SBJ Media: What's Next For Sinclair?
I want to give a special shout out to my nephew, Drew Mount, who was promoted to the Daytona Tortugas, the Reds' High-A affiliate in the Florida State League.
BIG QUESTIONS FOR SINCLAIR WITH RSNs
- Sinclair’s purchase of the Fox RSNs was the topic of almost every conversation I had today. There’s a lot we still don’t know. The RSNs still are operating under the Fox Sports brand until the deal closes -- believed to be late summer or early fall. Jeff Krolik’s team is expected to move over to Sinclair to continue to run the RSNs -- at least during the first months. Here are three areas where I will be focused in the coming months:
- What does it mean for distributors?
- Sinclair’s purchase of the Fox-branded RSNs is the worst possible outcome for distributors. That’s the consensus from just about every media exec I’ve contacted since the deal was announced last week. There’s a reason Sinclair’s share price rose 35% today in an overall down market. As the country’s biggest owner of local broadcast stations, Sinclair now holds much more leverage in distribution negotiations with the RSNs. The company also has a well-earned reputation as a tough negotiator. Adding the RSNs is sure to make those conversations tougher. Matt Polka, president of ACA Connects, a lobbying group for small- to mid-sized distributors, said by "jointly negotiating (broadcast network programming and RSN programming) when they serve the same market, Sinclair can raise prices to cable operators for both offerings.” Negotiations will get intense early. All of the Fox RSNs will see their contracts with Dish Network expire this summer. Charter, Verizon, Cox, Sling TV, YouTube TV and Wide Open West will not enjoy these conversations and likely will not be successful in moving the RSNs off of the basic tier.
- Sinclair’s purchase of the Fox-branded RSNs is the worst possible outcome for distributors. That’s the consensus from just about every media exec I’ve contacted since the deal was announced last week. There’s a reason Sinclair’s share price rose 35% today in an overall down market. As the country’s biggest owner of local broadcast stations, Sinclair now holds much more leverage in distribution negotiations with the RSNs. The company also has a well-earned reputation as a tough negotiator. Adding the RSNs is sure to make those conversations tougher. Matt Polka, president of ACA Connects, a lobbying group for small- to mid-sized distributors, said by "jointly negotiating (broadcast network programming and RSN programming) when they serve the same market, Sinclair can raise prices to cable operators for both offerings.” Negotiations will get intense early. All of the Fox RSNs will see their contracts with Dish Network expire this summer. Charter, Verizon, Cox, Sling TV, YouTube TV and Wide Open West will not enjoy these conversations and likely will not be successful in moving the RSNs off of the basic tier.
- Where’s the growth?
- The theory that the RSNs had few growth prospects took hold when it became clear that Disney would have to sell the them for much less than the $20 billion that it paid. Sinclair’s exec team believes that theory is dead wrong. The company believes it can find revenue through several easy fixes, including taking advantage of the growing gambling market to focusing on more digital distribution. “We see the digital distributors -- the streamers -- being the next frontier of distribution for these games,” said Sinclair CEO Chris Ripley. “We’re already doing a significant amount of streaming business with the virtual MVPDs. But we’re going to look to expand distribution to as many platforms as possible.”
- The theory that the RSNs had few growth prospects took hold when it became clear that Disney would have to sell the them for much less than the $20 billion that it paid. Sinclair’s exec team believes that theory is dead wrong. The company believes it can find revenue through several easy fixes, including taking advantage of the growing gambling market to focusing on more digital distribution. “We see the digital distributors -- the streamers -- being the next frontier of distribution for these games,” said Sinclair CEO Chris Ripley. “We’re already doing a significant amount of streaming business with the virtual MVPDs. But we’re going to look to expand distribution to as many platforms as possible.”
- What does this mean for the teams?
- Look for Sinclair to offer equity stakes in RSNs as their rights deals start to expire, which is how Sinclair's RSN relationships with the Cubs and Yankees are structured. Several teams already own stakes in the Fox RSNs. “We expect that to be a core tenet of renewals going forward because we do think that it aligns interest better and it variable-izes the expense structure," Ripley said.
