Regional Sports Networks and the Future of Sports Media Rights

Loeb & Loeb partner Scott Zolke discusses the ways in which regional sports networks have evolved to keep up with viewership and distribution changes in the television industry and how teams are using creative distribution deals to create an untapped potential for revenue in the digital and mobile space.

How have regional sports networks evolved?

As it relates to baseball, hockey and basketball, it's so critical that you have a strong regional sports presence because you have a ton of inventory. 

In the early part of local television, teams made their deals with broadcasters. Channel 4, boom, here's your local game on Channel 4.

As television became more scattered with the advent of cable, viewing habits started to spread thinner and it got distributed across 500 channels as opposed to twenty channels, it became more and more important for the teams to be able to get their brands out on a 24/7 news cycle. The way you did that is you created a regional sports network. Fox created several regional sports networks, Comcast has created several regional sports networks, and now in the last few years, we've seen teams partner with paid television distributors.

It's becoming more and more important for the owners to understand how they can create the regional sports network in their market, but also get the network carried across a broad array of providers, because every market is split up and people get their TV various ways. Some people don't get it at all because they're just Hulu users or they’re Netflix users. The challenge that we're seeing going forward is how are we going to get these regional sports networks distributed.

How are team owners addressing this challenge?

The Clippers just did something very interesting. They renewed their deal with Fox Sports Network. Fox Sports Network has broad distribution in Los Angeles. They got their deal with Fox, but the team carved out the over the top digital rights. So, what is contemplated is, they will make available a myriad of different views from a game. You'll have your traditional telecast on Fox Sports Net, but on the over the top digital service that you can watch on your smartphone, tablet or laptop, they will have cameras in the arena that are showing you the perspective from the bench, showing you the perspective from behind the basket. There's even been talk of putting little mini cameras on players’ uniforms so you can see what the players are seeing.

The team gets the broad distribution it needs by remaining on Fox Sports Net, but then it goes after that consumer that is a sports junkie and would completely love to get into that. I get six or seven different perspectives during a game and I'll pay whatever it is, $5.99 a month or whatever they end up charging, but we'll see some of that moving forward. The potential for revenue in the digital and mobile space is absolutely untapped right now and it's an area that we're going to see grow dramatically.