Warner Bros. Discovery is in the process of advising affected teams that it wants to exit the regional sports network business and end its association with the Pittsburgh, Rocky Mountain, and Southwest AT&T SportsNet channels.
It has become increasingly harder to stream local sports over the past few years, with rising costs seemingly the main issue. The cost is also what appears to be driving this latest decision as well.
Warner Bros. Discovery might be better known by streamers for its flagship HBO Max and Discovery Plus streaming services, but it also owns a number of networks. This includes AT&T Sports Networks, a group of regional sports networks owned and operated through WBD’s sports unit.
It is this unit that has now reportedly begun contacting affected teams to explain that it wishes to exit the business and cease operating the channels. The details on this come from a new report by The Wall Street Journal, which credits a letter sent by Patrick Crumb (President of AT&T Sports Networks) and “people familiar with the matter” for the information.
According to the report, AT&T Sports Networks doesn’t have the money “to pay the upcoming rights fees” and Warner Bros. Discovery has no intention of helping. Instead, the unit is now looking at ways in which it can exit the business completely, including the possibility of filing for bankruptcy.
One of the options reportedly proposed in the letter is that ownership of the networks and rights are transferred over to the teams. It would seem this would be done relatively for free and in return for avoiding any future claims against the networks.
Probably most alarming in the near-term is that the letter reportedly issues a March 31st deadline. That is, the date by which the “only realistic option” would be to file for chapter 7 liquidation” if an alternate solution isn’t agreed.
It is worth noting that the Root Sports Northwest regional sports network is not thought to be involved in the current situation. While Warner Bros. Discovery is a part-owner of Root Sports Northwest, it is a minority owner compared to the Seattle Mariners.
In addition to The Wall Street Journal reporting, Sports Business Journal has also confirmed WBD’s intention to exit the regional sports business market. In a statement to SBJ, WBD explained that “AT&T SportsNet is not immune to the well-known challenges that the entire RSN industry is facing.”
The statement went on to expalin that the plan is to “continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions.”