Warner Bros Discovery (WBD) is nearing a deal with Major League Baseball (MLB) to exit the regional sports business in three areas by the end of fall, according to a new report published on Monday.
The report, which first appeared in the Sports Business Journal, said the deal was coming together after a deadline lapsed in late March for WBD and MLB to settle on local media rights for the Houston Astros, Pittsburgh Pirates and Colorado Rockies baseball games, whose games are currently broadcast on WBD-owned AT&T SportsNet channels.
In February, WBD executives notified the teams of their intent to exit the regional sports business. A letter sent to officials at the teams warned WBD “will not have the sufficient cash to pay the upcoming rights fees” for continued carriage of their live games on AT&T SportsNet.
WBD had 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 was contingent upon the leagues taking no action to indemnify WBD from past or future claims.
This week, the Sports Business Journal said the tentative deal between all sides would have WBD continue to pay the rights fees and broadcast pro sports games through the remainder of the MLB’s regular season, which ends in early October. Once the regular season is over, WBD will lose the rights to MLB games, and the MLB is prepared to distribute future games on its own, the Sports Business Journal said.
Games played by the Houston Astros could continue on AT&T SportsNet, which also broadcasts in-market games played by the Houston Rockets basketball team. The Astros and the Rockets could eventually reach a deal to take over the regional sports network from WBD, a move that would preserve the channel’s carriage on pay TV platforms like Comcast, DirecTV and Fubo TV.
In Pittsburgh, games played by the Penguins could air on New England Sports Network (NESN), a network majority-owned by Fenway Sports Group, which has a minority interest in the team.
Less clear is what will happen with Colorado Rockies games: The area’s other regional sports network, Altitude Sports, doesn’t have a carriage agreement with Comcast, the cable TV provider in the greater Denver area. The lack of carriage could inhibit Altitude’s ability to bid for the games, a scenario that could see MLB offer them directly to consumers through a subscription streaming offering or forge a partnership with a local broadcaster like KWGN (Channel 2, CW) or KDCO (Channel 3).