On Thursday, KTLA and the Los Angeles Clippers announced that they extended their partnership through the 2024-25 NBA season which involves KTLA broadcasting all four Clippers preseason games and select regular season games. The relationship also includes live streaming games on KTLA.com and KTLA+, the station’s app for Roku, Fire TV, Apple TV and Samsung Smart TVs.
The addition of local live streaming is a relatively new development in professional sports and comes at a time when the business model for many regional sports networks (RSNs) is collapsing due to cord-cutting and other market forces.
We recently spoke with Rick Allen, CEO of KTLA’s streaming partner, ViewLift, about the past, present and potential future of sports broadcasting rights.
What has caused this house of cards to collapse for the regional sports networks?
Rick Allen: You have to start from two different directions.
One is structurally for RSNs, which were created to capture what was the great benefit of cable television from a content owners’ perspective, which is you had a dual revenue stream. You had your carriage payments from the cable operators as a pass-through of a portion of the subscriptions that they collected from viewers to be on a Charter system or Comcast, etc. And the second revenue stream was advertising, which was sold by the content owner, in this case, the regional sports network.
Over the last 10 years, the number of cable and satellite subscribers has declined really precipitously. That hits the revenue of the regional sports network on both ends of the spectrum. There are fewer subscribers to that cable system, so the carriage payments get lower. Then you have a smaller addressable ad universe. You have fewer people watching because of “cord cutters” and “cord nevers.”
That’s impacting all of cable TV, but it had a particular impact on the regional sports networks because traditionally, they received a very high pass-through of cable payments. It was estimated that ESPN, for example, had the highest deal negotiated of carriage payments on a per-cell basis.
Then you had deal-specific circumstances. With respect to Bally’s, they bought the Fox Sports systems and the structure of that deal was a very high price – significantly above what the next highest bidder had offered. And that deal was highly leveraged with a lot of debt. That meant there was no room to move for Bally’s. Their revenue was being pushed down. They had huge interest payments to make, and they were in a position where they ultimately had to file for bankruptcy, which they did on March 15 of this year.
The other impacted regional sports network was the group of old AT&T stations, which went to Warner Bros. Discovery when it bought the AT&T assets. And that just wasn’t a business line that [CEO] David Zaslav and Warner Bros. Discovery wanted to stay in. So rather than filing bankruptcy, they told the underlying rights holders were getting out of this business – that we’ll turn over the keys if you want to take this over yourself. And so suddenly, you had roughly half of the teams in the NHL and in the NBA, whose second largest checks were coming from RSNs, were suddenly in great, great jeopardy. And that’s what’s precipitated a whole series of actions that really kind of kicked off this year.
But even with the RSN collapses, sports broadcasting is still a viable business, right?
Allen: Without question. In fact, live games and live sports is really the last appointment television. In a universe that’s become increasingly driven by on-demand content. People still want to see games of their favorite teams, their favorite sports, and they want to see them live. The question is rationalizing how to reach an audience, and there are a variety of ways of doing it. You can do traditional broadcasts, you can go through the cable and satellite system, and you can stream digitally. And for an increasing number of fans, streaming is the way that they want to receive their entertainment, their sports, their news, and, they want it on their terms, and on the devices of their choice. Folks in the sports world must adapt to that consumer preference.
ViewLift is KTLA’s platform for streaming and our station has the rights to live stream L.A. Clippers preseason games and a handful of regular season games. Not that long ago, it was unheard of for major professional sports franchises to stream digitally on a local, independent station. What does this tell you about the future?
Allen: We’ve always considered KTLA to be a real innovator, and we’re extremely proud of our relationship with your station. And I think that innovation was shown by that Clippers deal. It’s a package of games. It wasn’t all Clippers games. But it was a great way for KTLA and the Clippers to see how that new dynamic would work. We’re seeing local stations really step up in this era of change with the RSNs. We’re also seeing local television stations become the principal partner of teams in markets where the RSN relationship is broken down. We’re involved, for example, with the Vegas Golden Knights, the Stanley Cup-winning NHL team. They’ve announced that rather than put their games through a regional sports network again, they’ve got a combination of a relationship over-the-air with Scripps stations within their marketplaces, and then ViewLift is putting together the direct-to-consumer streaming product. And I think that combination will happen more and more.
Do you see a chance or a likelihood that one of the leagues may take all broadcasting in-house, top to bottom, the streaming, the sales, and be responsible for that revenue being distributed to the teams in a similar fashion to the way the RSNs had?
Allen: It’s possible. All of the leagues, of course, are running the national games now. They’re handling all of the licensing relationships at a consolidated league level. In terms of being the operator and picking up the local games in addition, there are a couple of barriers. But the commissioner of baseball has made it clear that that’s his preference. He wants the leagues to control at least the digital, streaming versions of baseball games, but it’s not something he can wave a magic wand over because several of the clubs have their own RSNs. And they’ve made a big investment in those media enterprises. So that would have to be a transition, there may well be various teams that go in a different direction.
I think what the NBA and the NHL have done has been a bit different. They’ve said, we’re perfectly comfortable with local rights continuing to reside with and being negotiated by local teams. We think that that’s an important part of the revenue picture. We think they know their own marketplaces extremely well. But if there comes a circumstance where those games cannot be covered and provided to local fans, we, the league, will step in and make sure those games are available to fans within the local market areas. So really what they’re doing is standing in in an emergency.
Last year was the perfect example of what could have been a real need. You had the bankruptcy filing by Diamond Sports, which is the successor to Bally’s. You had them filing bankruptcy on March 15. You had Warner Bros. Discovery saying we’re going to close these stations down at the end of March. That was their original position. At that time, you still had a month left in the NBA and NHL regular seasons. For the leagues, when you go into playoffs. Those are national games. You don’t really worry about the games being picked up because they’re already under contract. But for that last month of the regular season, there was a very realistic possibility that you as a fan could, on a Tuesday night get ready to watch a game and it wasn’t there. And so the leagues all decided to step up.
As a fan, it can be difficult to find which channel your game is on given how the broadcast rights have been divided. Now, with streaming, fans might need to download new apps entirely. Do you see this as a barrier?
Allen: As you talk to sports fans around the country, and frankly, around the world, finding where they can watch their desired games is a huge pressure point. Teams and leagues are going to have to find better ways of dealing with that. I think the development of a direct-to-consumer service streaming from the team itself to their fan base is one answer. You should also be able to see on that service where else those games are available. An innovative team will show you not only that we’re playing Tuesday night, but also where the game will be carried and what all of the access points will be.
There’s going to be a lot of friction over this current season, and quite possibly next season before the paths get grooved again. Fans were used to watching games on over-the-air broadcasters back in the day, and the switch to cable and the development of RSN was a dislocating process in its time as well. All of us like progress and most of us hate change, right? So, we’re going to have to find ways as fans to adapt to a new ecosystem. But it’s critical for the leagues and teams to make that as easy as possible. Because everybody’s too busy. You just don’t have time to go hunting for content that you know you want. And so, we’re working with leagues and teams to try to make that process easier.
Denial of responsibility! galaxyconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.