What The ESPN-MLB Divorce Says About TV Sports Rights

In an era where media companies are trying to gather as much rights to major live sporting events as they can, losing those deals by choice is a rarity.

And yet, that’s exactly what’s about to happen with ESPN and Major League Baseball. The Athletic reported on Thursday evening that the two parties “mutually agreed” to opt out of their deal for the 2026-28 seasons.

While MLB’s side of the story includes getting minimal coverage aside from live games, this very much appears to be a move first initiated by ESPN, who balked at the $550 million per year price tag it would be saddled with airing its portion of the MLB package — especially when Apple TV+ is paying $85 million per year for its carve-out, and Roku is paying $10 million.

Those deals also aren’t the same as ESPN’s, as MLB will tell everyone. But at the same time, they do change the conversation around the value of MLB rights for ESPN and other potential partners.

MLB games were the No. 10 program (2.20% of the total) by share of est. national linear TV ad spend on ESPN last year, according to iSpot data. Not nothing, but also… not the biggest piece of the pie. The percentages have been in that same general range or lower for the past several years now, too.

That’s not a result of ESPN’s presentation of the games being less compelling, or the games being less entertaining. You could argue both have improved of late. But instead, speaks to the unintended consequences of the Regional Sports Network era.

As regional networks grew in importance for MLB (and the NBA and NHL) alongside the emergence of out-of-market packages, it worked to flatten the live sports landscape. And when streaming emerged to further cut into linear TV audiences — at times while airing the exact same games — the “prestige” placement of Sunday Night Baseball or other primetime slots waned. For fans, the game they want to watch is THE premier game that day/night, whether it appears on broadcast, cable, streaming, MLB Extra Innings/MLB.TV or their local RSN.

This dynamic has played out for basketball and hockey too, but the difference is it’s not an every day activity like MLB action is. MLB itself has championed the fact that its games are the most-viewed local programming on TV, and have RSNs to thank for that. But they also have RSNs to thank for the fact that MLB’s increasingly become league fueled by regional viewing and loyalties above any overarching national product the way the NFL has itself positioned.

For college sports, the NHL, and some of its lesser league partners, ESPN has been able to mitigate these regionality issues with creative uses of ESPN+ to keep fans engaged with the rights to their teams. But those leagues also balance that out by either a) delivering big ratings and ad dollars for premier games, and/or b) lack the pricetag of MLB’s deal.

Unless ESPN was going to get into aspects of the regional game with MLB — and The Athletic’s reporting indicates that was the direction they were trying to (and still could) go for a reworked arrangement — the price simply didn’t make sense anymore. And it won’t for others either, especially when they stare at the figures Apple and Roku are paying.

That doesn’t mean a primetime placement for MLB games is completely undesirable at this point, either. It just needs to be rethought.

Yankees/Red Sox, Dodgers/Giants and Mets/Phillies are big matchups in their respective divisions and regions, but it’s harder than ever to get large national audiences to tune into those games in primetime. Any future deal for MLB to replace Sunday Night Baseball could potentially include regional windowing similar to what the NFL does on Sunday afternoons (Fox already does this for some fall weekend MLB matchups).

There’s also the MLB Network approach to these games — work with a national partner to air big matchups in primetime each week, but with the local broadcast team to provide that “insiders” look at the hot team in the AL Central that can get casual fans invested alongside the every-day-viewing diehards.

For MLB, you could argue that replacing ESPN, still one of the top 10 networks on TV, with yet another streaming service could be a real breaking point for the remaining fans that have tried to watch the game on a national level. Less than a decade ago, the average live MLB viewer was 57 (!!!) years old. Even assuming that number’s gone down a little, it’s a lot to expect of ANY baseball fan to keep track of and subscribe to 3-5 services just to watch national games.

Overall, this development could be the first real sign that live sports rights fees (even as they increase their share of ad dollars and viewership on traditional TV) can’t grow forever, and could be reaching their ceiling. That’s a bad sign for leagues that rely heavily on ballooning media deals, but it may be a good thing for major media companies as they try to rein in costs and get smarter about their heaviest investments.

The other thing this says (to me, anyway) is that the new frontier of live sports on streaming or linear TV is whoever is able to best monetize local and regional rights. MLB has moved to centralize some of this in the wake of Diamond Sports Group’s failures, and perhaps losing its ESPN deal helps them double down there.

Is MLB now more of a regional TV product than an national one? I’d say yes, but that doesn’t have to diminish its importance. It just necessitates a change in how the league approaches television that leans on its regional quirks and sensibilities. The big question, of course, is whether it can do that at this point, without losing too much money in the process.