A trend of people cutting the cord has been giving cable companies headaches for years now, but some live events are still big winners for cable and satellite companies, and live sports loom large among those winners. In fact, live sporting events are helping to keep pay TV as a whole afloat. Movie- and sitcom-loving TV viewers may find it easy to ditch their cable bills and still find something to watch, but sports fans are reliant on big sports networks like Walt Disney's ESPN and regional sports networks (RSNs).

But regional sports networks have an uncertain future. Channels like YES, SNY, MSG, NESN, and others are must-have networks for fans of local MLB, NBA, and NHL teams, but as the streaming landscape changes, these networks could go from high-earning essentials to abandoned middlemen.

A baseball, a baseball glove, and a bat lie on the grass

Image source: Getty Images.

Why RSNs are big right now

Whatever the future may hold for RSNs, they have certainly had a strong recent run. As less time-sensitive broadcasts (like movies and TV shows) have become less appealing to viewers in a market increasingly full of attractive on-demand streaming options, sports broadcasts have become greener pastures for advertisers. The big national sports networks, like ESPN and Fox's Fox Sports 1, are the best-known examples of the phenomenon, but regional networks are a big deal, too.

RSNs are where fans turn for the everyday games from local teams. A big Yankees game might make it to ESPN's Sunday Night Baseball, but the rest of those regular-season Yankees games are going to air on YES, a New York-area RSN. And for all the lamentation about baseball's national ratings, local teams still drive a remarkable amount of viewership.

The World Series' viewing numbers don't do for Fox what the Super Bowl or NBA Finals do, but on any given weeknight or weekend afternoon during baseball's regular season, consistently large audiences are tuning in to watch their region's team. Over the course of a 162-game season, that adds up. And RSNs are also the source for regular-season NBA and NHL games, provided the rights haven't been sold off to a national network.

All of this makes RSNs valuable. That's part of what had tech giant Amazon, among other big names, eyeing the Fox regional sports networks that were auctioned off ahead of the Fox-Disney merger. Those networks eventually went to a joint venture between Entertainment Studios and Sinclair Broadcast Group, Inc., with the exception of YES, which is now jointly owned by a group that includes the New York Yankees, Sinclair, and Amazon.

An uncertain future

In the here and now, RSNs are a big deal. But in the years to come? Well, that's anybody's guess. The big-picture problem is that RSNs are in so many ways relics of the cable era. They are regional by definition, and they act as middlemen between sports teams and pay-TV companies (except, of course, when they are owned by the teams themselves -- as is the case with YES, among other relatively few examples).

Streaming services don't require RSNs. MLB TV subscribers can stream regular-season games from outside of the local market. The broadcasts on MLB TV are the same ones that go out over the RSNs. But the MLB TV model also proves that MLB can distribute its own broadcasts. The teams already generally produce these broadcasts; if a team switches TV (or, for that matter, radio) broadcast channels, it keeps the same announcers and the same "show." RSNs are in the distribution business, not in the business of paying broadcasters and producing live sports programming.

A streaming future for baseball -- and NBA and NHL, too -- wouldn't necessarily require RSNs. And it may well exclude them. MLB teams recently got the right the sell their own local streaming rights (the league previously handled this on behalf of the teams), and while teams do have to respect existing streaming contracts with RSNs, they are free to move on once those contracts expire. At that point, some RSNs may find themselves being undercut by streaming alternatives of the very same broadcasts. And while that might also undercut the value of the TV rights themselves, RSNs would still be stuck in the bundled-up world of cable, less able to alter prices for their viewers than a new streaming competitor might be.

All of this is a future problem: Right now, MLB TV and services like it generally use IP addresses to "black out" games that are available on TV in the streamer's area. But this could change -- and, at some point soon, probably will. Changes like this drive changes in cable, satellite, and streaming subscription numbers -- and, sometimes, in legacy pay TV and tech copmanies.

And, on the off chance that things don't change, RSNs aren't necessarily much better off. The RSNs may earn big bucks from cable and satellite companies, but they also pay big bucks for TV rights to local teams. That's a particularly troubling spot to be in during the coronavirus pandemic, when sports have disappeared from TV (even as sports broadcast rights keep getting pricier, as has been the case with national broadcast contracts even during the darkest and most sports-less days of the pandemic). Refunds have been happening, but most calculations suggest that RSNs have lost a game of musical chairs with these sports-related refunds. As cable companies and (to some degree) customers get money back via RSN rebates, RSNs themselves are finding their own refunds from sports leagues to be inadequate. 

A volatile situation

RSNs have a lot to worry about. The long term doesn't look good. The near-term situation, once a bright spot, is darkened by the realities of the pandemic. RSNs may have some upside in the near future, but their more distant future is extremely uncertain.