Warner Bros. Discovery plans to stop broadcasting regional sports as financial troubles grow across industry, reports say

• AT&T Sportsnet channels owned by Warner Bros. Discovery are reportedly on the verge of bankruptcy.
• The channels broadcast regular season games for several MLB, NBA, and NHL teams in multiple states.

Weeks after reports emerged of financial troubles plaguing Diamond Sports Group — the largest operator of regional sports networks in the US — Warner Bros. Discovery has reportedly told teams that it also plans to remove itself from the regional sports broadcasting business.

The channels in question are still branded as AT&T Sportsnet after WarnerMedia's assets, previously owned by AT&T, were acquired by Warner Bros. Discovery last year. The channels broadcast regular season games for multiple MLB, NBA, and NHL teams, according to the Wall Street Journal.

The Journal reported that the channels informed teams that they will not have enough money to pay upcoming rights fees owed to the sports leagues, and Warner Bros. Discovery "will not fund our shortfalls."

The AT&T Sportsnet channels cover the NBA's Houston Rockets and Utah Jazz, the Pittsburgh Penguins of the NHL, and MLB's Pittsburgh Pirates, Houston Astros, and Colorado Rockies.

"Unless we can reach a deal to transfer ownership of the network (and the attendant rights)" by March 31, "our only realistic option is to file for chapter 7 liquidation," a letter sent to the teams read, according to the Journal.

Warner Bros. Discovery has been looking to exit the regional sports industry for some time, as it has been negotiating a deal for the rights owned by AT&T Sportsnet to shift back to the leagues, according to the Sports Business Journal.

The Sports Business Journal also reported that the network told teams it will allow them to continue using Warner Bros. Discovery production staff and equipment to broadcast future games if necessary. The network has to carefully negotiate its exit from local broadcasting with the NBA, as the conglomerate also owns Turner Sports, which is negotiating an extension to continue broadcasting primetime NBA games on TNT.

The AT&T Sportsnet channels are the second set of regional sports networks, commonly referred to as RSNs, this month to report serious financial troubles that could result in bankruptcy. Diamond Sports Group, which operates the biggest group of RSNs across the US, missed $140 million in interest payments on debt earlier this month and is reportedly negotiating its options, including bankruptcy.

MLB Commissioner Rob Manfred said last week that the league is prepared to take over broadcasting games if necessary, and a new agreement because of the industry's financial struggles could lead to positive changes for the league.

Fans have complained about "blackouts" across sports for years, which take place when fans are unable to see games in their local market through a streaming service like MLB TV because of restrictions put in place by the RSN contracts.

Manfred said last week that Diamond's financial struggles could lead to the end of blackouts if the league has to take over the bulk of broadcasting.

Warner Bros. Discovery did not immediately respond to a request for comment.