Major League Baseball’s Local Rights Deals Are Stuck in the Cable Bundle

In the era of cable bundles and streaming, Major League Baseball is struggling to find its footing. Its local rights arrangements, which generate a quarter of team revenues and are a cornerstone for sports channels that depend on MLB for hours of live action every day, have become subject to financial turmoil as the industry grapples with new ways of watching games. That turbulence is likely to impact the way fans consume baseball, potentially disrupting a business model that for decades turbocharged team revenue and drove sky-high player salaries.

Despite the turmoil, most local rights are safe for now. The national broadcast partners – Disney DIS +2.5%-owned ESPN, Fox FOX +3.8% and CBS CBS -.5% – have long-term deals with the NFL, NHL and NBA, but MLB primarily manages its own broadcasting rights through a regional sports network, or RSN, structure. Many big-market teams have their own networks, including the Yankees’ YES Network and the Cubs’ Wrigley Field-based NBC Sports Chicago, while others work with the likes of the Comcast CMCSA +2.7%-owned NBC Sports. The RSNs command high carriage fees – in excess of $7 a month per subscriber for the most-watched, the Yankees’ network – which are passed on to all cable customers, whether they can tell Mike Trout from a rainbow trout or not.

When baseball first hit the radio in 1925, teams were reluctant to play their games on the air because they worried fans would listen to a broadcast instead of heading to the ballpark. The Sporting News editorialized against the trend, describing it as “a succotash party with neither corn nor beans.” But by 1933, Arlin’s voice was echoing off the walls of the Mansfield News-Journal’s offices and the world changed.

As the season kicks off, the biggest story in local broadcasting is what will happen with the debt-ridden Diamond Sports Group, which runs 19 regional networks including Bally Sports and carries the television rights to 42 MLB teams. MLB Commissioner Rob Manfred has suggested that he might step in to keep the telecasts on cable and make them more accessible to cord-cutters, although his comments were hedged by language that seemed designed to give DSG and its creditors more time to hammer out a deal.

One thing is certain – this will be an incredibly interesting summer in local baseball broadcasting. For baseball fans, that means a variety of perspectives and a chance to see how the business model continues to evolve in an age when so many of us watch our favorite game on devices other than traditional televisions. And for the networks involved, it means a rethinking of how they deliver statistics and other information to their audiences in an attempt to maintain viewership while keeping them engaged. The question is whether the changes will be fast enough to stay ahead of the curve. 메이저리그중계

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