The Rise and Fall of Regional Sports Networks
In 1969, a significant innovation changed the sports broadcasting landscape forever with the launch of the first sports-oriented TV channel dedicated to a local market. This inaugural venture was realized through a pioneering deal involving the New York Knicks and Rangers, setting the stage for what would become known as Regional Sports Networks (RSNs).
During the 1990s, the popularity of RSNs surged, culminating in a peak in 2010 when over 100 million households were connected to cable. However, this golden era was not to last. The number of households subscribing to cable has been on a steady decline, primarily driven by cord-cutting trends and a notable decrease in interest among younger generations.
Despite these challenges, most cable, satellite, and live TV streaming services continue to offer RSNs, although not every network is accessible on all providers. For instance, fuboTV provides a variety of RSNs, but availability is not guaranteed in every region. Conversely, services like Hulu, YouTube, and Sling TV suffer from a lack of access to popular RSN groups such as AT&T SportsNet and Bally Sports, illustrating the fragmented landscape of sports broadcasting.
Bally Sports: A Case Study in Decline
The Bally Sports Regional Network, managed by Diamond Sports Group, serves as a stark example of the challenges facing RSNs. It covers 42 teams across the NBA, NHL, and MLB, but has not been immune to the broader trends impacting the industry. Initially, cash flow projections for Bally Sports were optimistic, estimated at $1.5 billion in April 2019. Shockingly, by July 2020, these projections plummeted to $750 million, signaling significant financial distress.
The result was a Chapter 11 bankruptcy filing by Diamond Sports Group, which also included a lawsuit against Sinclair for allegedly offloading "insolvent" assets onto them. In response to the decline of RSNs, teams have begun exploring alternative broadcasting avenues or forming local partnerships, seeking to diversify their revenue streams and reduce dependency on the troubled RSN model.
This model, largely reliant on fees from all cable subscribers, has been disrupted by the shift towards streaming services. This disruption poses a direct threat to the traditional revenue streams that RSNs have long depended upon.
The Broader Picture: Sports Broadcasting in the Streaming Era
Despite the challenges faced by RSNs, the NBA and NFL continue to thrive, buoyed by global interest and innovative offerings like NFL RedZone and NBA+. However, the shift away from traditional broadcasting poses significant threats to leagues heavily reliant on RSNs for revenue. This evolving landscape could have profound implications for team valuations, player salaries, and league structures.
The Evolution of Pittsburgh Sports Broadcasting
The history of regional sports broadcasting in Pittsburgh mirrors the broader changes in the industry. From the establishment of the Pirates Cable Network in 1986 to the transition to SportsNet Pittsburgh in 2023, the evolution has been significant. AT&T's failed attempt to sell its regional sports networks and disputes with providers like Dish Network highlight the instability facing the sector. Currently, Warner Bros. Discovery is moving towards Chapter 7 bankruptcy, further emphasizing the precarious nature of RSNs. Despite these challenges, SportsNet Pittsburgh continues to broadcast Pirates baseball, Penguins hockey, and local sports content, navigating the uncertainties of the market.
Future Outlook on Regional Sports Networks
The decline of RSNs reflects a significant shift in consumer behavior, moving away from traditional cable subscriptions towards models deemed more consumer-friendly. While team-owned RSNs in major markets might remain viable, their future hangs in the balance as the number of cable households continues to decrease. As of October 27, 2023, the fate of over 36 teams tied to the bankrupt Bally Sports network remains uncertain, underscoring the precarious position of RSNs in the current media landscape.
The sports broadcasting industry finds itself at a crossroads, caught between the enduring appeal of traditional broadcasting and the burgeoning opportunities presented by streaming services. The outcome of this transition will undoubtedly shape the future of sports media, influencing not only how fans consume their favorite games but also the financial health of the leagues and teams they support.