Editor Note: ‘Early Entrants’ is a series of sports business ‘rumblings’ before the news breaks.
Major League Baseball voted to reassign local direct-to-consumer standalone broadcast rights to its clubs in time for the start of the 2020 season (that shouldn’t be a surprise, we told you back on September 10th that Amazon’s investment in YES Network was a clear indication that a change to the league’s interactive media rights agreement was coming). One team owner indicated that the move was made to “attract and retain the younger viewer.”
While there is some concern within media circles that an in-market DTC offering will eat away at RSN viewership, little short-term trepidation exists on the team side. Our source said, “most clubs [will] not be directly impacted by [continued cord cutting or the threat of a cable operator renegotiating an RSNs fee down] because they have long-term broadcast deals, with baked in rights increases, in place.”
With that said, MLB understands that streaming rights “have essentially become substitutional with broadcast rights” and that “in the most extreme of scenarios, if an RSN were to become upside down, they’re going to be coming back to the local club and trying to renegotiate [their existing deal].” So, while few details of the altered agreement have been released, it reasons to assume teams will be actively working to protect local broadcast partners that pay exorbitant fees for exclusive rights. Former FOX Sports executive and industry consultant Patrick Crakes agreed saying, “many MLB teams are RSN owner/partners. Local DTC that threatens established relationships will walk value back, probably. There are not, in any way, enough local DTC subs available to offset the impact to distributors who produce 90% of local economics for RSN’s and in turn the teams. The local sports DTC moment just isn’t here yet, if it ever will be.”
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