D.C. Regional Sports Network Sees Agnostic Future of Content Distribution

Today, beyond DTC and MVPD distribution, Monumental anticipates other ways to distribute its sports content "with some of the additional digital players out there," Leonsis told us during an interview at Monumental's D.C. offices a stone's throw away from its Capital One Arena, which is in the midst of a three-year, $800 million renovation that will expand the venue from 900,000 to 1.6 million square feet. That's in addition to the roughly $40 million Monumental spent on studios and production facilities at its offices.

Aside from the Monumental Sports Network RSN and arena, Monumental owns the NBA's Washington Wizards, NHL's Washington Capitals and WNBA's Washington Mystics, as well as EagleBank Arena in suburban Virginia.

Leonsis discussed the changing makeup of how Monumental distributes content and its changing role as a streamer. The following transcript was edited for length and clarity.

CD: The aim of Monumental is not to be solely DTC or distributed via MVPDs, but to have a multiplicity of distribution routes. How does that affect your traditional relationships with MVPDs?

Leonsis: When we originally bought our network, we didn't really even think about it as buying our network. We thought about it as buying our rights back. And I think that most networks, most media companies, they really have to trust in the value of their [intellectual property]. I don't think we're dissimilar from a Disney in that respect, where they've got some of the best IP in the world. We've got incredibly valuable IP in our live sports programming. And so we wanted to build a platform that was agnostic to wherever we wanted to distribute our programming in the future.

I think that the traditional MVPDs and virtual MVPDs, they're looking for greater flexibility on packaging, and, in exchange, I think IP owners are looking for greater flexibility to distribute their programs elsewhere. We have to balance commercialization with accessibility. And half our games are on the road. It's really important that all fans have the opportunity to watch all of our games and have a really premium experience, too, which is why we've invested back into our product. So accessibility, I think, as we make deals on our renewals, is really important to us.

CD: When you talk about other potential digital platforms, we're talking about the Amazons and Netflixes of the world -- that sort of thing?

Leonsis: Yeah. I think Amazon has clearly shown an interest in sports. Look no further than the NBA national television deal. You hear a lot about the Netflixes, Metas, Microsofts, Rokus -- there are a lot of digital players out there with a lot of interest in live sports. I think they see it as the next best way to continue their subscribership growth. They're under a lot of pressure to continue to grow their subscriber bases. You look at the content budgets of some of these big streamers -- they're enormous. Sometimes a streamer will spend $5 million-$10 million per episode for a 10-episode series. You sit down, you binge-watch it over the course of a week, and then you're done. I think what live sports leagues and teams provide is tonnage. We have 82-game seasons in the NHL and the NBA, and there's a predictability to it in terms of when games will happen. There's a built-in audience that you know is going to tune in. Every game is a 2.5-hour drama. I think streamers see a lot of value in that.

CD: Do you expect that there will still be a role for traditional MVPDs for a long time, that there’s a plateau to cord-cutting subscriber losses? Do you see MVPD distribution being a part of Monumental five or 10 years from now?

Leonsis: I think there's still going to be a significant portion of our audience who prefers to watch our games on cable and satellite. And just like we want to be accessible to people who are curating their own direct-to-consumer bundles, we want to be accessible to those who still prefer the [traditional] bundle. We have lots of fans for that. I'm a cable subscriber, and so, yes, we imagine that being important [in the] future, too.

CD: Is there a particular mode of delivery of content that dominates or will dominate revenue in the future? Traditionally, MVPDs have clearly dominated.

Leonsis: It’s still dominant today. But I could imagine that over the course of the next, say, five years, it becomes a part of the pie of the larger distribution footprint in terms of eyeballs and dollars.

CD: Do you see DTC becoming the dominant mode at some point?

Leonsis: I’m not sure if I see DTC becoming the dominant mode of distribution, but I see it becoming an important slice. We want to be evolving, not over-relying on any one medium in the future. We want to be available no matter where people are watching. And I think that helps inoculate us from changes in different media. Because you know what? In 20 years, this distribution landscape will look very different, and wherever we've settled on, that will probably be due to be disrupted by something else that we haven't even thought of, right? But as long as people still value watching sports, which I think they still do, we can adapt and evolve and be distributed wherever we want to in the future.

CD: What are the challenges of having to market directly to the Washington region yourself, as opposed to letting someone else handle all that while you just do the sports content?

Leonsis: There are two ways to think about that. One, we do have a direct connection with our fans. We've built it ourselves through our teams. When we acquired NBC Sports Washington, it only had 36,000 email addresses. Across all of our teams, we have over 5 million email addresses. We get up to 3 million people through our turnstiles on an annual basis. At Capital One Arena, we're the number one pickup and drop-off destination for Uber in the mid-Atlantic. We know who's coming into our building. We've got great followership on our digital channels, our social accounts. We know how to reach our fans, educate them, inform them, market to them.

It's harder for us to understand who's actually watching our games through our distributors outside of a rating point. We transitioned to an impression-based system, and we get slightly more information from TV-everywhere viewing and, obviously, even more information from a direct-to-consumer streaming basis. But being disintermediated from your fan is a challenge. It's the challenge that non-team-affiliated networks face. It's why we weren't shy about going direct-to-consumer.

CD: Are there particular sports that you look to grow into? What are the growth opportunities in terms of additional teams or additional sports for Monumental?

Leonsis: We are an ambitious organization. We would love to add additional properties in the future, whether they be teams, whether they be venues, whether they be other linear or digital media companies and the like. And so we'll have to see. We'll have to see.

CD: If I had you, MSG Sports, Fenway Sports Group and other RSNs in this room right now, what’s the Capitol Hill issue that everybody would be most focused on?

Leonsis: The topic that people are certainly keen to really focus on is maintaining that flexibility to distribute our programming elsewhere. As distributors seek packaging changes and whatnot, they're making changes to their strategy, which prompts us to want to be able to change our strategy a bit, too.