Phoenix Suns, Mercury output cable, Grey Tv signal

A general view during the second half of game two of the NBA Finals between the Milwaukee Bucks and the Phoenix Suns at Phoenix Suns Arena on July 8, 2021 in Phoenix, Arizona.

Christian Peterson | Getty Images

Arizona’s men’s and women’s professional basketball teams are jumping out of the regional sports network’s arena.

The NBA’s Phoenix Suns and the WNBA’s Phoenix Mercury reached an agreement with the station’s owner Gray TV to air the entirety of their regular seasons on local radio networks throughout Arizona.

The local networks are available both to pay TV subscribers and to those who opt for free television via an antenna. The teams also signed a deal with Kiswe, a private video technology company, to launch their own direct-to-consumer streaming service.

The deal marks a pivotal moment as a professional sports team pulls out of the regional sports business and brings regular-season games back to fans through their local television networks.

“I’m incredibly excited to announce that we have closed and signed a deal that represents an absolute game changer for our organization, our fans and the future of how we make the game,” said Mat Ishbia, owner of Suns and Mercury, in an email to executives, seen by CNBC. “Not only are we the first modern all-radio contract nationwide, we are also developing our own DTC product in partnership with Kiswe.”

Part of what made this deal possible is that the Suns and Mercury have their own in-house manufacturing as well as a commercial distribution group that will help ease the transition from their RSN.

Regular season games for the Suns were previously available on Diamond Sports’ Bally Sports Arizona channel. Diamond filed for bankruptcy protection in March.

Starting next season, the Suns will be off the network. The Suns, who advanced to the second round of this year’s NBA playoffs, are considered contenders to win their first championship.

Bally Sports Arizona also broadcasts the regular season games of the NHL’s Arizona Coyotes and MLB’s Arizona Diamondbacks. Diamond Sports waived a rights payment to the Diamondbacks to preserve its streaming rights before filing for bankruptcy. Diamondbacks games are still being broadcast on the network while the fight is being fought in court.

On Friday, Diamond Sports said the Suns’ deal with Gray and Kiswe was a breach of contract and they were working to stop it.

“The Phoenix Suns have breached our contract and breached bankruptcy laws and Diamond Sports Group will pursue all legal remedies against any party attempting to exercise control of our property interests while we reorganize. This is an improper effort by the Suns to change their broadcast partner without allowing Diamond to exercise our contractual rights,” a Diamond Sports spokesman said in a statement Friday.

The Suns responded that they were aware of closing the deal. “Diamond’s position is completely inaccurate. We’re moving forward with this deal and couldn’t be more excited about what it means for our fans and our future,” Suns and Mercury CEO Josh Bartlestein said in a statement Friday.

The RSN business model has long been lucrative for the leagues and teams, as broadcasters pay hefty royalties for the rights to games that are not broadcast nationally.

The financial terms of the Suns and Mercury deal with Gray and Kiswe were not disclosed. Overall, Gray and Kiswe will carry the Suns games for five years, while three-time WNBA champion Mercury has a two-year contract. Make an effort and WME Sports advised the Suns on the deal.

Regional sports networks have generally been under pressure as customers cut their pay-TV subscriptions and opt for streaming. The networks, including Bally Sports, have rolled out streaming options at prices that many consumers shy away from, but are unlikely to upend RSN’s longstanding business model.

Phoenix Mercury U.S. basketball player Brittney Griner speaks during a news conference at the Footprint Center in Phoenix, Arizona April 27, 2023.

Patrick T Fallon | AFP | Getty Images

With this new deal, Suns and Mercury games will be available to nearly 2.8 million homes in Arizona, which the teams say triples the current number of homes they now reach. Teams will be able to reach every home in Arizona once Gray launches in Yuma this summer.

“If you go back to the 1980s and 1990s, there were no RSNs. Those pro games were on local television,” said Pat LaPlatney, co-CEO of Gray Television. “This gives the Suns and the Mercury a really broad distribution platform. It will add significantly more value to the TV promotion and promotion of the games as the games will reach a lot more people.”

With the WNBA season starting in just a few weeks, Mercury games will already be available on Kiswe’s local networks and streaming service. Mercury games will be available for free via the streaming option to expand the team’s fan base.

The first two Mercury games will be televised nationally on ESPN as it marks the return of WNBA star Brittney Griner, who was jailed in Russia last year on drug charges. She was released in December.

Mercury games will be available on local television stations in Phoenix and Tucson, covering more than 95% of the state’s television households, and Yuma will be added over the summer.

The Suns games won’t be free on the streaming service next season, however, but will be cheaper than prices on other RSN streaming services, executives said. Earlier this year, MSG Networks, which broadcasts the NHL’s New York Knicks, New York Rangers, Buffalo Sabers and New Jersey Devils games, announced that it would release MSG+ for $29.99 per month. The New York Yankees’ YES Network is charging $24.99 a month for its new streaming service.

“The absolute intention is to improve it compared to what’s coming out in the industry today from a pricing perspective,” said Mike Schabel, Kiswe’s Chief Strategy Officer. “I want it to be soda money, not gas money, some kind of assessment. We think about the audience and who we want to reach.”

Pricing for the Suns’ streaming option is yet to be determined.

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