With Warner Bros. Discovery looking to abandon its limited presence in the declining regional sports networks business, the NBA’s Utah Jazz, which had called WBD's AT&T SportsNet Rocky Mountain home, have been looking to develop what the team calls a “hybrid model” for its next distribution agreement.
They seem to have found it in a somewhat ironic place. Next season, the Jazz will locally broadcast all of their games not picked up by national networks ESPN, ABC and TNT free and over the air on channel 14, aka KJZZ Salt Lake City. That station is owned by a company on the leading edge of dismantling the regional sports networks business, Sinclair Broadcast Group.
The Jazz will also show their games on a new direct-to-consumer streaming service, founded by the team's new media venture, Smith Entertainment Group (SEG), which is named after team owner Jason Smith.
“It’s not a super long-term deal, but with the flexibility, it’s probably much more of a partnership than a deal," Smith told local paper the Salt Lake City Tribune.
The length of the contract wasn't defined.
"With KJZZ, if we’re good partners, we’ll keep going, and if we’re not good partners with each other, we won’t," Smith added.
WBD told its AT&T SportsNet team partners in February that it was looking to divest itself from the channels.
RSN margins have whittled away quickly amid cord-cutting — non-sports fans have exited the pay TV ecosystem in droves, driving down the market value of local sports network dramatically.
Sinclair, for example, paid $10.6 billion to acquire 19 Fox Sports Net channels in 2019. At the time, those channels were spinning off margins in excess of 50%. By March of this year, those average margins had whittled below 15%, and the division Sinclair had set up to manage its sports networks, Diamond Sports Group, entered bankruptcy.
Certainly, it didn't help that Sinclair management elected to pursue expensive stock buyback initiatives rather than pay down debt on the regional sports networks it branded as Bally Sports. Investors — and perhaps more so, creditors — will just have to forgive management, financially well off personally as they may be now, for that fateful decision.
As for the “partnership” between the Jazz and Sinclair, don’t be surprised if the broadcast station group finds a way to use its acumen with ATSC 3.0 to develop a new broadcast sports business model with the pro hoops team down the road. Smith did talk about "flexibility," after all.
Just our prediction.
