Ryan Pressly #55 of the Houston Astros delivers a pitch against the Philadelphia Phillies in the ninth inning of game six of the 2022 World Series at Minute Maid Park on November 05, 2022.
Rob Carr/Getty Images
Warner Bros. Discovery wants to get out of the business with regional sports channels.
The media and entertainment giant, which also owns Turner Sports, sent a letter to the sports teams whose games it supports saying it does not have the money to pay upcoming rights fees and that WBD will not fund the shortfall. The company proposes handing control of RSNs over to teams and leagues, warning that if it can’t execute a transfer, Chapter 7 bankruptcy is on the table.
“We are running out of time and options,” the letter said.
The Wall Street Journal first reported the details of the letter.
That being said, a league source told The Hollywood Reporter that “we’ve had productive discussions with WB Discovery about the future of their four RSNs,” suggesting a deal could be a possibility.
The company owns three AT&T SportsNet-branded RSNs (a holdover from the telecom giant’s ownership days) serving Colorado, Utah, Houston and Pittsburgh and rights to NBA teams including the Houston Rockets and Utah Jazz, MLBs Colorado Rockies, Pittsburgh Pirates and Houston Astros and the NHL’s Pittsburgh Penguins.
Regional sports networks have clearly reached a turning point in their business models. RSN’s largest owner, Diamond Sports, is also said to be on the brink of bankruptcy and missed a debt payment to bondholders earlier this month.
Unlike national sports divisions like Fox Sports, ESPN or Turner Sports, the regional nature of RSNs means they have a limited reach, and while they’ve had pricing power in their markets for years, cable cutting has diluted any profits there are to be made.
Among the major media companies, NBCUniversal also owns a handful of RSNs. Both Fox and Disney exited the space in connection with their merger and sold their combined RSN footprint to Sinclair, which formed Diamond Sports.