The Collapse of RSNs
What happened and why the sports industry should be excited.
by Christy Grady-Murray
For decades, local sports TV was a cash machine. Teams sold local rights to regional sports networks (RSNs). RSNs belonged to sprawling cable TV packages, and all subscribers paid for them regardless of their sports fandom. Everybody won.
And then streaming technology suddenly evolved and this time-tested model collapsed. The largest RSN filed for bankruptcy in 2023, marking the end of an era.
How did this happen? And what comes next? While the industry scrambles to rethink the future of local sports broadcasting, let’s take a closer look at how this new reality came to pass, and how all the key players are creating a new media ecosystem full of incredible opportunity.
Back to the Good Old Days
Let’s be clear: this story doesn’t include the NFL, where only preseason games are even open to possible airing on local channels. As the most popular sport in the country, and with only 17 games on each team’s schedule, the NFL thrives on national broadcasts during the regular season. But for virtually every other sports league, local TV rights were a golden ticket.
RSNs owned by Fox, NBC, and AT&T, as well as a variety of smaller, bespoke organizations, competed intensely for these rights. They paid teams huge guaranteed fees up front and committed to lengthy, multi-year contracts. This made RSNs among the most expensive channels in any given cable package, meaning they had a high “retransmission fee” per cable subscriber.
However, this wasn’t a problem because of the massive bundling effect of cable diluting this expense. RSNs became a standard element of cable lineups, not just dedicated sports packages. In other words, every single cable subscriber was paying for RSNs whether they watched sports or not. We all got used to this arrangement.
At the time, the system worked perfectly. Teams received huge, predictable revenue streams and RSNs secured massive leverage with cable companies. Until they didn’t.
The Internet Breaks the Spell
We can trace the collapse of regional sports networks back to three factors, all of which happened at basically the same time.
- Cord-cutting. Cable subscribers took a closer look at their monthly bills and began asking why they were paying for dozens of channels they didn’t even watch. As a result, millions of subscribers ditched cable in favor of their preferred streaming platform. The cord-cutting impact on sports TV was devastating, causing RSN revenues to plummet.
- New math. Locked into long-term deals at “good old days” prices, RSNs were like strip malls that depended on foot traffic. For the RSN, the shoppers stopped showing up but their rent stayed high. They were clearly in a bind, with revenues dropping and costs that didn’t budge.
- Debt-fueled expansion. While many RSNs folded, the biggest one doubled down on the hopes that cord-cutting was just a phase and the cable business would eventually rebound. This company loaded up on debt and expanded operations to stay afloat. As we now know, this bet was a poor one.
Which Teams Were Hit Hardest?
Most RSNs focused on MLB, the NBA, and the NHL, as well as some college football teams with large fan bases. In every case, it’s difficult to understate the impact of cord-cutting on team revenues. These teams relied heavily on local TV money. For some franchises, RSN contracts represented between 40% and 50% of annual revenues.
When these networks started failing, teams felt the pinch immediately. They also had to act quickly to make up the difference. Which brings us to the modern era.
How Teams are Handling TV Rights Today
This is where it gets interesting. In fact, calling them “TV rights” today is a bit of a misnomer. In general, teams are taking one of four approaches in the wild west of the sports media rights shift.
- Direct-to-consumer (DTC). Many teams and leagues are replacing RSNs with their own streaming platforms. Available on your phone, tablet, or smart TV, these apps require a monthly or seasonal fee instead of a cable subscription. They also involve a fair degree of technical savvy, so they are not a perfect fit for every fan. But with direct-to-consumer sports streaming, fans do (finally!) get broader access to games, often without blackouts or similar restrictions. MLB has led the way in DTC with the MLB Network app and dedicated in-market streaming options for 20 clubs.
- Hybrid deals. In this scenario, teams split the difference between DTC and traditional TV, keeping a local broadcast partner and offering a separate streaming platform. By splitting the broadcast rights instead of selling everything to a single RSN, teams gain more flexibility and enjoy less dependency on a single broadcaster.
- Shorter, safer contracts. Whether they are going DTC or hybrid, teams are no longer chasing maximum deals. Instead, they are seeking shorter-term contracts that give them more control matched with potential revenue upside if viewership grows.
- League influence. The MLB and NBA have inserted themselves into the discussion, in some cases taking over production and broadcasting for certain teams. Essentially, they have rapidly modernized their media distribution in ways that would have been unthinkable 10 years ago.
Key Takeaways for a New Era
It’s critical to remember that this situation was not a “sports problem.” Teams still have rabid fans, and those fans still want to watch the games. That part is the same as it ever was.
This was a business problem. Specifically, it was a media business problem. The highly lucrative RSN model emerged to meet a glaring need, which it did very successfully for decades. But this model assumed that cable TV would dominate forever. Keep in mind, sports media was far from the only industry to get rocked by the rapid rise of the Internet.
We are in a new age now. Teams aren’t losing value. They are relearning how to reach fans in a streaming-first world. But this is no easy task. Here are some key considerations for any team or league navigating this new environment:
- The learning curve. Teams accustomed to selling sponsorships platforms and radio spots are wading into much more complex negotiations with new streaming services. Look for partners who can provide solutions and guidance to make this transition easier.
- The technology. For example, it’s not so easy for legacy baseball fans to find the MLB app, install it on their TV, and set up their account. If you are going DTC, be aware that you may lose fans that don’t have the patience for dealing with technology. This is why Major League Soccer signed a deal with Apple TV: to make their product easier to access.
- No guarantees. Just because you had a big national brand in the RSN world doesn’t mean they will stick with you in this new era. Whether you are selling in-house or through an agency, you can’t lean on last year’s numbers to make your case.
- The opportunity. On the flip side, teams can sell sponsorships for any combination of rights, inside and outside of the ballpark, arena, or stadium. They now have far more inventory to sell, and it can be packaged in so many creative ways. With teams controlling more ad space, brands now have a single source to buy from when they want to connect with sports fans.
We are in truly uncharted territory with this sports media rights shift, so now is the time to be a real pioneer. Those who move first and adapt the fastest are going to be happy they did. It will truly be a win-win situation for sports organizations and brands alike.
