Sports Media Watch presents thoughts on recent events in the industry, starting with Adam Silver’s recent comments about streaming being a solution to the local rights problem.
Given everything else that went on in the NBA during a momentous Opening Week, you might have missed some comments by commissioner Adam Silver about the state of the RSN industry.
In an interview with Sports Illustrated writer Chris Mannix published last Monday, Silver said he was “not overly concerned” about the stability of the RSN model because he expects the streaming industry to eventually see the value of local sports, just as they did on a national level. The major streamers, Silver said, “were saying publicly only a few years ago that live sports were unlikely to become part of their model, now they’re all embracing it.” Eventually, he believes, they will apply that same embrace to local games.
Silver said that the level of engagement during local games is twice as high as during the league’s national games, which now generate $7 billion per year in media rights revenue. “There’s absolutely no reason why these games proportionally should have less value locally than they do nationally. If anything, they should be worth more locally.”
But for as confident as Silver sounded in the article, it is worth noting that as of yet, the RSN market is not commanding a ton of interest.
Earlier this month, John Ourand of Puck reported that Charter has informed the Lakers that it is looking to sell Spectrum SportsNet, the RSN that was created to carry Laker games in 2012. Spectrum SportsNet pays the Lakers a league-leading $150 million/year in a deal that runs through at least 2032 and potentially as long as 2037. Per Ourand, Charter is concerned less by the rights fee and more by the length of the deal, which at maximum would outlast the new NBA media rights deals that go into effect this season.
But just because Charter has put the RSN on the market does not mean there will be any takers. Warner Bros. Discovery put its three RSNs on the market two years ago and ended up selling its Pittsburgh RSN to the Penguins, its Houston RSN to the Rockets and Astros, and shutting down the third. NBCUniversal was reported four years ago to be considering a sale of its RSNs, ultimately selling its Washington D.C. RSN to Monumental Sports and shutting down its Chicago station, but maintaining the other five.
In a follow-up report this past Thursday, Ourand wrote that Charter believes that if it has no takers for the RSN, it can exit its obligations by having the network declare bankruptcy. (That is notably not an option for the company’s other RSN Spectrum SportsNet LA, which carries Dodgers games in a considerably more expensive $334 million/year deal. According to Ourand, Charter itself would have to declare bankruptcy to get out of those obligations.)
If the state of the RSN business is that bankruptcy is a more realistic option than a sale of the network carrying the NBA’s ultimate glamour team, it is hard to see Silver’s optimism.
In fairness to Silver, his argument is not that streamers will go out and purchase individual RSNs, especially under the current model of territorial restrictions. The NBA, like Major League Baseball, is seeking to launch its own centralized local broadcast solution as soon as the 2027-28 season.
When asked by Mannix whether that could be in the form of an NFL Sunday Ticket-style option, but with local games, Silver said yes. “To me, the most pro-consumer/fan model would be one where you can get any game at any time regardless of the geography. And you would also simplify the transactional friction in terms of being able to get that game. That’s something that, I’d say, many of the national platforms are interested in and those discussions are ongoing.”
Though it would not be good at all for the Lakers, a scenario where Spectrum SportsNet shuts down would be a boon for such an option, presumably making the Lakers available to include with its offerings (unless the team were to find a new RSN partner willing to pay a similarly high rights fee, in which case a sale would be more likely anyway). Already, the NBA is expecting rights to upwards of 20 teams to be available when 2027-28 rolls around. Recent NBA team renewals, including with Main Street Sports Group (FanDuel Sports Network), have been one- or two-year extensions that expire in that season.
Already, the NBA is trying to reduce the confusion surrounding the sheer number of platforms needed to watch games. The league announced shortly before the start of the season that it is launching a “Tap to Watch” feature on its various digital platforms allowing users to go directly from the NBA app, NBA.com, team websites or league partners like Google, Reddit and Roku to the streaming service carrying a particular game. That will include the apps for national television partners ESPN/ABC, NBC/Peacock and Prime Video, as well as the apps for 29 of 30 teams’ local broadcast partners. (The Rockets, whose Space City Home Network does not have a direct-to-subscriber option, will be the exception.)
But viewers will not be able to watch those national or in-market local games in the NBA app itself.
In the ideal scenario touted by the NBA and MLB, all local games would be available via sort of centralized or hybrid solution and viewable anywhere. In the most pie on the sky scenario, the national networks would sign off on including their games — unlikely given the amount of money the they spent for the rights — creating an ultimate outcome where all NBA games from Opening Night to the Finals are available in a single app. The league could have its cake and eat it too; the multiple revenue and promotional streams of several national and local television partners, plus the convenience of one-stop shopping for the ardent fan.
It seems ambitious, but already one can see how it might work. Amazon already has NBA League Pass and a slate of national games. Add in local in-market rights and the Prime Video app alone would include all NBA content outside of games on ESPN and NBC Sports.
