by Forget pitch clocks and defensive positioning – the biggest story in baseball right now is the collapse of the regional sports network and what it means for the future of how fans watch games. Change is coming that could affect broadcasts, blackouts, and ultimately the sport’s economic landscape.
Shortly after the World Series ended in November, Major League Baseball held its quarterly owner meetings at the Commissioner’s office in New York. At the end, Commissioner Rob Manfred told media members that a lengthy report had been issued to owners about the future of RSNs. He referred to the need to serve both cable subscribers and cord-cutters, touting the league’s new partnerships with streaming services like Apple and Peacock, and predicted “a relaxation of that exclusivity” that has long been inherent in lucrative RSN deals.
It was perhaps the least bombastic way he could have announced that one of baseball fans’ biggest frustrations might be resolved.
MLB almost invented streaming. . But from the start, blackouts were seen as a structural inevitability. Basically, RSNs give teams so much money because they have the exclusive right to broadcast games in a specific area. Making games available online to local fans would go against what the RSNs pay for, so while MLB.tv made game streaming technically possible, existing economic structures required the service to obfuscate games in local markets, essentially with exclusion of what is literally the target group. (In addition, certain parts of the country are subject to heavy overlapping blackouts, sometimes without the ability to watch those games on TV.)
In the two decades since MLB.tv’s inception, people’s expectations of their ability to watch whatever they want, wherever they want, without the limitations or hassles of traditional television have exploded. With content consumption becoming more à la carte, blackouts have become a serious barrier to growing the game and .
But as local television deals made up an increasing percentage of team revenue, the RSN-supported blackouts seemed unmanageable. Even as cable-cutting became a growing threat to the cable bubble, .
In December, at baseball’s annual winter meetings, Manfred repeated his allusion to an imminent solution to the exclusivity problem. In January, the league announced it had hired an RSN veteran for the newly created role of executive vice president of local media, responsible for “overseeing MLB’s management and distribution of local media rights.”
Less than a month later, Diamond Sports Group — which viewers know as Bally Sports and which broadcasts games for 14 MLB teams — . The company is in financial trouble because of both the exodus of cord cutters and the huge amount of debt Sinclair – of which DSG is essentially a subsidiary – took on when it bought the bundle of RSNs in 2019.
At the time, MLB bid for the rights that eventually went to Sinclair/DSG for what the league somewhat presciently considered to be too high a price, and it has been monitoring the situation ever since. It’s not lost on the league that DSG’s bankruptcy, while bringing an uncomfortable level of uncertainty in the near term, could allow MLB to remake its broadcast options to fit a more modern market.
Indeed, Manfred said so during press conferences to start spring training in both Arizona and Florida.
“I think our aggressiveness with regard to intervening in the event that Ballys is unable to broadcast was driven in part by the fact that we saw it as an opportunity to resolve this blackout problem,” he said in Florida two weeks ago.
(He also said, “I’m not enjoying this,” which, frankly, seems like a bit at much protest – so much so that some might take it as evidence to the contrary.)
In the event that DSG goes out of business and loses the ability and rights to broadcast games — that removes the complications of bankruptcy court and the possibility that not all teams and RSNs suffer the same consequences — Manfred says MLB is willing to allow local games to produce and broadcast.
“We know we can offer those games digitally along with MLB.tv, and we’re working through arrangements that will allow us to make those games available within the cable bundle as well,” he said.
What he’s talking about is making teams’ games available DSG resolves on both traditional TV and streaming, which appears to be a solution to the blackout problem, at least for affected markets. It’s also possible that MLB will take this as an opportunity to renegotiate the exclusivity terms with DSG that have proven so restrictive, though that would only affect the 14 teams that are sent out to Bally.
In addition, Warner Bros. . Together, that would account for nearly two-thirds of baseball teams, while the ultimate goal is clearly for MLB to control the distribution of all of its games.
“I hope we get to the point where on the digital side, if you go to MLB.tv, you can buy whatever you want,” Manfred said. “You can buy the out-of-market package. You can buy local games, you can buy two sets of local games, whatever you want. I mean, that to me is the definition of what will be a valuable digital offering in the future.”
In other words, the a la carte streaming options that consumers have become accustomed to.
“There’s a lot of work that needs to be done on this project,” said Manfred. “But I think as you move more nationally, by definition you’re going to have more central revenue.”
And now we’ve come to some of the more far-reaching implications of the cable bubble bursting. Currently, as established, local broadcasts make up a significant portion of each team’s revenue. That’s true across the board, but the actual dollar amounts vary widely; .
But as Manfred said, if the local TV product were centralized in production and distribution, that revenue would presumably come through the league office and could be distributed more fairly.
Or, as the Commissioner put it: “A more national product generates more centrally shared revenues, which reduces income inequality, which in turn, we hope, will reduce wage inequality.”
Taking a logical leap toward a more level playing field for payroll is a convenient preemptive justification, so long as the correlation between revenue and payroll (or lack thereof) ultimately remains up to individual owners. (Just ask Padres owner Peter Seidler, whose local TV revenue ranks 22nd out of 29 teams reported by FanGraphs, below that of the Rays, A’s and Orioles.)
Still, a sport with fully centralized TV revenue probably looks quite different. First, the distribution of that revenue would have to be collectively negotiated with the MLB Players Association.
“They have the opportunity to address the RSNs and have told us they have a plan,” MLBPA executive director Tony Clark said recently at a meeting with media members. “What we don’t know is more than that and how it will affect the system. That calls for a conversation.”
Like Manfred, Clark expressed confidence that while the potentially protracted and painful dissolution of the RSN model could cost teams in the short term, “growth will still happen in the long run.”
More precisely, there will be growth if MLB can work its way from an already outdated model to something more nimble and accessible. At the moment, the league is publicly expressing confidence without much detail, which makes it difficult to judge.
Ultimately, however, the results will be legacy-determining.
