Georgetown Law
Technology Review

I. Introduction

The media landscape in the U.S. is in a state of major flux. In July 2023, for the first time ever, cable and broadcast television (TV) viewership dropped to under 50% of total TV usage. Meanwhile, streaming services continued their upward surge, securing a record 38.7% of total TV consumption. The growth of streaming has given rise to “cord-cutting,” the process of “canceling … a traditional cable or satellite TV subscription in favor of streaming video content over the internet.”

Sports has not been immune to this evolution of the media market. In recent years, sports leagues have increasingly been entering into exclusive agreements with streaming services. In March 2021, the National Football League (NFL) granted Amazon Prime the exclusive rights to air Thursday Night Football. In June 2022, Major League Soccer (MLS) gave exclusive rights to Apple TV. In January 2024, World Wrestling Entertainment (WWE) provided Netflix with exclusive rights to its flagship “Raw” show.

Innovative streaming partnerships between established media companies appear to be on the horizon. In February 2024, Warner Brothers, ESPN, and Fox announced that they are joining forces to launch a sports-streaming service to provide content from across all major sports leagues.

As the sports media landscape continues to adapt to dramatic changes in market structure, it is imperative that the market’s focus remains on sports fans. Sports have the unique and powerful ability to bridge divides and bring people together from diverse backgrounds. However, the shift toward streaming in sports media threatens to keep sports out of reach for many fans. Novel policy solutions are needed to ensure accessible and affordable sports viewership to all sports fans across the United States, regardless of geographic location or income level.

Part II provides a brief overview of how sports media is regulated, highlighting that streaming is not subject to any direct FCC regulation. Part III summarizes the benefits and challenges associated with the evolving sports media landscape and rise of streaming usage. Part IV explores the decline of Regional Sports Networks (RSNs) and references an emerging hybrid broadcast model as an indication of how the transition away from RSNs might look.

Part V offers three approaches that can be used to improve access, affordability, and the fan’s user experience as sports media continues to evolve. It first discusses the potential for greater over-the-air broadcast coverage of home-team playoff games. Then, it highlights the importance of fans being able to easily move between different sports media platforms. Finally, it mentions federal legislation that can improve access to streaming via greater broadband access.

II. How Is Sports Media Regulated?

In reaction to increasing cable rates, Congress enacted the 1992 Cable Act. This law regulated cable rates, exempting cable systems “subject to effective competition.” However, Congress narrowed the government’s authority through its enactment of the 1996 Telecommunications Act, which prevented the Federal Communications Commission (FCC) from regulating the rates of non-basic cable services as of 1999.

The FCC does not regulate most cable service rates. A state-approved local franchising authority (LFA), which is generally “a city, county, or other governmental organization,” can regulate rates for “basic” cable services if they lack effective competition. These services include local broadcast and educational channels, but do not extend to “premium” cable services like pay-per-view sporting events.

Unlike cable and broadcast television, streaming services are currently not subject to any direct FCC regulation. Some lawmakers have called on the FCC “to reopen its 2014 proposal to define some video-streaming services as MVPDs [Multichannel Video Programming Distributors] subject to agency regulation.” However, FCC Chair Jessica Rosenworcel has maintained that the FCC lacks the authority to regulate streamers absent an express mandate from Congress.

III. Benefits and Challenges of the Increasingly Fragmented Sports Landscape

There is no question that streaming has brought benefits to sports fans. Viewers can watch sports on their mobile, tablet, or other devices inside or outside their homes and selectively pick the sports streaming services they want. They also have greater access to niche and emerging sports, such as frisbee, lacrosse, and darts.

Among other benefits, streaming services can also avoid sports “blackouts” caused by retransmission consent disputes between broadcast and cable providers. A provision of the 1992 Cable Act, retransmission consent “requires that a [broadcast] television station give its consent to a cable system … to carry its broadcast signal.” Consent is secured through negotiations involving “money or other consideration.” In the event that the broadcast and cable providers fail to come to an agreement, the cable provider has to cease offering the station to its customers. The result of this in the sports context is what is commonly referred to as a “blackout” – when these unresolved disputes block sports fans from accessing a given game or match.

However, the rise of streaming and the increasingly fragmented sports media landscape present numerous challenges to sports fans as well. Streaming applications often lack adequate accessibility features, such as subtitles, captions, and audio description. Viewers are often forced to sift through various subscriptions and streaming platform accounts to find a game. Many sports fans cannot afford certain streaming subscriptions, and others in certain geographic areas, such as rural communities, lack access to streaming due to insufficient broadband speeds.

IV. The Decline of Regional Sports Networks

One result of the rise in streaming and cord-cutting movement has been the decline of Regional Sports Networks (RSNs).

Unlike the NFL, only a tiny fraction of National Basketball Association (NBA), Major League Baseball (MLB), and National Hockey League (NHL) games are broadcast on national networks. Generally, “at least 80 percent of a team’s games are shown only locally [through RSNs] in the media markets where the team and its opponent play.”

RSNs are pay-TV channels that provide local coverage of a team’s games. They work in the following manner: teams, who control the rights to their games, sell their rights to RSNs. Then, RSNs approach cable distributors (e.g. Comcast) “and [negotiate] to receive a monthly fee for allowing the distributors to include the channel in packages [they sell] to customers.”

However, the rise in streaming and cord-cutting has threatened the RSN business model. Because fewer people are buying cable packages, distributors are less likely to pay large fees to include RSNs in their channel packages and more likely to drop RSNs altogether. As a result, RSNs “receive less in carriage fees, while still having to pay teams the sums they agreed to years ago in long-term deals.” Further, RSNs cannot take advantage of the streaming surge because the traditional deals they have struck with teams and distributors are limited to their inclusion in cable packages. These contracts generally prohibit teams or leagues from streaming their games, because that “would diminish the exclusivity of what the [RSNs] pay handsomely to show.”

