Published in cooperation between Digital Whiskers and the Morgan Hill Times
Professional sports are often associated with infinite growth. It’s not hard to see why.
Athlete salaries and endorsements continue to rise almost across the board. The rise of online betting in the United States has opened up a new revenue stream, on which just about every franchise is capitalizing. Not surprisingly, the valuations of pro sports are on a meteoric climb. This is especially true across the five major leagues in North America: The NFL, NBA, WNBA, MLB and NHL.
Yet, despite how much live sports continues to flourish, we are also witnessing an existential struggle that touches pretty much every league other than the NFL. This struggle, if not crisis, in question pertains to how pro sports are disseminated—how they are broadcast.
Sure, you may have noticed that virtually every sport is signing record-breaking media-rights deals. Formula 1 is just the latest to join the fold. They recently signed a lucrative contract with Apple TV.
You may have also noticed, however, that Apple TV is not a legacy broadcast company, such as ESPN, NBC, CBS or Warner Discovery. They are a streaming service. And in many ways, this specific deal with Formula 1 is emblematic of the landscape.
It all leads us to a question: Will pro sports teams eventually embrace direct-to-consumer broadcast rights?
Cord-Cutting Has Disrupted the Live Sports Industry
Streaming services have disrupted the industry. Cord-cutting is more prevalent than ever. This has not dramatically impacted how much leagues are getting for their broadcast rights. On the contrary, these dollar-figures keep rising as well. Live sports, by and large, remain appointment viewing. You cannot say the same for almost anything else. Television shows, in particular, are now something you binge-watch or stream at your own convenience.
Still, these record-breaking broadcast deals are, in many cases, based on lower audience numbers overall. Traditional ratings for most sports aren’t as high as they were 10 years ago, which suggests the National TV packages should decline. But these events are still anomalous. Even if they aren’t drawing as many viewers as in years past, they continue to reel in way more than many other forms of entertainment.
With all of this said, the number of bidders on national broadcast deals appears to be winnowing down. Warner Discovery basically punted on its NBA rights after three to four decades of being in business with the Association. And even when there aren’t fewer bidders, so many of the most aggressive buyers are streaming companies like Apple, Amazon even Netflix.
Add it all together, and you get … the death of Regional Sports Networks, otherwise known as RSNs.
Regional Sports Networks are Quickly Becoming a Relic
These companies were responsible for disseminating games in local markets. Remember, MLB’s Arizona Diamondbacks are not on National TV every single game. Far from it. And all the times they are not, they’re shown via a local channel, which is owned, affiliated and/or operated by an RSN.
More and more, though, the heavy hitters in the RSN industry are declaring bankruptcy. Consider this synopsis from Devin Epding of Market Place:
“The problem? Cord-cutting. Millions of Americans no longer want to pay for cable packages, which cut into RSN revenue and led distributors to question whether it was worth carrying them. Diamond Sports Group filed for Chapter 11 bankruptcy in 2023, and several teams turned to their respective leagues to broadcast their games. Tensions reached a boiling point in May when Comcast’s carriage agreement with DSG expired, leaving fans in DSG’s 18 remaining markets without access to live broadcasts. The blackout ended on Aug. 1 with a new deal placing live games in 15 markets on its ‘Ultimate TV’ package—he company’s most expensive.”
As Epding mentions, select teams leaned on their incumbent leagues to help them disseminate their games. In doing so, though, they opened the door to a new way of pro sports franchises delivering their product to fans.
The DTC Era in Pro Sports May Be Underway
A handful of franchises across various leagues have started taking matters into their own hands.
Most prominently, over the past couple of years, we have seen four teams take the lead. The Anaheim Ducks and Dallas Stars of the NHL joined forces to offer a direct-to-consumer package. Meanwhile, in the NBA, the Phoenix Suns created their own app that streams games and other content to its subscribers. The Utah Jazz also recently launched Jazz+, which follows in direct footsteps of the Suns.
Going this route is a calculated gamble. All of these teams could have signed other TV deals. They may not have been as lucrative, or as stable, as their previous RSN agreements. But they were guaranteed money. Traveling the DTC path doesn’t offer the same assurances.
Well, the dice roll appears to be paying off. As Epding writes:
“Since launch, these new platforms have attracted tens of thousands of subscribers, something Jeremi Duru, a professor at American University’s Washington College of Law, said will likely be worth the massive undertaking for teams in order to preserve their long-term success. ‘As forward-thinking as we all seek to be, the majority of those who are in these organizations, more of them are closer to the boomer age than the 25-year-old graduate streaming games,’ Duru said. ‘You end up having something like this shot to the system where your partner goes bankrupt and forces you into thinking in a more forward direction.’”
Make no mistake, it is much too early into these experiments for us to draw any sweeping conclusions. Heck, for the most part, we are talking about a sample size of fewer than five teams. That is nothing when measured against the 150-plus teams that combine to populate the NFL, NBA, WNBA, MLB, NHL and MLS.
At the same time, the shift makes sense. Live sports aren’t as exclusively catered to the older generation anymore. Streaming apps wouldn’t be so heavily involved if they were. The investment every league has put into social media speaks to them targeting younger audiences. DTC apps are right up that alley.
Plus, streaming services seem to be more trusting of people over 45 using their product. They would not be going so aggressively into live sports if it were any other way. This also makes sense. The eldest end of the millennial generation is around 43 years old. The prime of their lives intersected with the rise of streaming services. These DTC apps are not foreign to them.
This is all to say, the DTC model doesn’t seem like a fly-by-night trend. Pro sports is a copycat business. If the DTC apps are working for certain organizations, many others will follow. And in the years to come, we should brace for exactly that.
