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.

Dish Network said that AT&T SportsNet and Root Sports regional sports networks were removed from the Dish Network satellite TV service Thursday.

Dish customers can no longer watch AT&T SportsNet Rocky Mountain, AT&T SportsNet PIttsburgh and Root Sports Northwest.

Dish previously stopped carrying other regional sports networks, including the Bally Sports networks owned by Sinclair Broadcast Group.

Another end-of-the-month dispute has blacked out MSG Networks to Comcast subscribers in New Jersey and Connecticut.

“The current RSN model is fundamentally broken,” said Brian Neylon, group president, Dish. “This model requires nearly all customers to pay for RSNs when only a small percentage of customers actually watch them.”

Dish claimed the regional sports networks are demanding that all customers pay for the networks, whether they watch or not.

“Our proposal to offer sports fans access to RSNs is simple, and provides choice and value to all of our customers,” added Neylon. “It would allow Dish TV customers to choose to subscribe to the RSN channels they want — such as the regional AT&T SportsNet and Root Sports networks — on an a la carte basis, similar to premium subscription channels. With this updated RSN model, no customer would be forced to pay for content they don’t watch, and the RSNs would determine the price customers would pay for their channels.”

AT&T, which recently spun off Dish competitor DirecTV, noted that dropping sports networks has been a pattern for Dish and that AT&T SportsNet and Root Sports were among the last RSNs on Dish.

“We are not surprised Dish Network has chosen to deprive their customers of our regional sports networks” said Patrick Crumb, president of AT&T Sports Networks. 

“As each of the nation’s regional sports networks’ agreements with Dish have come up for renewal over the last several years, we have witnessed them remove each RSN from their channel lineup,” Crumb said. “It is unfortunate that Dish has decided to abandon local MLB, NBA and NHL games, but the vast majority of Dish subscribers will have multiple alternative options for TV and streaming providers that carry our networks and we expect that many will switch from DISH to those providers that value premium local sports content.”

AT&T said it is trying to keep the networks on Dish.

“For all three networks we proposed commonly accepted, marketplace terms to continue our relationship, which terms Dish itself has accepted previously, but Dish chose instead to drop our networks, forcing its customers to sacrifice access to their favorite regional sports teams,” said Nina Kinch, VP of affiliate relations and business affairs. “The terms proposed by Dish were not acceptable, and in fact have not been accepted by any RSN in the country.”

AT&T notes that the sports nets are available via cable and DirecTV. AT&T is also making the AT&T SportsNet’s available via DirecTV Stream.  Root Sports and AT&T Pittsburgh are available via fuboTV. 

Following 14 months of chapter 11 wrangling, CSN Houston is set to fade to black on Sunday, Nov. 16 after coverage of the NBA game between the Houston Rockets and Oklahoma City.

In its place is a new regional sports network owned by AT&T and DirecTV, which will operate the service under its Root Sports banner. Expected to bear the sub moniker of Houston, the service evidently will sport the Southwest name, according to a website,http://rssouthwest.itmwpb.com/, first pointed out by the Houston Chronicle’s David Barron on his twitter feed.

DirecTV, citing legal constraints, has declined to comment about programming and further distribution plans for the service throughout the bankruptcy court proceedings.

The RSN, which will also televise Houston Astros MLB contests, has carriage with the telco and DBS providers, which are awaiting federal approval on their merger, and Comcast, a combo that will give it 80% coverage in the Houston DMA. That’s far greater penetration than CSN Houston, which only managed to gain carriage deals with Comcast and a handful of small providers in the Houston DMA, ever managed. That wasn’t nearly enough to sustain the service, which tipped in October 2012 and whose territory extends in Texas, Oklahoma, Arkansas, Louisiana and parts of New Mexico. With a reported $4 per month per subscriber ask within its central area, and 70 cents elsewhere, CSN never collected enough affiliate revenue to pay the clubs their rights fees and meet its other obligations.

A look at Root Sports Southwest’s programming grid on the website shows a couple of early-morning entries --  Planet X Square and My Life John Lucas – on Sunday, Nov. 16.

Its first full day apparently comes Monday, Nov. 17 at 6 a.m. (CT), beginning with Heartland Poker Tour: Season 10, followed by four hours of paid programming.  The Rich Eisen Show and The Dan Patrick Show, both staples of DirecTV’s Audience Network and other outlets, will run for three hours apiece, before more poker fare bridges the gap until the Rockets pregame show at 6:30 p.m., the team’s contest against the Memphis Grizzlies at 7 p.m. and the post-game show at 9:30 p.m. 

