over-the-air broadcast TV carriage, which has mostly been abandoned by local pro sports over the last couple of decades.

Sports teams now hope to find some revenue -- although perhaps not nearly as much -- from over the air sports-rights carriage deals.

Unlike the separate “premium” fee that RSNs charge consumers, over the air TV stations are included in an overall pay TV monthly bill.

Revenues might not yield the same results for a particular team, but Nexstar Media Group CEO Perry Sook says there is potential upside. During an earnings call with analysts on Tuesday, he said the benefit of local broadcast is that it has a “much larger” potential audience than pay TV.

What's that potential? Why, advertising revenue, of course. All this might make it somewhat easier for sports-focused, TV-minded advertisers to find their way to place more media dollars back into local TV.

Local TV -- already seeing more weak periods of “core” advertising revenue -- would like that very much.

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