Formerly Lucrative Regional Sports Network Model Is Showing Fissures
Formerly Lucrative Regional Sports Network Model Is Showing Fissures
The tea leaves haven't revealed exactly how or when, but Seattle Kraken viewers should be prepared for changes in how they watch their favorite team.
ROOT Sports, the regional sports network which carries the Kraken, could be impacted by the financial tsunami crashing into rightsholders of most NHL teams.
Much of the money RSNs funnel to NHL, NBA and MLB clubs comes from a fee tacked onto every cable bill. Non-sports fans - the vast majority of viewers - have chafed at this mandatory surcharge. (According to enterpriseappstoday.com, 80% of U.S. cable subscribers don't watch sports.) The rising fee has contributed to a "cord-cutting" exodus which has bled U.S. cable companies of tens of millions of subscribers.
Fewer subscribers equals substantially reduced RSN revenue. Diamond Sports Group, known to fans as Bally Sports, has televised games of 13 NHL teams. However, the crushing debt load DSG used to purchase RSNs has caused it to declare bankruptcy.
Warner Bros. Discovery, under its own enormous cost-cutting pressure, has announced its AT&T Sportsnet unit will be exiting the RSN business. AT&T Sportsnet has televised the Pittsburgh Penguins and Vegas Golden Knights, and owns a 40% minority stake in ROOT Sports.
In the short term, the Kraken are well positioned to weather the destructive waves of red ink hitting RSNs. That's because a 60% majority stake of ROOT Sports is owned by its local sports neighbor, baseball's Seattle Mariners. This arrangement is increasingly common, in which pro teams and the networks that cover them have the same owners.
Stan Kroenke's media empire owns both the Colorado Avalanche and Altitude Sports. NY Rangers owner James Dolan controls MSG Network, which also regionally televises the NY Islanders, NJ Devils, and Buffalo Sabres. Washington Capitals owner Ted Leonsis recently purchased NBC Sports Washington.
Team-owned media companies have access to a revenue stream not available to most third-party RSNs - namely, streaming. This is one way many more Kraken fans could consume live games in the future.
Neither the Kraken nor ROOT Sports currently has a streaming option. The only way for in-market cord-cutters to watch Kraken games is to subscribe to a cable-like streaming service such as FuboTV.
(Editors note: One sentence, three hyphenated words: a new personal record.)
NHL Preparing Contingency Plans
The NHL still hopes an agreement with Diamond Sports Group can be reached for the upcoming season. But Shana Elberg, an attorney representing the NHL, told a bankruptcy court last week, "We recognize there’s a risk that might not happen." Elberg added, "If we don’t have any reasonable certainty in the near future, we may be coming back to the court on potentially short notice to request any appropriate necessary relief.”
That relief could come in the form of returning rights to individual teams, and/or the NHL overseeing telecasts themselves. Major League Baseball is already producing San Diego Padres broadcasts.
There's one final option, echoing sage words from the movie musical All That Jazz: "Everything Old Is New Again." The Vegas Golden Knights, a former AT&T Sportsnet client, has already chosen to dance down an old-fashioned TV path.
"Scripps Sports will air Golden Knights games on its local station KMCC, channel 34," reported kntv.com. "The deal makes VGK the first NHL team to announce free over-the-air broadcasts to all fans. 'This deal is a significant win for fans because they will be able to see our games on television and for free, if they wish,' Golden Knights president and CEO Kerry Bubolz said."
For the record, the Golden Knights are far from the first to present NHL games over the air for free; just the first to do it exclusively in the cable TV era. Regardless, this is food for thought for the Kraken; how many potential Puget Sound fans lacking cable have never been able to watch their local hockey team?
The quality of the ROOT hockey presentation is unquestioned. Even so, circumstances mandate that the team review its options. The core question Kraken management must ponder is whether ROOT Sports, with the RSN model crumbling around it, can remain viable for the long haul.