Sports' Inexorable Move to Streaming Seen Leaving MVPDs in Lurch

As live sports content continues what many see as an inexorable move to streaming, traditional pay TV is left in an increasingly tighter spot and the future of such deals is in limbo, media and sports industry experts tell us. The future of sports league and team deals with broadcasters is seen as more stable. House Communications Subcommittee members at a Wednesday hearing repeatedly highlighted sports programming's move from traditional pay TV to streaming services, at times expressing frustration with rising prices and fragmented access to games. Testimony from DirecTV Chief Content Officer Rob Thun and other witnesses reflected earlier written statements that agreed the sports marketplace is in a state of flux (see 2401300078).

Citing Amazon Prime's Thursday Night Football, a recent NFL Wild Card playoff game airing solely on Comcast's Peacock streaming service and MLS calling Apple+ home, Andrew Brandt, executive director-Moorad Center for Sports Law, Villanova University, wrote in an email that "'stream-creep' will only continue, slowly and inevitably." A former sports agent and former Philadelphia Eagles and Green Bay Packers executive, Brandt said Netflix's announcement last week that it will be the home of World Wrestling Entertainment's Raw program in 2025 "is another small but important dent in the traditional environment of sports programming."

All the major sports leagues are watching each other to see how they tackle distribution, former ESPN anchor Anthony Amey, now a Virginia Tech assistant professor of practice-sports media and analytics, told us in an interview. Both the streamers and the leagues see the relatively new Amazon/NFL and Apple+/MLS arrangements as successes, he said. Conversely, some streaming arrangements, like Apple and MLB, have created waves of upset fans, angered that games are no longer available via traditional MVPDs or over the air, he said. The NBA, whose deals with Disney's ESPN and ABC and with Warner Bros. Discovery expire after its 2024/2025 season, wants to triple the value of its current deals "and knows it has streaming in its back pocket," with Amazon likely interested, Amey said.

That increasing move of sports to streaming could hasten erosion of cable and direct broadcast satellite subscribers, Amey believes. He said the NFL Sunday Ticket's move from DirecTV to YouTube TV in 2023 probably hurt the DBS operator's subscriber count. In addition, Generation Z seems "converted fully to streaming," increasing momentum away from traditional pay-TV distribution, he added.

Sports teams use various approaches for carrying games and no single model has emerged as the best, Amey said. He acknowledged over-the-air broadcasts won't likely go away. For instance, the NFL understands OTA "is one of its best friends," he said. However, leagues also know streaming is the future. As such, they are deciding on a balance between streaming and OTA, he said. He believes the NBA's next deal could be a bellwether for where sports carriage might head. On the other hand, the NFL operates as a conglomeration, and likely won't reach the point where many teams have direct-to-consumer offerings, like MLB or the NBA, he said.

Broadcasters and sports teams have seen success with recent deals for packages of local games with companies like Nexstar and Gray Television, said Rose Oberman, director media and telecoms for S&P Global Ratings. MVPDs generally carry local broadcast stations and stream on platforms such as Hulu in addition to their OTA signal, so broadcasting gives teams “full reach,” she said. For example, a Gray deal for broadcasting 10 games of the NBA's New Orleans Pelicans has so far led to much better viewership figures in the New Orleans market than similar games were getting on a regional sports network, she said. In addition, Gray has a similar deal with the NBA's Atlanta Hawks. Nexstar has agreements with basketball's Los Angeles Clippers and LIV Golf, she said.

The local reach broadcasting provides is particularly important for sports teams because watching games on TV is how viewers become fans, who then buy game tickets and merchandise, said Erik Schrader, general manager of Gray station WPCH Atlanta, which is carrying Atlanta Hawks games. If local sports teams were “locked behind paywalls” when Schrader was growing up in the 1970s, he would never have become a fan as a kid, he said. “Broadcasting is how you grow fans.”

