Diamond Sports ruling signals new era for local NBA, MLB, NHL streaming rights

Diamond Sports Group, the largest regional sports operator in the U.S., will prioritize streaming as it seeks to reorganize post-bankruptcy. A federal judge approved the business plan last week as a way for the beleaguered company to emerge from Chapter 11.

Going forward, sports fans can stream local games for the 27 teams left in Diamond Sports’ portfolio (13 in the NBA, eight in the NHL and six in the MLB) in-market through the newly named FanDuel Sports Network. In-market streaming will also become available at some point on Amazon Prime Video, after Amazon agreed to add games as an add-on subscription.

This opens up fresh ad inventory on these streaming platforms, giving advertisers more opportunities to access live sports. The ruling is a life raft to the regional sports product, but there are still major issues that lie ahead.

The local rights to the 21 NBA and NHL teams with Diamond Sports expire after this season, and the six MLB rights reportedly run through 2028. That could potentially convert all the sports from local and regional products to more national ones.

NBA Commissioner Adam Silver and MLB Commissioner Rob Manfred have been clear that this is the future they want to see. The NBA’s new national rights deal, which was agreed to earlier this year, is built on streaming and broadcast. This creates national scale, reach and positions streaming as the future of distribution, according to Silver.

For advertisers, that national reach could pay dividends opening up a wider audience to their messaging. And with the tools that streaming offers (like targeting), brands could also zero in on the exact audience they want. Manfred has been open about his interest in a national package full of local MLB rights, telling Sports Business Journal he met with many of the major streaming companies recently at the Sun Valley Conference.

“We know the future is going to be streaming,” Manfred said. “What we’re hearing from the streamers is they want a more national product, and we need to be responsive.”

Many regional sports networks (RSNs) have been ravaged by cord-cutting, hitting teams like the NBA’s Utah Jazz. The Jazz left their RSN deal in 2023 and moved to showing their games for free on over-the-air broadcast. That move converted local-audience watch rates from 39% to 100%. The Jazz also created its own streaming app for fans.

They’re part of an emerging trend, as 13 teams across the NBA, NHL and MLB move to a hybrid model — launching their own streaming services while also airing most of their games for free on broadcast channels. This strategy seems to prioritize broader distribution and reach over making money through local rights deals.

“Ultimately what we’re seeing is teams having to come up with alternatives to the RSNs’ distribution,” Geoff McQueen, managing director at L.E.K. Consulting, tells The Current.

“And I think the most effective path to that is going to be local-market over-the-air broadcast partnerships in conjunction with some sort of streaming product. Centralizing that with the league across all the teams that are in need of it probably makes the most sense.”

Stoking local sports fandom

Cord-cutting is the key reason why RSNs have faltered, as fewer cable subscribers has translated to less money coming in. A recent survey of 8,000 internet households from Parks Associates found that 42% of internet households in the U.S. say they subscribe to a traditional pay-TV service as of Q3 2024, down from 75% in 2017.

Many teams are working toward driving revenue with over-the-air channels through advertising instead of receiving rights fees from RSNs, meaning they’re trading short-term revenue from RSN deals to hold more control over their futures. They’re hoping advertising revenue, their streaming operations and reaching fans at a higher clip will pay off.

“Ultimately, sports is still a locally driven fandom,” William Mao, senior vice president of media rights consulting at Octagon, tells The Current. “The first question is, how do the go-forward economics compare to the height of the cable sports network model on the local level we’re able to provide?”

The limitless streaming world

Another advantage to streaming games is the lack of programming limitations. Long gone is the need to fit games into specific channels, as a limitless number of games could be shown on streaming platforms. For the NBA’s and NHL’s 82-game seasons, along with the 162-game season for MLB, that’s a much bigger space to play in.

“There’s no reason why every single game couldn’t be available live [locally],” Jennifer Kent, VP of research at Parks Associates, tells The Current. “It’s just the blackouts. What we’re going to air tonight is totally about creating an exclusivity and maximizing the money that you can around that particular game. But they could stream [most] of these games today if they wanted to.”