There could be more disruption coming to the regional sports networks industry, beyond just the widely observed emerging Bally Sports/Diamond bankruptcy fiasco.
Last week, Sportico reported that three AT&T SportsNet channels, now operated by Warner Bros. Discovery, have been lighter than expected on recent payments to their respective Major League Baseball franchise partners, the Pittsburgh Pirates, Colorado Rockies and Houston Astros.
It isn't clear that the three RSNs are in default on their TV rights licensing payments -- the Pittsburgh Post-Gazette subsequently talked to an "individual with direct knowledge of the situation," who said that the channels actually have until the start of the MLB season, March 30, to render full their payments.
However, the context of the light envelopes has spurred speculation.
Not only did the report emerge just as Sinclair Broadcast Group subsidiary Diamond Sports Group confirm that it will actually skip a $140-million all-interest payment on debt of around $9 billion, there is also the looming specter of WBD's cost-cutting.
Even though AT&T SportsNet Pittsburgh, AT&T SportsNet Southwest and AT&T SportsNet Rocky Mountain still fly the AT&T flag, they are each fully owned by WBD, which was spun off from the Dallas-based wireless giant and merged with Discovery a year ago in a deal valued at $43 billion.
With WBD heavily in debt and cutting $3.5 billion in expenses, it's questionable as to how enthusiastic the conglomerate is about staying in the challenged legacy RSN business.
Addressing the Bally Sports crisis last week during a press conference to mark the beginning of Spring Training last week (full video here), MLB Commissioner Rob Manfred didn't mention the AT&T SportsNet channels coming up light.
However, with 16 NBA teams, 14 MLB franchises and 12 National Hockey League clubs tied up in the Bally Sports mess, the possible SportsNet issue is undoubtedly a concern that's being watched by Manfred and other pro league execs.
Baseball's perennially cash-strapped Pittsburgh Pirates provide a case study:
Baseball research company Fangraphs estimates that AT&T SportsNet Pittsburgh agreed to pay the Pirates around $44 million a season when it re-upped the team's RSN rights deal back in 2019.
In 2021, the team generated around $258 million in total revenue, rendering the RSN deal about 17% of total sales for one of the poorest cash-generating clubs in all of U.S. major league sports.
The Pirates carried a player payroll of just $61.2 million in 2022, vs over $270 million for the Los Angeles Dodgers, according to SpotTrac.
And the Pirates, who finished tied with the Cincinnati Reds for the third worst record in baseball last season with a 62-100 record, would certainly feel it if nearly 20% of the team's revenue stream were to be disrupted.
