Will The Solution To RSN Backruptcy Be As Easy As N-B-C?

As major league baseball players headed for the World Baseball Classic have already reported to camps, despite the fact that the official report date for pitchers and catchers is officially tomorrow, for all intents and purposes spring training has already begun.  So, too, has the anticipation of actual live games to occupy colder afternoons ahead in most of the nation with competitions from the balmy climes of Florida and Arizona.

For decades, for the very reason that live content has been the main driver for their very existence, a good deal of otherwise meaningless spring exhibitions have been televised by regional sports networks.  Which is why this nugget from Adam Gostomelsky of Sports Media Watch, while anything.but unexpected, was nevertheless chilling:

Sinclair’s Diamond Sports Group LLC, owner of the 19 Bally Sports regional sports networks, will declare bankruptcy next week according to a Sportico report. Instead of paying the $140 million interest fee payment, the group will file for Chapter 11. Currently, the company has only $585 million in cash on hand with TV rights payments to sports teams totaling $2 billion. The bankruptcy will have a large effect on NBA, MLB, and NHL teams, where local rights have been quite lucrative. Leagues have been planning for this eventuality for some time, with MLB commissioner Rob Manfred recently stating that the league is prepared to make the games available both through digital and cable.

A more detailed report from Al Yellon of SB Nation gave further clarity on how frosty this spring might get:

The potential bankruptcy, though, could have impact beyond just viewership, as noted in the Bloomberg article quoted in Awful Announcing:

In a bankruptcy, Diamond would have the option of ending contracts with teams, potentially cutting off crucial industry revenue while also allowing teams to reclaim their media rights. The company could also halt payments to the teams while keeping the contracts in place. If a deal is not reached, both MLB and creditors are preparing for baseball teams not to be paid, according to two people.

Another person familiar with the matter downplayed the prospect that Diamond would discontinue rights payments in a bankruptcy, adding that the company is open to bringing in teams and leagues as equity partners in any restructured entity.

The article goes on to quote a Diamond executive as saying “The idea of rejecting MLB contracts is unequivocally false.” But this is quite the fluid situation and obviously things could change. The note about “bringing teams and leagues as equity partners” is something that’s likely to become reality as time goes by.

As we and others have written, adding fuel to this fire was the rebranding of the majority of these Sinclair sports networks, once owned by FOX, into networks with the name of a chain of casinos, with particular emphasis on in-game gambling opportunties.  While such a money grab is tempting, and that concept is especially appealing to baseball given its length and the time available between pitches to place bets, economic reality demonstrates that the name Bally Sports has done more harm than goodand does not reflect the full breadth of fan opportunity.  In those markets, such an in-your-face reminder of that destination is damaging to the brand and to many potential sponsors from other categories.

But there is another, far healthier, media conglomerate in that business.   A brand with 85 years in the books as a baseball broadcaster, oars in the water with three professional sports on a national level today and with every team sport historically, and one with existing and significant regional sports networks holdings in many key markets that sync up with owned-and-operated broadcast TV stations to allow for cost-effective management and sales.

Yep, this one.

And for a number of valid reasons, I’m going on record saying they may be the solution to Sinclair—and MLB’s—problems.

— Branded NBC Sports RSNs already operate in Philadelphia, the Bay Area, Boston and Chicago–four Top 10 DMAs.  As recently as a couple of years ago, packages of games, mostly in weekend aftenoon time slots, aired on their owned-and-operated stations.  Parent Comcast owns MVPDs in each of those cities, as well as many others where they operate both an English and Spanish-language broadcast station, including New York, Los Angeles and Miami.   There is no question existing RSNs owned by Bally’s could seamlessly transition to this branding.

— While NBC Sports shut down their linear national sports channel at the end of 2021, it continues to air NASCAR and Premier League soccer on USA Network, and today announced their intention to pursue NBA rights effective in the 2024-25 season.  With both ESPN’s and Turner Sports’ interest in pursuing exponentially higher rates to continue in flux due to their parents’ fiscal woes,  Comcast is showing enthusiasm for reacquiring the national rights they had during the glory days of the Michael Jordan era.  And they can leverage their ongoing production expertise with the likes of the Warriors, 76ers and Celtics to reinforce to the NBA that they are more than capable of doing a great job.

— Jeff Shell, the brilliant CEO of NBCUniversal, cut his professional teeth as the head of FOX’s cable networks at the time of their peak ownership and cloat with RSNs.   He was the architect of the concept of aggregating the locally owned regionals into a national “network” to compete with ESPN, a desire honed when after he developed that plan for Disney they chose not to move forward with it.  He loves sports, and knows its value.

— Many NBC affiliates are clamoring to get back into the local sports business, as well as find more ways to create unique content to make themselves more valuable to MVPDs such as Comcast, particularly in light of NBCU’s prioritized support of Peacock for a ubiquitous, ad-supported streaming platform, with many linear rights reduced to nonexcluvity or even second position.  Scripps and Hearst are two such groups, each of which have their own local histories with carriage of local baseball teams such as the Reds and Orioles.

–NBCU appears intent on cutting back on the number of hours it programs each night, with these top affiliates pushing for it.  Such a policy could easily be pivoted to, or buttressed, by turning over, say, a summer Friday night to a package of different games that could be carried by its affilates on a regional basis, akin to an experiment that was premature for its time called The Baseball Network which NBC and ABC each employed, a gameplan further hampered by the fact the two seasons of its existence were both impacted by a players’ strike (1994 and 1995).

— Peacock carved out a unique time slot for a weekly game last summer with an 11:30 AM ET Sunday morning “brunch” slot, giving one game a two-hour jump on the day.  Ratings were inconsequential, but the favorable impact on slightly later starts for local games helped ticket sales and, in some cases, local ratings.  The broadcast, launched as one of two new streaming efforts, was widely acclaimed by even baseball purists as being modern but with homage to tradition, even reviving 80s music and graphics from the old Game of the Week featuring Vin Scully and Joe Garagiola.  It showed NBC Sports as a more than capable partner for any sports league, particularly MLB, having both legacy and recency.

— Comcast has already taken over a legacy FOX business, Sky News, internationally, and fully integrated it into into an ambitious news service that encompasses its national, local and global resources.  Saving Bally Sports would potentially be even more seamless an integration, particularly with a reemergence of NBC Sports on a national level.

Just a few ideas.  But hopefully, good ones that should calm a few fears.

For now, at least, play ball!



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