Although the recent deals between teams and broadcasters like Gray and Nexstar were driven partially by Diamond Sports' bankruptcy, Oberman believes they will continue. “The pay-TV market is significantly different" from the way it was "when the regional sports networks were created.” Broadcasters such as Nexstar and E.W. Scripps, which own their networks, are particularly attractive for teams because programming can more easily shift to accommodate live games, she said.

"It is clear to everyone at this point that the emerging streaming models aren’t as attractive as the old linear one," MoffettNathanson's Craig Moffett said in an email. "But preserving the old model just isn’t feasible anymore." He said sports leagues and team owners "can’t afford to let their fan base grow older and older as the linear model loses subscribers." Meanwhile, media companies can’t afford to wait to move sports to their streaming platforms "lest they miss the cut as one of the scaled survivors," he said. "So everyone involved is plunging forward, notwithstanding the enormous risks."

Comcast said it scored a big win with the streaming-exclusive NFL Wild Card game Jan. 13 featuring the Kansas City Chiefs defeating the Miami Dolphins. The event on Peacock was "the biggest live stream event in U.S. history," Comcast CEO Mike Cavanagh said last week during an earnings call with analysts. Nearly 23 million viewers watched, with the game accounting for 30% of all U.S. internet traffic during the period of Jan. 13 during which the game was streaming, the company said. Cavanagh said the game likely drove paid subscriber growth, and Comcast is now focused on retaining those. He said Peacock saw "record levels of hours viewed" in the days after the game. Comcast attributed its gain of 10 million Peacock streaming subscribers year over year in large part to sports content, including the NFL and college's Big 10.

With the success of the Wild Card game on Peacock, the NFL undoubtedly will offer additional streaming-exclusive regular season and playoff games, and other leagues will likely follow, Amey said.

Hill Misgivings

“Sports fans now have the freedom to choose services that align with their preferences,” but that “increasing number of viewing options has also made it more complicated for some people to find the sporting event that they are looking for,” said House Commerce Committee Chair Cathy McMorris Rodgers, R-Wash. Customers “may also now have to purchase different subscriptions just to watch their team play,” which “means games that may have traditionally been free for someone … could now be too expensive for them to afford.”

The hearing was light on legislative proposals, with House Communications Chairman Bob Latta, R-Ohio, explaining the session was intended to be “informational” and it's "just the beginning of the discussion.” Latta highlighted that “consumer demand” and increased competition among providers to carry sporting events "has driven the cost of rights up.” Rep. Troy Balderson, R-Ohio, noted his 86-year-old mother “could not find the freaking” Purdue University-Ohio State University football game in mid-October because OSU had a deal with Comcast-owned NBCUniversal to exclusively stream its contests via the Peacock service.

House Commerce ranking member Frank Pallone of New Jersey and other Democrats also raised concerns. “The evolving video marketplace is complex, and it is more important than ever to put consumers first and make sure that they are getting the information they need and not being ripped off,” Pallone said. Lawmakers must see “what it means if” sports programming “increasingly moves from local broadcast stations to” streaming. “Legacy broadcast media are our most trusted providers of local news” and emergency information. Accordingly, “we should examine the implications of a significant revenue generator, like sports programming, moving off the free airwaves and what this will mean for the future of local news,” he said.

“Consumers must now sign up for multiple streaming services” and “in extreme cases, the only way to watch big games is to sign up for the streamer who holds exclusive rights” to the game, said House Communications ranking member Doris Matsui, D-Calif. “Being forced to sign up for a new subscription service for every playoff game is not what consumers want, and not where we should be headed.” That “doesn't even begin to capture the anger consumers face when they realize the game isn't available anywhere because of a blackout,” she said: “It's not fair and it shouldn't be happening.”

Rep. Anna Eshoo, D-Calif., was among the few House Communications members who dug into potential solutions. Eshoo touted her lead role in writing the Modern Television Act (see 2103110064), which would repeal parts of the 1992 Cable Act, including retransmission rules. “I think our job here is to protect the American consumer to ensure that they're able to easily access the content that they pay for,” she said: “It's a racket” and “I don't know who can defend that.”