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Main Street Sports might shutter if DAZN deal falls through, which would add to a decade of RSN drama
One of the most remarkable changes in the U.S. sports media landscape over the past decade has been with regional sports networks. The most notable (but far from the only) piece of that has been what was once the Fox Sports Regional Networks and are now known as the FanDuel Sports Networks (but are separate from the national free advertising-supported television FanDuel Sports Network), owned by Main Street Sports.
Those networks (15 owned-and-operated ones, some deals beyond that) currently have local rights to 29 teams across MLB, the NBA, and the NHL. And Main Street has been in discussions to sell them to over-the-top streaming service DAZN. But, as Tom Friend reported at Sports Business Journal Sunday, a failed sale could lead to a quick closure:
Main Street Sports Group has missed a December payment to the St. Louis Cardinals as it continues to pursue a last-ditch sale to DAZN, and sources told SBJ late Saturday that if the DAZN purchase does not close by January, Main Street will wind down and dissolve its business at the end of this year’s NBA and NHL regular seasons.
...However, sources said Main Street remains in active discussions with all 29 organizations -- including the Cardinals, who have not terminated their Main Street right agreement -- and is working to finalize a complex strategic investment that would turn DAZN into the majority owner of what is now known as the FanDuel Sports Network.
“Main Street Sports Group is in discussions with certain team partners around the timing of their rights payments as we progress discussions with strategic partners to further enhance our long-term capital position,” a Main Street spokesperson said Saturday night in a statement to SBJ.
If the deal with DAZN falls through, sources said Main Street intends to end its business in coordination with the NBA and NHL with only minimal disruption to local game broadcasts -- meaning they apparently intend to make their final rights fee payments.
Those same sources said Main Street would not file for bankruptcy again, after emerging from a previous Chapter 11 one calendar year ago.
There's worthwhile history to consider with these RSNs, and that may have an impact on what happens here. These networks were sold to Disney as part of Fox's larger sale of assets (announced in December 2017, completed in March 2019), then divested as a Department of Justice condition on that Disney-Fox sale (with the stated rationale of preventing Disney-owned ESPN from controlling too much of the sports TV market). All sorts of bidders weighed in on that, with Sinclair (the owner of the most local broadcast network affiliates) eventually prevailing to buy those then-21 RSNs with rights to 42 local teams through subsidiary Diamond Sports Group (which had some other outside investment, especially from Byron Allen's Allen Entertainment Group) for $10.6 billion. That figure doesn't include the separate $3.5 billion the New York Yankees paid to buy back YES in partnership with a coalition. But even combining those to $14.1 billion still comes in well below the $20-25 billion many had initially projected all 22 networks as being worth around the 2018 news of the upcoming divestment.
However, $14.1 billion (and, especially, $10.6 billion for the non-YES networks) wound up being far too much considering what subsequently happened. The COVID-19 shutdowns and scheduling impacts of 2020 certainly accelerated the fall of the networks (which went through several name changes due to branding, from Fox to Bally to FanDuel), but they weren't the only reason (another huge one was virtual multichannel video programming distributors YouTube TV and Hulu+Live TV dropping the RSNs) behind the writedown of $4.2 billion Sinclair took on those assets in November 2020. And things got worse from there, with Diamond filing for Chapter 11 bankruptcy in March 2023.
Diamond skipped payments and lost rights along the way to (and after) that bankruptcy filing. And that led to sudden broadcasting shifts. But these networks eventually emerged from bankruptcy (with the Main Street name, with new ownership led by the old creditors, and with a much smaller group of networks and rights) near the end of 2024. They've made some big moves since then, too, including hiring veteran ex-ESPN executive Norby Williamson to oversee production this January. But now, it looks like they're again facing some of the challenges they were before.
And a big question here is not just what's the future of these particular RSNs, but of the overall RSN model. That model was already facing stress before the pandemic, as the low bids compared to valuations illustrated (although it is worth wondering if these could have survived better if Disney had been allowed to keep them, do some integration with ESPN, and flex their packaging muscle in carriage disputes). But it's gotten much worse since then. And many teams that have moved away from RSNs have found benefits in new setups of broadcast TV (growing increasingly more vital with MVPD (cable, satellite, virtual) bundles continuing to shrink as specific direct-to-consumer options take off) plus streaming options; some of the 29 franchises remaining in the Main Street bundle might see some bright side if these networks go away and they can make their own deals similar to what others who have previously cut ties with or been dropped by RSNs have done.