Given NBA TV territorial restrictions, the RSN evidently will present an alternate feed of encore of the college football game between Texas Southern and Jackson State from 6:30 p.m. to 9:30 p.m., with Poker Night in America subbing for the post-game show in restricted areas.

According to the website’s listing of teams, Root Sports Southwest will be home to “at least 67 Rockets games, excluding the 2014-15 season,” plus the pre- and post-game shows, and auxiliary fare.  At least 135 Astros games and related programming also are on tap.

From the college ranks, the listing outlines Big Sky and Southern Conference football, plus Mountain West and Conference USA pigskin and hoops action. Rice basketball appears to be in the mix, flanked by a coaching show, as well as a University of Houston coach’s basketball program.

Eisen and Patrick’s programs are also included on the lineup.

Although 96 of the 141 CSN Houston employees will lose their gigs in the change, the talent subheading under the "about us" tab on the site indicates that Bill Worrell, Matt Bullard and Clyde Drexler will still call Rockets games, with Calvin Murphy remaining a part of the club’s studio shows. Bill Brown, Alan Ashby, Geoff Blum and Art Howe (studio) evidently will call the 2015 Astros season.

Under the reorganization plan, the Astros (46%), Rockets (31%) and Comcast (23%) have lost their network equity positons, and the teams agreed to forego immediate payment of more than $100 million in unpaid rights fees. DirecTV and AT&T are picking up the RSN for $5,000.

For its part, Comcast, through a financial appeal, is still trying to recoup more of the $100 million secured loan that was earmarked for CSN Houston's start-up costs, including a studio build-out and the teams' rights fees. The bankruptcy court ruled it could only receive $26 million of that total. 

Other legal action continues as the Astros have filed suit against former team owner Drayton McLane and Comcast and the Houston Chronicle reports that the Rockets may also sue Comcast.

Those betting the under on whether CSN Houston’s final live telecast was the Oct. 24 preseason game between the Houston Rockets and Dallas Mavericks have collected their money.

The ongoing chapter 11 bankruptcy saga will extend until at least Thursday, Oct. 30, when final arguments in the case are now scheduled for 3 p.m. (CT), instead of Oct. 28.

Under the plan, DirecTV and AT&T U-verse would gain ownership of the network, which would trade under the Roots Sports banner, from the prior owners, the NBA Rockets, MLB’s Houston Astros and Comcast/NBC Sports.

The Houston Chronicle reported that as a deadline to submit their final modifications neared, attorneys for the network asked judge Marvin Isgur for more time to submit changes regarding the sale of furniture, fixtures and equipment at CSN Houston’s downtown studios from Comcast to the network.  The DBS provider and the telco, which are waiting federal regulatory approval over their proposed merger, want to use the extant equipment at the facility for the new network but refuse to pay for it as part of their agreements with the teams.  In turn, the clubs have proposed a plan that transfers ownership of those items to the new network while compensating Comcast for the goods.

At any rate, CSN Houston will be televising the Rockets’ game against the Utah Jazz on Oct. 29 (the team’s opener against the Los Angeles Lakers on Oct. 28 will air nationally on TNT).

Comcast opposes the plan for a number of reasons, and is still looking to reclaim some compensation for the $100 million loan it provided to the RSN for start-up costs, the studio build-out and early rights fee allotments; fair value for NBC Sports' 22% stake in the network that was valued at $700 million in 2010 and would be sold for just $5,000 to DirecTV/AT&T; and exculpation from creditors upon the transfer of the network.

Comcast/NBC Sports could also file an appeal that would further delay matters.

At any rate, CSN Houston has issued a schedule of Rockets’ telecasts covering its first five regional telecasts.

Launched in October 2012 and seeking a monthly subscriber fee in the $3.40 neighborhood, CSN Houston failed to gain distribution traction beyond Comcast and a few smaller providers in the Houston DMA, much less with DirecTV, AT&T U-verse, Time Warner Cable, Suddenlink, Charter and Verizon, among others, in its five-state TV territory that also stretches to Oklahoma, Arkansas, Louisiana and New Mexico.

As such, the RSN never generated nearly enough affiliate revenues to pay the teams their rights fees and meet its bills.

The RSN ended live news and studio programming on Oct. 22. Under the bankruptcy plan, 96 of CSN Houston’s employees will lose their jobs.