Diamonds In The Rough - RSN Trouble

The Sports television landscape is changing so quickly that it’s tough to keep up with it. Just over the past few days, the judicial courts have been as busy as the basketball courts in Denver and Miami. Not only that, but there was an announcement on the South Side that may impact the way Chicagoans will be watching several of their teams starting in 2025.

Let the games begin starting with Diamond Sports Group (DSG), the owners of 21 Regional Sports Networks (RSNs) in the country, airing the play-by-play for 14 MLB teams. Well, at least they used to own 21 of them. Now, it’s down to 20 RSNs and 13 teams. Let me try to explain this without even me getting lost. DSG is owned by Sinclair Broadcasting Group. They are sort of at the center of this whole thing. Sinclair owns 193 local television stations across the country. None of those stations are in Chicago. Sinclair also owns several digital multicast networks you may have watched such as "Comet”, "Charge!” and "TBD” as well as cable TV’s "Tennis Channel”. So, Chicagoans have multiple opportunities to sample Sinclair’s TV fare.

While I mentioned that they do not own a Chicago television station, they do have some very interesting arrangements with our teams. They are partners with the Ricketts family in "Marquee Network”, the place for all things Cubs and Sky. Not to show preference to the North Side, they also have a deal with a company called "Silver Chalice” which is owned by Jerry Reinsdorf and operates out of facilities located in a certain stadium on the South Side. That partnership is a digital TV channel called "Stadium”. I’ll write more about them in a bit. Just to finish Sinclair’s baseball business, they are also partners with the New York Yankees in their RSN called “YES”. I should also mention that Sinclair/Diamond also airs play-by-play for 28 NBA and NHL teams, but since those seasons are currently over for each RSN, we will stick to baseball.

So, let’s get back to those 21 pesky RSNs. In August of 2019, Sinclair purchased all of them from Fox for 10.6 billion dollars. At the time of the sale, Chris Ripley, chief executive of Sinclair said, "We are very excited about the transformational aspects the RSN acquisition will have on Sinclair and are eager to bring those opportunities to life.” Upon further review, he might want to take that quote back. But let’s not get to the back chapter of this story (number 11) quite yet.

In March of 2021, DSG (remember, they are owned by Sinclair), sold the naming rights for all 21 of those RSN channels to Bally’s Corporation and they were re-branded as Bally Sports insert market name here. For example, if you live in areas that are home to the Milwaukee Brewers and Bucks, you watch their games on "Bally Sports Wisconsin”. So, in all 21 markets, you watch your home sports teams on some iteration of Bally, which has a naming rights deal with Diamond Sports Group, which is owned by Sinclair Broadcast Group. Got it? – Good.

All was fine until some number cruncher at Sinclair realized that not only do they air Cincinnati Reds games on "Bally Sports Ohio", but they may as well change all their teams’ names to Reds since that is the color of the ink that they are delivering to Sinclair. So, in March of 2023, Diamond Sports declared Chapter 11 Bankruptcy, having missed a 140-million-dollar payment to its bondholders. Not only did they miss that payment, but they recently "stiffed” the San Diego Padres out of a 60-million-dollar yearly payment as part of their 1.2-billion-dollar rights fee deal which was supposed to go until 2032. For those of you keeping score at home, the "Friars” have the third highest payroll in baseball at around 250-million-dollars a year. That’s 3.5 times higher than their payroll was just six years ago and guess what? Those TV rights funded a whole lot of that. In fact, only the two New York teams have higher payrolls. Without that check from Sinclair/Diamond, Padres Chairman, Peter Seidler, is going to have to Venmo a whole lot of money to Manny Machado, Yu Darvish and Juan Soto.

So, how does it affect a Padres fan and for that matter, baseball viewers everywhere? Well on Wednesday, May 31st, Major League Baseball took control of the TV rights to the Padres. So, bye-bye to Bally’s branding in San Diego. From now on, their games will continue to be broadcast on various cable and streaming services in the San Diego market as well as directly to the consumer (DTC) on the MLB.TV app. The biggest change is now, anyone living in the San Diego Padres territory can simply pay Major League Baseball $19.99 a month, get the app and essentially cut out the middleman. This is a growing trend in Sports play-by-play. In fact, to our North, Milwaukee Brewers and Bucks games can be purchased directly without any other subscription.

