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WBD pulling out of regional sports network business

A baseball stadium. (Stock image via Pexels, Graphic by The Desk)
A baseball stadium. (Stock image via Pexels, Graphic by The Desk)

Warner Bros Discovery (WBD) has sent a letter to several professional sports leagues informing them of a recent decision to exit the regional sports market, according to multiple reports published this weekend.

The decision, first reported by the Sports Business Journal on Friday, will impact AT&T SportsNet-branded channels as well as WBD’s minority stake in Root Sports. The channels primarily serve viewers in Colorado, Pennsylvania, Texas and Utah, offering Major League Baseball, National Hockey League and National Basketball Association events.

Patrick Crumb, the president of WBD’s regional sports networks, wrote a letter to various pro sports teams warning them that the company “will not have sufficient cash to pay the upcoming rights fees,” and that WBD as a whole will not cover the lack of funds.

WBD has offered to transfer its ownership stake in the regional sports networks to the professional sports leagues, with no cash exchanging hands, the letter said. The deal is contingent upon the leagues taking no action to indemnify WBD from past or future claims.

If no action is taken, WBD may be forced to file Chapter 7 bankruptcy protection for the regional sports networks, which could further complicate matters.

“We find ourselves running out of time and options,” the letter, a copy of which was reviewed by The Desk, said.

The teams affected by the issue include the MLB’s Colorado Rockies, Houston Astros and Pittsburgh Pirates; the NHL’s Pittsburgh Penguins and the NBA’s Houston Rockets and Utah Jazz.

The move comes at a time when cable and satellite companies are reconsidering deals to carry regional sports networks, with some platforms choosing not to carry them due to their outsized expense and relatively low viewership.

For several years, Sinclair Broadcast Group has struggled to obtain carriage of its Bally Sports-branded regional networks on cable, satellite and cable-like streaming services. It recently inked a deal with Fubo TV to bring the Bally channels on board, marking one of the few instances the networks have been available to pay TV customers beyond a traditional cable bundle. The channels were pulled from Dish Network in 2019.

Last month, reports began to surface that indicated Sinclair’s regional sports subsidiary, called Diamond Sports, was close to declaring bankruptcy if it was unable to restructure a deal with its creditors and professional sports leagues. In mid-February, Sinclair announced it would skip out on a $140 million debt payment, causing further speculation. Sports leagues have reportedly started to draft contingency plans in case the Diamond Sports subsidiary does go under, a move that could bring some regional sports events to streaming-only platforms, albeit at a high cost.

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About the Author:

Matthew Keys

Matthew Keys is an award-winning journalist with more than 10 years of experience covering the business of television and radio broadcasting, streaming services and the overall media industry. In addition to his work as publisher of The Desk, Matthew contributes regularly to StreamTV Insider and KnowTechie, and has worked for several well-known news organizations, including Thomson Reuters, McNaughton Newspapers, Grasswire, Comstock's magazine, KTXL-TV and KGO-TV. Matthew is a member of IRE, a trade organization for investigative reporters and editors, and is based in Northern California.

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