Warner Bros. Discovery Expects To Exit RSN Business by Year-End

Warner Bros. Discovery said it plans to be out of the shrinking regional sports network business.

“We expect each of the networks will be sold or [have their] operation seized by the end of the year,” WBD chief financial officer Gunnar Wiedenfels said on the company’s second-quarter earnings call Thursday.

“I am very pleased to say that we have been working diligently with the respective leagues and teams to formulate a plan to exit the RSN business in a manner that minimizes the disruption to teams and their fans.”

Warner Bros. Discovery operates AT&T SportsNet channels in Denver, Houston and PIttsburgh. It also has a minority stake in Root Sports in Seattle. Warner Media owned the businesses when it was acquired by Discovery.

Before the start of this year’s baseball season, WBD told the teams it works with that it wanted them to take back the rights to broadcast games.

The RSN business is under pressure as cord-cutting erodes subscribers and revenue while rights costs to air games mounts.

Sinclair’s Diamond Sports unit, which runs the Bally Sports RSNs declared bankruptcy in March.

In May, Diamond declared it was losing money televising San Diego Padres games and opted to stop making rights payments. Major League Baseball stepped in to put the games on a new channel. 

Wiedenfels said that WBD has been managing its RSNs to break even in terms of earnings before interest, taxes, depreciation and amortization (EBITDA).

The RSNs generated nearly $400 million in revenue in 2022, with most of the revenue coming from distribution.

“As these networks are sold or wound down over the next few months, we expect a modest impact in Q3 distribution and advertising revenues with a more meaningful impact in Q4 and into 2024,” Wiedenfels said.