These constraints have pushed RSNs to the financial brink. The fall of Diamond Sports Group, the largest provider of RSNs, is emblematic of this market shift. In 2019, Sinclair Broadcast Group acquired Diamond Sports for $10.6 billion, including $8 billion of debt. The deal was designed to leverage the collective power of RSNs to secure higher pay-TV fees. Diamond Sports eventually grew to operate 19 RSNs across the U.S. and offer local TV broadcasts for 37 teams across the NBA, MLB, and NHL. Facing a diminishing base of pay-TV subscribers, the over-leveraged RSN operator was unable to make interest payments. In March of 2023, Diamond Sports filed for Chapter 11 bankruptcy.

As further evidence of the shift in power from pay-TV to streaming, Amazon agreed to invest in Diamond Sports to help it emerge from bankruptcy. According to the investment’s terms, Amazon will gain the rights to stream Diamond Sports’ games on Amazon Prime.

A new broadcast model developed by the Phoenix Suns and Phoenix Mercury provides another indication of how the transition away from RSNs might look. The Suns and Mercury have moved away from Diamond Sports and toward a hybrid service consisting of a free over-the-air broadcast network, Gray Television, and a paid streaming service, Kiswe. The Utah Jazz mirrored this approach, moving away from the RSN AT&T SportsNet Rocky Mountain and toward an over-the-air station, KJZZ, and streaming service, Jazz+.

Although these new hybrid deals pay teams less in rights fees than RSNs traditionally could, proponents argue that any short term revenue losses will be more than offset by long term gains derived from a larger fan base and viewership. The Jazz, for example, said that TV viewership for their games is already 53% higher than it was last year.

V. Recommendations

According to Nielsen, streaming is here to stay: younger viewers between the ages of 18 and 34 “spend considerably more time with streaming than any other TV source.” As of August 2023, young viewers aged 18 to 34 spend 60% of their TV time on streaming, compared to 32% for viewers aged 50 to 64 and 18% for viewers aged 65 and over. As the sports media landscape continues to evolve, it is imperative that sports are readily accessible to fans regardless of their income level or geographic location. 

            A. Remove the paywall for in-market playoff games

Investing in affordable access of sports for in-market, home team fans is crucial. Failure to do so will lead to long-term ebbs in the fan base and deterioration of connected revenue streams.

Leagues can remove the paywall for home-team playoff games by offering them for free in local markets on over-the-air broadcast networks. These leagues would not include the NFL, which already allows for free viewing of all games in the local market. State governments, with the consent of their legislatures, could also authorize funds to subsidize the revenue loss leagues would face from moving these games to broadcast television from cable. Broadcast networks receiving these games can further negotiate with cable networks that lose the games to split advertising revenue.

            B. Make it easier for fans to move between different sports media platforms

Leagues and teams should refrain from “abrupt and radical changes to how people watch games” and “overly complex licensing that fragments individual sports and even teams across a variety of services.” Streaming services should promote interoperability by adopting features like “universal search” and making it easy for fans to move between different applications. For example, the new joint sports streaming service launched by ESPN, Warner Brothers, and Fox can streamline the fan viewing experience and make it easier for fans to watch a diverse array of sports without having to mix and match numerous streaming platforms.

However, governmental antitrust scrutiny may be warranted to ensure that joint streaming services like the ESPN-Warner Brothers-Fox service do not engage in anticompetitive pricing or improperly force fans to exclusively use their platforms to access key sporting events. The U.S. Department of Justice plans to review the ESPN-Warner Brothers-Fox joint service due to “concerns it could harm consumers, sports leagues and rivals.” Rival streamer FuboTV filed an antitrust lawsuit to block the joint service’s launch, arguing that the three media giants are leveraging “their power over commercially critical sports content to force Fubo to broadcast unwanted, expensive content that prevents Fubo from offering the sports-centric package of channels that its customers want.”

            C. Close the digital divide: improve access to broadband

To watch sports via streaming, viewers must be able to access the Internet first. Reliable, high-speed broadband is essential, but too many rural and low-income households across the U.S. lack broadband. Approximately 42 million people in the U.S. lack broadband access.

The FCC’s Affordable Connectivity Program (ACP) has made great strides in closing the broadband access gap. A $14.2 billion program that helps low-income households afford broadband through monthly benefits, the ACP has assisted upwards of 22.5 million households. The ACP gives eligible households a discount of up to $75 per month to purchase an internet service, along with a discount of up to $100 to buy a tablet or laptop – key products that facilitate streaming. This financial assistance can help sports fans afford internet plans, along with streaming services, that provide access to live sports.

However, the ACP is projected to run out of funding in April 2024. Congress can protect the ACP by passing the Affordable Connectivity Program Extension Act of 2024. Companion versions of this legislation have been introduced by Rep. Yvette Clarke in the U.S. House of Representatives and Sen. Peter Welch in the U.S. Senate. This legislation would preserve the ACP with seven billion dollars in federal funding.

VI. Conclusion

The sports media market is evolving, as broadcast and cable TV give way to streaming services. Although streaming offers greater access to emerging sports and the ability to watch live sports on-the-go, it can make key sporting events harder to find and subject sports fans to financial difficulties and broadband access constraints. Sports are fundamental for social cohesion, bringing communities together across diverse cultures, backgrounds, and identities. Stakeholders across sports teams, leagues, media companies, and government should work together to ensure that sports remain affordable and accessible to all fans.