The appeal of regional sports networks
The top 10 most expensive cable affiliate fees in the U.S. last year were all sports channels — mostly regional sports networks (RSNs) — with ESPN being by far the most expensive, per SNL Kagan data provided to Axios.
The big picture: They're expensive because the bulk of their content comes from licensing sports rights, which as noted above, are getting more expensive.
So why would Amazon want to get into such a business?
- To bolster Prime membership: Per The New York Times' Edmund Lee: "At a time when pay TV is in decline, sports content drives viewership across platforms. Owning rights to big franchises would help Amazon market its Prime program (which costs $119 a year), especially if that membership included access to those games. That, in turn, could add more revenue, as Prime members tend to buy more on Amazon."
- It's easier than going directly to the sports leagues: Per BTIG Managing Director and Media Analyst Rich Greenfield in a note to clients: "While ultimately tech platforms could simply buy local rights directly from leagues/owners, the quickest way to enter the local/regional sports licensing game could be through the acquisition of RSNs."