NBA Commissioner Adam Silver took the stage at the CAA World Congress of Sports last month and answered questions about a major concern for many Mavericks fans.
No, Silver didn’t address Kyrie Irving’s looming free agency or the fears about Luka Doncic’s long-term Mavericks future.
Rather, Silver discussed how fans in Dallas and other local markets will — or won’t — be able to watch those story lines unfold on the court next season.
Will Bally Sports Southwest and its related regional sports networks exist next season? The question prompts complicated possibilities and contingencies — and the Phoenix Suns and Mercury have already taken unprecedented steps to change. Media experts say Bally Sports’ bankrupt operator, Diamond Sports, will face significant obstacles and possible NBA extinction in the coming years.
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“I’ll just say politely: We need to reimagine these relationships,” Silver said at the sports business conference in mid-April. “It’s enormous the debt they had and correcting that issue. Then in terms of the fundamentals of the business, everybody sees what’s happening in the television market.”
To understand how NBA viewership options and habits could change, let’s recap the financial hurdles and macro evolution sports game broadcasting has faced.
Before the cord-cutting trend began, ESPN and sports networks held among the highest individual channel licensing fees to be included in traditional, all-channel-access cable packages.
As people started to turn from cable to streaming services — which at the time were significantly cheaper — those sports networks received less money per subscriber as streamers kept costs lower by not including regional sports networks in their offerings.
Bally Sports Southwest, for example, is still not available on most popular platforms, including YouTubeTV, Hulu and Sling TV. Fewer carriage deals with the increasing number of streaming and broadcast outlets has led to Diamond having less money to pay leagues for the rights to broadcast local NBA, NHL and MLB games.
“That just kind of made the whole economic model start to collapse,” media analyst Derek Baine said. “Unfortunately a lot of these teams got into long-term deals [with Diamond Sports Group], who’s just assuming the market is going to grow, right? So right fees are going up, so you’re stuck in this weird situation where your costs are going up, but your revenue is going down.”
That’s where Diamond Sports Group and the Bally networks sit now.
The company filed for Chapter 11 bankruptcy in mid-March in an effort to restructure its $8 billion debt under parent company Sinclair.
While NBA and NHL leaders expected to receive its typical payments through the remainder of this season — regional sports networks hold local broadcast rights through the first round of the playoffs — MLB has taken a different approach.
In April, Diamond Sports defaulted on payments to five MLB teams, including the Texas Rangers, and the league responded by filing an emergency court motion to demand payment or to nullify the contractual agreements.
Multiple outlets reported U.S. Bankruptcy Judge Christopher Lopez ordered Diamond to make 50% payments.
“They’re getting a lot of pushback,” Baine said. “MLB has got some really aggressive lawyers in there who, I think, they would just prefer to abandon ship on Sinclair and do their own thing streaming.”
While the MLB season is just one month into its 2023 schedule, the five-month wait until the start of next NBA and NHL season in October should allow those leagues “a lot more clarity about what to do and the pathway forward,” sports media journalist John Ourand said.
Phoenix’s NBA and WNBA franchises, under new governor Mat Ishbia, aren’t waiting.
In their next seasons, the Suns and Mercury will remove their broadcast rights from cable and broadcast their games for free on local Arizona television stations and on a new direct-to-consumer online streaming service, according to ESPN.
Fan experience is everything & truly matters most. That is why @Suns and @PhoenixMercury games will now be available to almost 3M AZ households for free. Excited to continue doing right by our fans & community across the board. https://t.co/q2uwiCE9xg — Mat Ishbia (@Mishbia15) April 28, 2023
The teams’ contract with Bally Sports Arizona, which has aired their games since 2003, expired after the Suns’ season.
Ishbia acknowledged the change could cost the Suns tens of millions in guaranteed money per year, but he expects the number of households able to watch games will increase from about 800,000 to more than 2.8 million.
“We’re not focusing on money,” Ishbia told ESPN. “We’re focused on winning, success and taking care of fans, taking care of the community. What happens is you always end up making money. It always works out. We’re going to have more fans than ever before.”
Mavericks governor Mark Cuban said his team’s deal with Bally Sports Southwest will run for about five more years, but the franchise has worked to subsidize fans’ access to DirecTV Stream — one of the few streaming platforms that carries the channel — and to offer free Bally Sports + subscriptions to season ticket holders.
“We will continue to look at these and other options going forward,” Cuban wrote in an email.
On a league-wide level, Ourand predicted the NBA could look to package its local broadcasts with national TV partners when their current contracts end in about two years.
In that case, ESPN and potential new bidder NBC, for example, could secure traditional national broadcast rights for their linear channels while adding local broadcasts on their respective ESPN+ or Peacock streaming platforms to boost subscriber interest.
If Bally Sports operations dissolved sooner, Ourand added, the NBA could utilize its in-house League Pass and streaming app capabilities to take over nightly broadcasts.
To do so long-term, however, would cost the league and individual teams — such as the Suns and Mercury — the continued opportunity to sell regional rights and make money on outside providers.
“I think the sky is falling in a certain way for the teams because they’re going to see a lot less revenue coming in for their rights,” Ourand said of Bally Sports’ short-term outlook. “There are still so many question marks about how the leagues and the teams are going to move forward with their local rights. Nobody has the answers to those yet, but they are going to start to emerge as Diamond proceeds through its bankruptcy process.”
Twitter: @CallieCaplan
Find more Mavericks coverage from The Dallas Morning News here.
Will Bally Sports Southwest exist next Mavericks season? TV experts say ‘sky is falling’
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