There is seismic change reverberating throughout the baseball community, and the tremors will affect the entire media ecosystem. I came across this article (see link below) that really stopped me in my tracks. It is an article that summarizes the bankruptcy of Diamond Sports Group, an RSN (Regional Sports Network) that holds the cable rights to 19 major league baseball teams (including our Cleveland Guardians). Billions of dollars were promised to these teams for these rights, and now DSG cannot pay their bills and have declared Bankruptcy. This has huge ramifications for these 19 teams because player contracts were based in part on incoming RSN revenues.
I share this article with you because it’s important to understand why DSG went bankrupt. The article accurately assigns much of the blame on falling cable subscriptions. For years, the traditional cable bundle model was held together by cable’s carriage of the local RSN. Why? Because the only reason why many people would begrudgingly pay cable’s high monthly subscription fees was to get their beloved local sports team programming. But now that the cable subscription model has been in serious decline, RSN revenues are down accordingly, and that has triggered the cascading series of events that we are now witnessing.
So how does this all resolve in bankruptcy court? Two scenarios are likely. First, DSG renegotiates with the cable companies at at discount. This doesn’t fix anything really, but it would buy DSG some time to get refinanced and possibly negotiate for the streaming rights. More than likely however, in the long run, MLB will take back these local carriage rights and as a result, you will see a mass exodus out of the traditional cable subscription model. Streaming will be MLB’s choice of program delivery. They already stream out-of-market games through the MLB app. How this will affect local advertisers is not clear at this point, but it’s safe to say there will be a seat at the table for local and regional advertisers in this new paradigm shift.
This DSG bankruptcy will play out over the next few months. But no matter how it resolves, it should be noted by all advertising stakeholders — business as usual is over. Live sports has been the one programming segment keeping broadcast and cable above water. Once all of those live sports programming viewers shift from broadcast and cable over to streaming, you will begin to see even more seismic changes occur; more bankruptcies, mergers, and new companies and partnerships will emerge as the migration to streaming services surges forward.
At Cyrid Media , we’ve learned to anticipate change. We strive to help our clients plan for the future, embrace change, stay ahead of the curve, and thrive as a result. This is only the beginning everyone, so hang on!
There is seismic change going on in the baseball community, and the tremors that come from this change are affecting the entire media ecosystem. I came across this article (see link below) that really stopped me in my tracks.