But then again, Amazon has to be interested. And on that point, Silver may be jumping the gun. In arguing for the value of local rights, Silver said that “the marketplace has just determined the value of NBA games nationally,” referring to the league’s new media rights deal. But remember that out of the three partners, Amazon is paying the lowest rights fee. And while that is still quite a chunk of change at $1.8 billion/year, it is nearly $1B less than Disney ($2.6B/year) and Comcast ($2.5B/year) are paying. The Amazon deal is the most expensive streaming-exclusive sports contract yet.
The streamers are showing increasing signs of interest in live sports, from Amazon’s NBA deal to Netflix finally acquiring sports rights to Apple meeting F1’s asking price when nobody else was coming close. But by and large they have been keeping their powder dry, at least as much as one can in an industry where ten figures is the going rate for national major league rights.
And when local rights have become available, the streamers have been noncommittal at best.
Amazon has long been discussed as a potential option for local rights, at one point agreeing to invest in the then-Bally Sports RSNs in what was widely believed a precursor to a more significant involvement in that space. But Amazon pulled out a few months later, instead signing a non-exclusive agreement to include the FanDuel Sports Network RSNs as an add-on to its Prime Video service.
Amazon was also thought to be in the mix for local NBA rights during those negotiations, but ended up merely becoming the primary distribution partner for NBA League Pass. But that does not even prevent other streaming MVPDs from including the out-of-market service, and while YouTube TV pulled out, League Pass remains available on Sling and DIRECTV — and of course linear cable.
Major League Baseball currently owns local rights to five of its own clubs, and by all accounts has finally found a taker for them in its latest negotiations. Was it Netflix, which is expected to get the Home Run Derby? Was it Amazon? No, it was ESPN. And while those rights are expected to be distributed in part through ESPN’s direct-to-subscriber streaming platform, the day may never come when ESPN can be best described as a “streamer.” (Jimmy Pitaro, when asked how he would describe ESPN earlier this year, answered “multiplatform.”)
MLB is packaging rights to those five clubs with MLB.tv and 30 national game windows for $550 million/year. According to Alex Sherman of CNBC, ESPN is valuing the MLB.tv out-of-market package at $450 million/year, meaning that at most those in-market rights account for something less than $100 million annually, or less than $20 million/team.
Obviously, teams like the Yankees and Dodgers would command considerably more than the five teams ESPN has acquired, but it gives a ballpark view of how the lowest-tier local rights might be valued.
NBA teams as a general rule are less of a draw on local television than their MLB counterparts — just compare the rights fees for the Dodgers and Lakers — and streamers, as noted, have been less willing to pay for rights to sporting events than linear broadcasters.
Realistically, how much money is the league expecting streamers to pay? If $150 million/year makes potential bidders balk at rights to the Los Angeles Lakers, what value are the New Orleans Pelicans going to have?
It certainly seems like Silver’s confidence is misplaced. But the NBA commissioner would have first-hand knowledge unavailable to this observer. As unlikely as it may seem that streaming may swoop in to save the day on RSNs, it once seemed unlikely that the NBA would get to $75 billion for its national media rights.
Plus: YouTube TV vs. Disney, NFL game quality
If you do not have the energy to care about the latest YouTube TV dispute, you are certainly not alone. For the third time in two months, there is public saber-rattling about a potential YouTube TV blackout, this time with Disney. The sides’ contract expires on Friday, and one can assume the key issues have much in common with the streamer’s earlier conflicts with Fox and NBCUniversal.
In those cases, Google-owned YouTube TV wanted to ‘ingest’ those companies’ respective direct-to-subscriber streamers, Fox One and Peacock, so that users could view programming on those platforms within the YouTube TV app. While Google ultimately ended up being able to ingest Peacock in some form or another — with NBCU set to launch a new NBCSN channel on YouTube TV that will include Peacock sporting events, and YouTube also set to offer Peacock as an add-on through its Primetime Channels feature — it had no such luck with Fox One.
A source familiar with Disney’s position noted the company’s past flexibility in carriage deals, and one could read into that a certain willingness to negotiate. But realistically, the only thing that matters to the viewer is whether ESPN will be blacked out on YouTube TV come Saturday. Based on the two prior negotiations, it seems fairly likely that this one will go down to the wire, the sides will reach a short-term extension to keep the networks on the air, and then there will be a deal.
But if you go back a few years, there was a brief blackout of Disney networks on YouTube TV in late 2021. So there is precedent.
The NFL is getting a little too cute with all the standalone windows, and the result is a weaker Sunday afternoon slate. NFL RedZone host Scott Hanson signed off Sunday referencing the John Denver song “Some Days Are Diamonds (Some Days Are Stone),” as there was only one close game during the daytime windows — the winless Jets over the sub-.500 Bengals.
It is easy to take for granted the Sunday afternoon windows, particularly the 1 PM ET slot that is ‘primetime’ for RedZone. But that 1 PM slot is possibly the most-watched in football. It is difficult to say that definitively, because the singleheader window includes 4:05 PM ET games that realistically should be counted toward the late window audience, but between FOX and CBS more than 30 million are watching the early doubleheader and singleheader windows in a given week.
It is one thing to sacrifice those early afternoon slots for primetime windows, and quite another to do so for 9:30 AM ET games from all over the globe, or a 10 PM ET late window on “Monday Night Football” (though those are likely going to be discontinued after this season).