Where does this leave the other Sinclair/Diamond/Bally’s 13 MLB teams and for that matter, where does it leave the Cubs and Sox? I’m glad you asked. On the same day that MLB took over Padres broadcasts, a hearing was held in Houston to "discuss” the next 4 teams in play-by-play crisis. Those are the Arizona Diamondbacks, Cleveland Guardians, Minnesota Twins and Texas Rangers. Basically Sinclair/Diamond threw MLB a wild pitch in court. They pitched the idea of simply not paying what they said they’d pay because "cord-cutting” had dropped subscribers and revenue by 30%. Well, the Judge (no relation to Aaron) called a balk on that pitch and ordered Sinclair/Diamond to pay every last penny to the teams for the remainder of the 2023 season. We are still waiting for Sinclair/Diamond’s other cleat to drop which could casue more situations such as the one in San Diego.

How does this play in Chicago? Let's start with the Cubs. As stated above, they are partners with Sinclair in the "Marquee Network". For the time being, nothing is going to change. However, keep your pencils and scorecards handy because next season, I would not be surprised if Marquee becomes available as a DTC offering. This will give Cub fans a chance to purchase games directly from the "Marquee Network". It will also anger the good people at Comcast and other cable and satellite providers, but DTC seems to be where this is all heading.

As for the Sox, they are partners with the Bulls (both owned by Jerry Reinsdorf), the Wirtz family's Blackhawks and the aforementioned Comcast in the "NBC Sports Chicago" channel. Their current rights deal ends in October of 2024. The Blackhawks, Bulls and White Sox have been TV partners since the 1980's, going back to the days of "SportsVision". I wrote a post in March on how the late Eddie Einhorn, who was a partner with Jerry Reinsdorf when the Sox were purchased, was a true visionary in TV rights. You can check that post out here. https://www.lowertechbills.com/post/major-league-problems-with-sports-play-by-play. And that’s what brings us back to "Silver Chalice" (remember them?) and "Stadium".

Over the Memorial Day weekend, Jerry Reindorf and his "Silver Chalice" quietly bought-out Sinclair’s interest in "Stadium". This means that "Stadium" is now wholly owned by the same good folks who bring you the Bulls and White Sox. Up to now, "Stadium" has been available on many so-called FAST (free advertiser supported television) services as well as on some over-the-air digital channels (for those with antennas) and online. It televises a lot of what I would call not exactly ready for primetime sports. For example, as I write this, they are broadcasting the "Strongman’s Champions League" – whatever that is. They also air a lot of lesser college sports, minor league baseball and in-studio opinion programs. But I highly doubt that Jerry Reinsdorf purchased the other half of "Stadium" because he’s a big fan of strong men. So, we should all mark our calendars for October 2024. That's when I believe that some form of "Stadium" will become the new home for the Bulls, White Sox and Blackhawks. Rocky Wirtz and Jerry Reinsdorf will do that deal together as they have done since the beginning of the RSN. By then, the waters will also have cleared on DTC.

There is a lot to unpack here but the bottom line is that the way we view Sports on TV is massively and rapidly changing. From streaming services exclusively airing games to networks owned by the leagues, we are going to have more choices and will have to pay more for them. Even now, if you want to watch a baseball game on Friday night, you need an "Apple+" subscription. If you want to watch one on Sunday morning, you’ll need "Peacock". Next season, if you want to watch the NFL games in Europe, you'll need to have access to both "ESPN+" and the "NFL Network". Amazon has already been in the game with the NFL Thursday package. And the big fish, "NFL Sunday Ticket", has moved from DirecTV to YouTube TV. And that’s just what’s going on in 2023.

As contracts end, networks and streaming services are going to throw more and more money at play-by-play since live Sports, News and the occasional special event such as the Academy Awards seem to be the only things left in the TV world that can attract lots of eyeballs. TV rights fees are even what’s behind all of the machinations with college conference changes. I mean who would have ever thought that UCLA and USC would be in the Big Ten? Well big money knew and so should have we. It’s academic. The Big Ten will now be in the three largest TV markets in the country with Rutgers, UCLA/USC and Northwestern.

Since I retired from Radio, I’ve been following the money because it’s the consumer who pays for all of this. I started Lower Tech Bills because I was able to save myself and others from hundreds to even thousands of dollars a year on their Cellular, Internet and Television costs. It’s bad enough to have to pay for what used to be free. It’s even worse when you are paying too much for services which could cost your household a lot less per month. For a free look at your bills, email hmwellsradio@gmail.com or visit lowertechbills.com because you may not have the time to keep up with all these changes, but I do.