The decline of regional sports networks is a hot topic, and it's time to explore what this means for sports fans and the industry. The end of an era is upon us, and it's a controversial one.
Let's dive into the reasons behind this shift and what the future holds.
In the not-too-distant past, regional sports networks were a win-win-win for teams, fans, and the networks themselves. These networks were easily accessible, often included in basic cable packages, and generated massive revenue. According to SNL Kagan, the average regional sports network brought in a staggering $137.8 million in revenue in 2010.
The key to their success lay in the economics of cable television. Channels charge cable companies per customer, and higher-demand channels command higher fees. During the cable TV heyday, regional sports networks were seen as must-have channels, and cable companies paid up to keep them. In 2012, an RSN cost cable companies $2.50 per customer, compared to $0.50 for CNN.
The teams were the real winners here, as the networks were willing to pay top dollar to secure their presence. Take the Los Angeles Dodgers, who, in 2013, secured an $8.35 billion, 25-year deal with Time Warner Cable to launch a new RSN. This deal far exceeded the national rights paid by Turner Sports for the NHL in 2021.
However, as the years progressed and streaming services gained popularity, the economics of these networks began to shift. People started cutting the cord, and cable companies could no longer justify the fees, especially with fewer customers. This is why you can't access FanDuel Sports Network on popular streaming platforms like YouTube TV or Hulu.
The beauty of cable for these networks was that even non-sports fans were contributing to their revenue. Unfortunately, as more non-sports fans cut the cord, the number of people paying for regional sports networks decreased, despite local sports viewership remaining steady.
The situation is further complicated by the long-term contracts teams secured with these networks. These contracts are not tied to the network's performance, which means the networks are now locked into deals based on outdated revenue and profit models.
So, what's next?
The only certainty is that the way fans watch their local teams will change. Major League Soccer, for example, has moved entirely to a streaming service through Apple TV, with all games available and no blackouts. However, the economics of this model haven't been favorable, and the MLS-specific service has been discontinued.
Several NHL and NBA teams have taken a different approach, moving their games to over-the-air networks. This has been successful in primary markets, where fans can access all games with a simple antenna, but in outer markets, games are often on subchannels, making it challenging to catch every match.
The NBA and MLB are considering launching streaming RSNs, which could potentially eliminate blackouts. The details are still unclear, but it's speculated that these leagues believe this model could be highly profitable. If true, it's likely that the streaming service holding these rights would either increase prices or create new RSN deals to maximize profits.
It's important to note that while regional sports networks are struggling in some areas, they are still thriving in others. Cable can still be a lucrative business, especially for teams in major markets. The economics of these deals vary greatly depending on market size and sport.
While league commissioners like Adam Silver and Rob Manfred talk about making games more accessible, it's essential to remember that these leagues are businesses first. For fans, a streaming RSN with games available over the air or on basic cable would be ideal, but this model may not be as profitable for the leagues as a standalone streaming RSN.
In the end, it often comes down to money, and the future of regional sports networks is a topic that will continue to spark debate and discussion. What are your thoughts on this shift? Do you think streaming RSNs are the way forward, or is there another model that could work better? Feel free to share your opinions in the comments!
