Are local wireless networks the future of regional sports broadcasting?

With the closure of the FanDuel-branded regional sports network, the days of cable-based regional sports networks are coming to an end. And to the delight of many fans, NHL and NBA teams are now using wireless networks to broadcast games.

The collapse of the regional sports network model has dried up cable revenue and forced teams to rely on local over-the-air broadcast networks. But can local sports on wireless networks fully replace the old regional sports network model?

Gray Media and EW Scripps Company, which owns 287 radio stations in the United States, have been at the forefront of this change.

Gray Media began transitioning its stations to wireless regional sports networks in 2022, just before Diamond Sports Group filed for bankruptcy in 2023. Gray currently operates 14 “sports and entertainment” networks across the United States. Locally, the company holds exclusive rights to the Phoenix Suns and New Orleans Pelicans on these wireless networks.

Scripps, which also owns the national Aeon network, launched the Scripps Sports division in 2022. The company currently holds exclusive local rights to five NHL teams: the Utah Mammoths, Vegas Golden Knights, Florida Panthers, Tampa Bay Lightning and Nashville Predators. For many of these teams, Scripps turned the team’s flagship station into an independent network under the “The Spot” brand.

But Mr. Gray and Mr. Scripps took markedly different approaches. Gray’s network features a variety of local teams, from Minnesota-Duluth Hockey on North Star Sports and Entertainment Network in Minnesota, to 25 Braves games on Peachtree Sports Network in Georgia, to exclusive local rights to the Phoenix Suns and Mercury on Family Sports in Arizona.

Anywhere a Gray can learn a sport, it can be done. With more baseball teams simulcasting at least 10 games each season, combined with Gray’s reach and appetite for live sports programming, 13 MLB teams now broadcast their games locally on Gray stations in at least one market.

Scripps, on the other hand, focuses on exclusivity. Scripps Sports President Brian Lawler told Awful Announcement that this was a deliberate decision.

“We see great economics and great consumer value by partnering with teams to do all the production, sell all the sponsorships and fully distribute the games.”

But Gray’s strategy suggests a different path. While this is a more limited investment in Duluth, Minnesota’s coverage and not directly produced, it has still proven to be a strong viewership draw for the network.

Ultimately, the economics of wireless sports will determine the staying power of these deals. Scripps and Gray’s efforts are only about four years old, so the industry is still in the early stages of this model.

The model is certainly not perfect. Scripps stations have been unavailable on Comcast since the end of March due to a dispute over distribution fees. At the center of the dispute is Scripps’ new sports-focused network, according to Pac’s John Woolland. Comcast has long pushed its regional sports networks to move to more expensive cable lines, and it’s unlikely that wireless channels will ever replicate the economics that cable networks once enjoyed.

Still, Lawler points to early evidence that the Scripps model is working. “We saw the Golden Knights double the ratings in their first season. Double the ratings means more advertising and bigger sponsorships.”

But the model that works at Scripps doesn’t necessarily translate to teams. Viewership increased, but media rights revenue took a hit.

The Dallas Mavericks’ transition from a cable regional sports network to a local over-the-air deal with Tegna reportedly reduced annual broadcast rights revenue by about $50 million, according to Sports Business Journal. This represents an upper bound on revenue loss. The Utah Jazz and Phoenix Suns, who made similar moves, reportedly lost nearly $20 million.

These declines come as both MLB and NBA are increasingly likely to pursue a centralized regional sports network model that could potentially be profitable. Under that structure, national streaming services like Amazon’s Prime Video would retain regional rights. Instead of each team negotiating individually, the NBA and MLB will bundle most or all teams nationally, a change that could increase local media revenue for franchises in small markets.

Lawlor believes this approach will come at a cost to viewers. “We’re going back to RSNs soon, where there are a lot of people who aren’t using these platforms.”

Streaming RSNs risk increasing fragmentation at a time when fans are already frustrated with the number of subscriptions required to follow a team. In contrast, over-the-air broadcasts are still widely accessible, whether through a basic cable package or a $20 antenna. When the Phoenix Suns, the first NBA team to move completely to terrestrial broadcasting, announced the move, the franchise cited increased reach as a driving factor.

Teams are unlikely to publicly frame radio economics as a failure. Still, despite the decline in broadcast rights fees, none of the NBA and NHL teams that transitioned to terrestrial TV after 2022 have returned to cable TV. That being said, the NBA’s interest in the streaming RSN model is significant.

A widespread shift to streaming by MLB and the NBA could ultimately benefit the NHL. The NHL works most closely with Scripps, and is the only league where rumors of an impending streaming RSN continue. Although the NHL’s relative lack of popularity limits the value of local rights, Gray’s findings suggest demand for local sports extends beyond the top league.

Whatever the future holds for wireless sports, leagues will need to balance economics with accessibility. Leagues that prioritize reach over revenue may reap audience benefits in the long run, but there are significant financial trade-offs.