With RSNs Hobbled, Scripps And Gray Take Aim At Sports

Harry Jessell

Each spring for many years, as Major League Baseball teams limbered up for their pre-season games, Broadcasting (now Broadcasting + Cable) would publish a survey of local TV baseball rights holders and estimates of how much they paid for those rights.

Here’s the chart from the 1985 survey. As usual, the principle rightsholders were TV stations. WMAR, had the Orioles; KTLA, the Angels; KSDK, the Cards; KTVU, the Giants; and on and on. The estimated fees totaled $116 million with WPIX and the Yankees leading the league at $14 million.

But broadcasting’s dominance of local baseball was not to last. By 1985, as the chart also shows, regional cable networks like Home Team Sports in Baltimore and Pro Am Sports in Detroit had begun scooping up rights like a slick fielding shortstop.

Over the next 20 years or so, the RSNs pretty much pushed broadcasting out of local baseball as well as hockey and basketball. The economics were on their side. They could outbid the broadcasters for TV rights because they could supplement advertising revenue with hefty affiliate fees from cable and later satellite operators.

It was a terrible loss, mitigated only by it happening gradually over many years. For years, it has been a stark reminder of the decline of broadcasting and the ascension of the MVPDs.

So, as a fan of baseball and broadcasting, I am enthralled and delighted by the ambition of E.W. Scripps to bring baseball and other local pro sports back to broadcasting.

With veteran broadcast exec Brian Lawlor on the point, the station group believe the economics — the needs of the rights holders and the teams — have swung back in broadcasting’s direction.

“We see an opportunity … right now to plant the flag and say, let’s bring some of these sports rights back where 100% of the households in a market can see local sports teams,” says Brian Lawlor, in an interview with TVNewsCheck Editor Michael Depp.

In a follow-up interview with me, he assured me that Scripps is as serious as a high and tight fastball. The group can pay for rights, produce the games, sell advertising and make money, he says.

As the TV contracts come up for renewal in the coming years, he says, Scripps will be at the table with the RSNs aiming for full-season packages in the major sports, although it might end up with smaller packages in partnership with the RSNs or with the teams themselves as they experiment with direct-to-consumer streaming services.

What will be different in the coming renewal cycle of the local rights is the diminished state of cable and satellite. The MVPDs have been shedding subscribers at an alarming rate for the past several years.

That has brought commensurate losses for the RSNs in affiliate fees and advertising revenue. And that means the RSNs will be looking for steep cuts in TV rights at renewal time — steep enough, if you believe Lawlor, that broadcasters can once again get in the game.

Part of Lawlor’s confidence stems from his ability to bring more than money to the negotiating table. Because of cord-cutting, teams are suffering because they can’t reach large portions of their fan bases.

MVPD reach has dropped to 50% in many markets and as low as 30% in some, Lawlor says. “It’s really hard to get people excited about your team if 70% of your audience where your team is based can’t even see your games…. It’s going to have an impact on ticket sales, suite sales, merchandise, sports betting.”

In Scripps’ hometown of Cincinnati, Lawlor notes that the Bally Sports RSN reaches only 46% of the homes. “That is a horrible business model for the Reds,” he says.

The broadcasters’ universal reach has real value. “Teams may have to decide whether they are better offer taking $10 million from the RSN and reaching 35% of the market or $5 million, $6 million, $7 million from the broadcasters and reaching 100%.”

Scripps can’t put games on any of its Big Four affiliates because of their contracts with the networks, Lawlor says, but the group has 10-12 markets with second stations that could accommodate them. If need be, he says, Scripps could acquire second stations or work with other broadcasters in other markets.

To a large extent, the local sports opportunity arises out of the financial troubles of Sinclair’s stable of 20 RSNs that it unwisely purchased from Disney in 2019 for $10 billion. Rebranded as Bally Sports, the networks have been badly battered by the cord-cutting and now appear headed for bankruptcy.

It’s unclear how things will play out for Sinclair, but rights in the Bally markets may become available at cut rates and sooner than expected.

Lawlor fully expects other broadcasters to seize the opportunity created by the RSN’s woes and says he wouldn’t be surprised to find himself bidding against some of his peers.

Indeed, Gray Television is interested. Through its Raycom Sports and Tupelo Honey units it has long and deep experience in sports production and distribution and it has established diginets in Memphis and Las Vegas filled with minor local sports.

Making the same case as Lawlor, CEO Pat LaPlatney told me Gray is eyeing the rights where it has second stations and the economics make sense. Two such markets are Atlanta and Phoenix, where Gray has the CBS affiliate and an independent and a weakened Bally RSN is the current rightsholder.

Another likely player would be Nexstar. KTLA Los Angeles and three other Southern California Nexstar stations began airing 15 games of the Los Angeles Clippers this season. “I think you’ll see more of this as times go on,” CEO Perry Sook told analysts on his 3Q earnings call last September.

Nexstar’s WPIX New York broadcasts a couple dozen Mets games each season, but that’s not new. The station has been doing so for the last two decades, mostly under prior Tribune ownership. It’s been among the few outposts of local sports on broadcasting.

Lawlor sees plain old linear broadcasting as the “savior” of the local franchises.

That might be overstating it, but local basketball and hockey attendance has been flat and baseball is struggling at the gate. MLB took a 5.7% hit in attendance in 2022 compared to pre-pandemic 2019. According to Forbes, the attendance of 67.6 million was the lowest since 1997.

I hope that Scripps and Gray have done their homework well and that their numbers add up. It would be great if they and other broadcasters could once again regularly schedule local sports. It would revitalize the station biz like nothing else I can imagine.

Sports would give them a massive infusion of top-quality programming that would spawn lucrative shoulder programming and provide a platform for promoting their news and other shows.

Sports would provide opportunities to cozy up to big advertisers, media buyers and sponsors. It will be easier to close deals after you’ve squired them to courtside seats and or sent them out to the mound to throw the first pitch in recognition of their favorite charity.

And sports would bind stations more tightly with their communities. As Lawlor says, nothing energizes a city and brings its people together more than a winning team. Broadcasters need to be fully part of that excitement and good feeling again. And it would be a gift to those who love sports but cannot afford cable or satellite.

Before Scripps went public with its plans last month, watching the Penguins, the Pistons or the Reds regularly on free over-the-air TV seemed as unlikely as CBS once again stacking Saturday night with a bunch of shows with 25 ratings.

The notion runs counter to one of the most powerful trends in TV — the migration of sports from broadcasting to other media — over the past 30 years, the broadcast networks’ renewal of national NFL football deals last year notwithstanding.

But Lawlor and LaPlatney make strong arguments for why the trend can be reversed and the public difficulties of Bally Sports tend to confirm the arguments.

RCA’s W2XBS New York (now WNBC) aired a Dodgers-Reds game from Brooklyn’s Ebbets Field in August 1939 as part of David Sarnoff’s determined drive to introduce TV broadcasting that year. Many thousands of broadcast TV games followed.

Local sports are a broadcasting birthright. It’s time for the medium to reclaim it.

P.S. Scripps will also be trying to land national sports for Ion, the fifth-highest-rated broadcast network in the land, behind the Big Four. Lawlor says that Ion could air a baseball game of the week on, say, Saturday night, but instead of airing a one-size-fits-all national game, Scripps would “localize” the broadcasts by scheduling the hometown team where it could.

“Obviously you could roll all that up, sell it together, cume it and have a big national audience with sponsors targeted for the market,” Lawlor says.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.