Key Takeaways
-RSNs are collapsing due to cord-cutting, pushing teams to launch their own streaming platforms
-Local media revenue uncertainty is disrupting team economics, especially in MLB and NBA, and may delay league expansion
-Teams and leagues are shifting to direct-to-consumer models, where tech-driven, seamless fan experiences are key to success
Last summer, the NHL’s Dallas Stars made a groundbreaking decision. Starting in the 2024-25 season, the Stars announced, all the team’s games will be streamed for free on VICTORY+, a new ad-supported platform designed by A Parent Media Co. (APMC), a technology and media company from Calgary.
The move came just days after the Stars ended their agreement with Bally Sports, the regional sports network (RSN) which previously held the rights to their games. “This is a monumental change to a business (model) that we’ve all been used to for the last two to three decades,” said Stars President and CEO, Brad Alberts.
And unfortunately for RSNs, this change is emblematic of the challenges most of them have been facing in the past few years.
A Fractured Foundation: Teams’ Reliance on Local TV Deals
The RSN model originated in the late 1960s, when an earlier version of MSG Networks started broadcasting Knicks and New York Rangers games in partnership with Manhattan Cable Television. As cable adoption grew, more RSNs appeared around the U.S. In the 1990s, they became a staple on cable TV and, just as important, a vital revenue stream for the NBA, NHL, and MLB.
Unlike the NFL, whose games are broadcast exclusively on national networks or subscription video on demand (SVOD) services, the NBA, NHL, and MLB—with their high volume of games – rely on RSNs to air most of the regular season. For a long time, it was a win-win situation. RSNs paid teams handsomely for their TV rights, because they knew pay-TV providers would pay a generous carriage fee to include their channels in the cable bundle.
Cord-cutting changed that equation. Since the 2010s, pay-TV providers have been bleeding customers: in 2012, 103.3 million U.S. consumers subscribed to the cable bundle; in the fourth quarter of 2024, that number fell to 46.9 million. And RSNs, who earn more money per subscriber than most channels in the cable bundle, are disproportionately affected.
Diamond Sports Group (DSG), formerly the Fox Sports RSNs, was the most affected by cord-cutting. DSG was launched in 2019 after its parent company, Sinclair Broadcast Group, acquired 21 RSNs with TV rights for 42 teams across the MLB, NHL, and NBA in a $9.6 billion deal with Disney. The reduction in the valuation of these RSNs over the last years tells the whole story:
-2018 (Disney purchase from Fox): $20 billion
-2019 (Sinclair purchase): $10 billion
-2020: $5 billion
-2024: $600 million
In 2023, DSG filed for Chapter 11 bankruptcy protection. After nearly two years, it officially exited bankruptcy with a new name: Main Street Sports Group. The rebranded company will continue to operate 16 RSNs (under the FanDuel Sports Network banner) with local rights to 29 teams. All in all, Main Street Sports Group parted ways with six MLB clubs, four NHL franchises, and three NBA teams during its time in bankruptcy protection.
The Financial Consequences of RSNs’ Decline
The changes in the RSN sector significantly impact teams’ bottom lines. A typical NBA team, for example, brings in about $30 to $40 million in annual revenue from its regional broadcast partner. While the league’s new national TV rights deal and revenue-sharing system provide a strong safety net for teams that parted ways with their RSNs, the uncertainty of local TV deals still hovers over franchises and the NBA as a whole.
According to Commissioner Adam Silver, this uncertainty could affect the league’s expansion plans. “Virtually two-thirds of our teams are now dealing with RSNs that recently experienced bankruptcies or have shut down,” said Silver recently. “To the extent we’re looking at expansion domestically, I think we’d really like to understand what that opportunity for local media is, because it’s a pretty critical component of our teams’ economics.”
It’s even more critical for baseball’s economics. MLB local media deals account for 23% of total revenue— compared to 13% in the NBA and 12% in the NHL. That’s not surprising, considering MLB clubs play almost twice as many games (162) as NBA and NHL teams (82) in the regular season. The question is, how sustainable is it given the decline of RSNs?
“The business model is not entirely in sync with the direction consumption is moving,” said Chris Bevilacqua, senior media advisor at financial advisory group Rothschild & Co. “But MLB has a great product and premium tonnage with six months of the calendar and 2,430 games. I do think they’ll figure it out, but it will take a few years to pull this together.”
Direct-to-Consumer Pivot: A Tech-Driven Transformation
Figuring it out, industry leaders agree, requires a shift towards a direct-to-consumer (DTC) model. This is where teams’, leagues’, and sports networks’ interests converge, as entities from all three sectors are investing in DTC offerings. And while there are various services they can potentially offer (subscription-based, ad-based, hybrid solutions), there’s a consensus about the importance of sports content technology in the process.
“Sports companies need trusted technology to deliver quality experiences,” wrote Brian Rifkin, Co-Founder & SVP of Strategic Partnerships at Sports Video Group (SVG). “The key to winning the hearts and streaming minutes of loyal sports fans is to take a customer-first approach, prioritizing a seamless experience wherever they want to consume their favorite sports content.”
The next and final article in this series will cover the transition from a B2B model (selling to content aggregators) to DTC (selling content directly to consumers), the opportunities and challenges it presents, and the role of sports content technologies in the changing media business.