Cautionary Tale: What Business Leaders Can Learn From Perils of
Regional Sports Networks

The times they are a changing and this fact has somehow caught what is referred to as regional sports networks (RSNs) asleep at the wheel. First, it was Sinclair-owned Bally Sports and now Warner Brothers Discovery-owned AT&T SportsNet that is also coming up short in meeting its financial obligations. Bally has filed for bankruptcy and the other networks are at the brink. 

The sport in the most immediate peril is Major League Baseball and its local broadcasts, but the NBA and NHL have also been caught up in this mess. Is this a case of financial malfeasance which has struck at the heart of local sports broadcasts, or is it just the fact that we had multiple conglomerates trying to make the same or increased money from a dwindling audience? Or, at the end of the day, did these companies just ignore the trends going on around them? 

In actuality, it hasn’t been ratings. RSN sports ratings have been satisfactory. Baseball was up last year, the NBA was up (Hockey is another issue except in hotbed locales like Detroit, Boston, New York, etc.) and sports broadcasts, year in and year out account for the lion’s share of top-rated local programming ratings. 

But somehow, the powers that be at RSNs missed the whole cord-cutting phenomenon while the leagues themselves continued to charge billions to carry their games. Whether we talk about Bally, the AT&T RSNs, or the local one-team networks doesn’t matter. Exceedingly giant payouts have restrained their operations. One example I ran across was SportsNet LA which paid $8.35 billion to the Los Angeles Dodgers over 25 years for ONE team.

The bigger picture is that cable and satellite companies that carry these networks have lost millions of dollars because subscribers have cut the cord and gone to streaming channels. Some, like DIRECT TV, have lost 12 million subscribers since 2015.  Comcast lost 16.1 million pay-TV subscribers in the fourth quarter of 2022 alone. And because those companies pay the RSNs a fee for every subscriber they reach, carriage fees have taken a hit, and advertising as well.

So what can businesses learn from this debacle? For one thing, when you feel the prevailing winds hit you in the face, you need to begin responding. Let me share an example. Currently, the sudden appearance of AI technology like ChatGPT could soon be changing how we produce content and, in my world, even how we prepare and deliver legal documents. Other industries, such as Realtors, have already started using it for listings. I like to use the phrase from Money Ball, “adapt or die,” but in this case, it may be a situation of “ADOPT or die.” 

The pandemic changed how we hire employees and work with a remote workforce that didn’t want to return to the office. Restaurants had to up their game in curbside pickups and online ordering. Retail companies continue to go under, like Bed, Bath & Beyond and Macy’s. While other industries, such as drug stores like CVS, Rite-Aid and Walgreens, are now about to get eaten alive by Amazon Pharmacy. 

See what am I trying to get across here? Change is inevitable and as business leaders and entrepreneurs, we have to get smarter about noticing what’s coming. Even in the case of RSNs, did they not see the fact that we don’t have the time anymore to sit and watch a 3.5 or four-hour baseball or hockey game? The NFL seems to be the only one that has escaped this issue, except for how fantasy football and online betting have driven people to watch the Red Zone, which only shows action when a team is inside the 20-yard line. These people aren’t watching traditional broadcasts. If the sports behemoth, the NFL, is not careful, even they could end up in the same mess as the RSNs.  

From a business standpoint, we need to leave our offices regularly and talk to people about what they want and how that product or service is delivered. Read and follow trends that are affecting your business and industry. In other words, don’t duck when the prevailing winds sweep in. Stand there, get hit in the face and learn from what’s happening around you. Change may be inevitable and those who refuse to do so may be waking up one morning and realizing, like the RSNs, that doing things the same way while ignoring the obvious trends could lead to irrelevance or, worse, financial ruin.