Warner Bros. Discovery has told teams that it plans to exit the regional sports network business entirely within the next several weeks.
The company, which operates three AT&T SportsNet-branded channels in Denver, Houston and Pittsburgh and has a minority stake in the Root Sports channel in Seattle, has told teams that they have until March 31 to reach an agreement to take their rights back. If the RSNs can’t reach deals with the teams, the channels eventually plan to move forward with a Chapter 7 liquidation filing.
In a statement provided to SBJ, WBD said, “AT&T SportsNet is not immune to the well-known challenges that the entire RSN industry is facing. We will continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions.”
WBD sent letters to the leagues and teams this afternoon informing them of their plans to divest their interest in those four RSNs.
WBD has rights deals with 10 teams across those four networks: four MLB teams (Astros, Mariners, Pirates, Rockies), three NBA teams (Blazers, Jazz, Rockets) and three NHL teams (Kraken, Penguins, Golden Knights).
The moves come at a fraught time for WBD, which has been trying to get out of the RSN business for a while.
Over the past several months, league sources privately have praised WBD Sports’ RSN leadership, led by AT&T SportsNet President Patrick Crumb, for working with the teams to come up with a plan that would enable the company to get out of the RSN business.
In the letters, WBD said that it will allow the teams to use the same production staff and equipment to continue producing the games.
With WBD trying to extend its NBA package past 2024-25 — as competitors like Amazon, Apple and NBC are emerging — it’s important for WBD to not ruffle feathers in the league office as it disentangles its interest in the RSNs.
Its RSNs hold the rights to three NBA teams — the Blazers, Jazz and Rockets — and it’s too early to determine how this move will affect them.
OTHER RSN TROUBLES: This move also comes as another big RSN group is preparing to file for bankruptcy. Diamond Sports Group, which holds the rights to 42 MLB, NBA and NHL teams on 19 regional sports networks, is expected to file for bankruptcy protection in the middle of March. Diamond’s RSNs operate under the name of Bally Sports.
Diamond, which is carrying about $8 billion worth of debt, has told the leagues and teams that it plans to continue producing and carrying games even through bankruptcy.
It may be easiest for WBD to unwind the Rocky Mountain and Pittsburgh stations, since those involve straight rights deals. The Rocky Mountain station has an assortment of rights that range from Denver to Salt Lake City to Las Vegas.
The Golden Knights, in particular, had protracted negotiations back in 2017 when the team signed its deal with AT&T Rocky Mountain. Its deal is believed to be worth an average of $13M per year, sources said.
Sources also pointed to the Pirates deal in Pittsburgh as one that is especially advantageous to the team. Sources said the Pirates bring in an average of around $60 million per year from its local media deal.
Local over-the-air broadcasters like Scripps, Gray Television and Sinclair have been trying to pick up some local sports rights. Each of the leagues also have been looking into developing a direct-to-consumer streaming service.
Root Sports Seattle is a joint venture where the Mariners own 60% and WBD owns 40%. And Rockets and Astros rights in Houston are tied up into long-term deals, sources said.
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