- Look for Sinclair to offer equity stakes in RSNs as their rights deals start to expire, which is how Sinclair's RSN relationships with the Cubs and Yankees are structured. Several teams already own stakes in the Fox RSNs. “We expect that to be a core tenet of renewals going forward because we do think that it aligns interest better and it variable-izes the expense structure," Ripley said.
CAN XFL SUCCEED WHERE AAF FAILED?
A heavy broadcast TV presence will be a staple for the XFL's return next year
- In reporting the XFL’s media deal with Fox and ESPN, I asked execs what lessons they learned from the AAF’s abbreviated season. I found their answers interesting:
- Mark Silverman, Fox Sports: "The league to partner with is the league that has financing. We did our diligence. We made sure this entity is in it for the long run. The XFL business plan is in order. We know the key leadership from our WWE deal."
- Oliver Luck, XFL: “The only game that the Alliance had on broadcast was their opening game on CBS. One of the lessons we took away was that they had a pretty good rating. It shows that Americans still want to watch football the week after the Super Bowl.”
- Alan Gold, CAA: "What we learned from the AAF is that even though they had an ad hoc TV schedule, the viewership was actually very strong."
- Burke Magnus, ESPN: "We’ve been working on this deal with the XFL for quite some time. Nothing changed relative to the structure of the deal or what we set out to do when the AAF disappeared. We bought into the vision that Vince brought to the table."
- Jeffrey Pollack, XFL: "Our business plan is different. We have focused on time and resources."
- Sports media consultant Neal Pilson was much more pessimistic. “While everyone is trumpeting the XFL securing network exposure, no one has pointed out the huge risk to the league of being rated every week and not having the chance to grow without being in the intense searchlight of broadcast TV. If ratings drop from week to week (as they did for the old XFL) and they run into competition from the NCAA Tournament, postseason NBA, the NFL Draft, local baseball and lower HUT (houses using TV) counts in the spring and summer, it could be the same old story for spring football."
THIS WEEK IN SBJ
- A look at Mark Silverman's behind-the-scenes leadership to get Fox Sports ready for a starring prime-time role on "New Fox."
- The origin of the Bucks' popular “Fear the Deer” slogan that has become synonymous with the team’s postseason run.
SPEED READS
- My colleague Michael Smith broke an interesting story today about the Colonial Athletic Association cutting a four-year deal with FloSports that is worth the low seven figures annually. To me, the most interesting part of the deal is the decision that CAA faced -- and it's the same decision that many smaller conferences have to consider. Do you take the money and move to a platform that has little distribution? Or do you cut a smaller deal with a bigger brand? There’s no easy answer. I’m told the CAA could have gone to ESPN+ but opted to take more money from FloSports.
- Lots of love on social media today for Panthers Owner David Tepper, who had a heavy presence in a new video unveiling the team’s inaugural Hall of Fame class. The video, up to 6,000 likes as of this evening, serves as a teaser for a new digital series coming next month. Tepper will have a significant role, as he continues to connect with fans in ways Jerry Richardson did not.
- I'm a fan of Showtime's "Billions," as my high school classmate David Costabile kills it as "Wags." The show also sets a high bar for sports cameos, rivaling the likes of HBO's "Entourage" or "Ballers." Last night was one of the better ones with NFL Network's Rich Eisen stealing some laughs as an announcer for a charity boxing match. Vulture.com called the scene a “delight to watch for its sheer absurdity, made all the more uproarious by Rich Eisen’s sardonic commentary.” Boxer Deontay Wilder and UFC fighter Stipe Miocic also had cameos for the fight scene, joining the likes of Maria Sharapova, Kevin Durant, Mark Cubanand Mark Teixeira from previous seasons.
Eisen (c) joined the roster of sports personalities who have made cameos on "Billions"
LET'S DO THE NUMBERS
- 300,000 -- Estimated number of new antennas likely needed to build out a 5G network on a national scale. But it's going to be necessary, as far as Yahoo Sports GM Geoff Reiss is concerned: "We are unlikely to have any real aspect of fandom that won't be touched by 5G somehow."
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