The thing is, though, as Friend's piece notes, the current RSN setup has tended to offer teams significantly more money (ranging from $11 million for the Memphis Grizzlies to $55 million for the Miami Heat in his article's accompanying list of Main Street's remaining NBA deals) than broadcast+streaming can right now. Broadcast TV gets its money from ads and from retransmission fees paid by MVPDs, and that isn't usually comparable to what RSNs have been paying. (And it's notable that Main Street's remaining deals are generally the ones they felt would continue to be worthwhile; they axed ones they believed in less during the bankruptcy process.) It's possible that the greater reach of broadcast TV deals paired with increased percentages from streaming to consumers more directly, either in a subscription or ad-supported model, might eventually beat the current RSN setup for teams, but shifts there seem likely to cause at least some short-term pain.
Through this process, MLB has been quite proactive and productive at trying to reduce that pain and help clubs both short-term and long-term. Their Local Media Department, formed only slightly in advance of the 2023 issues and staffed up quickly after those, dealt with things like the "absolute fire drill" of broadcasting a Padres' game 24 hours after learning the rights had finally reverted. And they, the NBA (whose specific preparations are discussed in Friend's piece), and the NHL seem set to help clubs both financially and technically if this Main Street collapse does happen, and it sounds like Main Street's plans are even to finish out the NBA and NHL seasons if the DAZN deal doesn't come through. So none of this is necessarily apocalyptic, especially considering the experience everyone involved has picked up over the past several years. But mid-year missed payments or potential broadcasting shifts sure aren't anything any of these teams want to see.
A big question here is how much of a future these networks would have in a DAZN deal, and, as such, what acquiring them would be worth to DAZN. On a lot of levels, this would be DAZN's biggest U.S. push to date. The company has made major impacts in Canada, Europe, Japan, and more markets, but often with top-tier rights (such as the international version of NFL Game Pass, which I interviewed DAZN SVP Zander Berlinski about this February). In the U.S., they've found some success with boxing-focused programming (and some other combat sports, and some other sports here and there, and programming initiatives such as Whistle Sports), but haven't really been able to get rights on that top-tier level. And that's limited their impact relative to what they've done in other markets.
Of course, DAZN has talked of ambitious U.S. forays in the past. That was especially seen when ex-ESPN president turned DAZN executive chairman John Skipper said in 2019 they had "hung up a sign" for wider sports interest with a deal for whiparound show MLB ChangeUp. That show ultimately didn't last long, DAZN didn't get U.S. rights to NFL Sunday Ticket (although it would eventually go to a different streamer, YouTube TV parent Google, ahead of the 2023 season), and Skipper would leave his DAZN role in 2021. But it is notable that they did try some swings, even if those didn't make solid contact. And ownership of these RSNs would be the most significant non-combat sports U.S. move that DAZN has made, and maybe even the most significant overall.
Would a RSN deal work out for DAZN? On the right terms, perhaps. Their streaming experience and scale could make them a good fit for these remaining RSNs and teams, and might help reduce some of the complaints that have plagued these streaming apps. There could be some useful integration and cross-promotion with other U.S. rights DAZN has. And DAZN, owned by billionaire Len Blavatnik's Access Industries, seems to have a good bit of money, which could let them keep paying the rates (or close to) that these remaining teams are accustomed to. DAZN would also bring more connections and scale than Main Street currently has.
But these RSNs have seen incredibly dramatic downward shifts in their value since that Disney-Fox sale was first floated in late 2017. And the way things have gone over the past six years in particular, especially around writedowns, bankruptcy, dropped rights, and more, may have the remaining teams leery of sticking with this setup, even if it gets a deeper-pocketed owner in DAZN. And a shift doesn't have to mean going it alone; MLB has certainly floated the idea of trying to offer a more nationalized approach to local rights (most current MLB.tv packages, outside of where they're acting like a RSN, revolve around out-of-market viewing), and Friend's piece makes it clear the NBA's contemplating that too. Thus, the key question for DAZN will be if these rights (and obligations) are worth acquiring at the price Main Street wants, and if they think deals like these can work long-term, or if we're more likely to see a further shift away from the RSN model.
