SBJ Media: What A Debt Restructure Could Mean For Sinclair RSNs

The crowded sports schedule of the past two months is about to get lonely. With no MLB, NBA or NHL games, RSN schedules will look a lot like they did back in the early days of the pandemic.

BIG CHANGES NOT EXPECTED AT SINCLAIR RSNs DESPITE POSSIBLE DEBT RESTRUCTURE

• Don’t expect significant short-term changes at Sinclair’s RSNs, even in the wake of the news that Sinclair and its creditors are preparing for a restructuring of $8 billion in debt. Despite speculation, Diamond Sports, Sinclair's indirect subsidiary that operates the RSNs, is not about to file for bankruptcy, says Ryan Vaughan, a TMT specialist at Manhattan-based investment bank Needham & Co.
  
  
• “There’s no trigger,” said Vaughan, who covers Sinclair. “There’s nothing that’s going to send Diamond Sports into bankruptcy right now.” Usually these triggers would be an upcoming debt maturity, a financial covenant Sinclair would have to meet or liquidity issues where Sinclair can’t make their debt interest payments. “None of those factors exist today,” Vaughan said.
  
  
• What does the potential restructuring of $8 billion in debt mean? Vaughan: “What’s happened here is that the $8 billion of debt is trading at deep discounts. ... Bond holders could say, ‘What if the company comes to us and tries to force us to some sort of transaction that we exchange into another piece of paper, but at a steep discount thereby reducing that total $8 billion down to $7 billion or $6 billion, where it’s more manageable for the company long term?’”
  
  
• It’s not all rosy at Sinclair’s RSNs. Cord cutting remains a big issue. Failed distribution deals with Dish Network and YouTube TV hurt. RSNs will have no MLB, NBA or NHL games until January at the earliest.
  
  
• “Sinclair knows what they bought,” Vaughan said. “Sinclair bought the RSNs at five times EBITDA. Even though EBITDA has come down a lot, they still have a lot of other opportunities. Direct-to-consumer is going to come in a matter of time. They have the sports betting angle. A Dish deal is likely to come next year. Nothing in the next couple of years is going to cause them to default unless cord cutting accelerates.”

WORLD SERIES SEES RECORD LOW AUDIENCE

• We can add the World Series to the list of major sports properties that has seen a ratings downturn during the pandemic. My colleague Austin Karp reports last night’s Game 1 for the Rays and Dodgers clocked in with 9.195 million viewers on Fox, the smallest World Series audience on record.
  
  
• The Game 1 audience is 25% below last year’s Nationals-Astros Game 1 and 33% less than 2018’s Game 1 between the Red Sox and Dodgers. The last time a World Series game drew fewer than 10 million viewers was in 2008, when the Phillies and Rays averaged 9.836 million for a Saturday night Game 3. Fox reported an average minute audience of 150,614 viewers for Game 1 on its streaming platforms. Game 1 last year had an AMA of 164,175 viewers.
  
  
• Los Angeles drew a 20.0 local rating for Game 1. Two years ago, the TV market drew a 24.8 for Game 1 against the Red Sox. Three years ago against the Astros, a 24.2. A 2020 L.A. market comp? The World Series opener was well above ABC’s Lakers-Heat Game 1 on Sept. 30 (13.2). Tampa-St. Pete drew a 14.5 local rating last night, the best figure for any Rays game in the market since 2013.
  
  
• The good news for baseball: a 25% drop for the Fall Classic compares favorably to other sports, including the Stanley Cup Final, NBA Finals, golf's U.S. Open and tennis' U.S. Open. During a Morning Buzzcast last week, SBJ Publisher & Executive Editor Abe Madkour asked listeners to email reasons why they thought ratings for so many big sports events were down. I will run many of the answers next week. Feel free to email me with any thoughts.

BTN UNVEILS FIRST LOGO REDESIGN SINCE NETWORK LAUNCH

• Big Ten Network is changing its logo for the first time since its 2007 launch. The first time viewers will see the network rebrand will be Friday night as the network carries the conference's first Big Ten game of the season -- Illinois against Wisconsin.
  
  
• The network used London-based design firm Pentagram to develop the new look. Pentagram helped develop the new conference logo two years ago. It also used a marketing firm called Troika to develop a campaign around the new look.
  
  
• Originally set to launch last month, the rebrand has been in the works for several months, network president Francois McGillicuddy said. “We wanted to capitalize on the strength of the iconic B1G conference logo,” he said. “We wanted to incorporate that into our network look. We wanted to provide brand consistency across the conference and the network.”
  
  
• Logos will be school-specific, meaning that when it’s displayed in College Park, it will feature Maryland colors. “There will be sport specific logos, too -- a new look for football, a new look for basketball, a new look for all of our Olympic sports,” he said.
  
  
• McGillicuddy, who predicted that this rebrand will last at least a decade, spoke about the BTN’s strong football schedule this fall with 28 conference game and at least two appearances by each school. “Just based on the rankings today, more than one-third of our games are going to include a ranked team,” he said.

SPEED READS

• Ben Grossman is joining the ownership group of the new NWSL team in L.A. Grossman helped oversee the last two FIFA Women’s World Cups as an advisor to Fox Sports and is also an investor in Minnesota United of MLS. Grossman joins an Angel City FC ownership group that includes Reddit co-Founder Alexis Ohanian and his wife Serena Williams, Academy Award-winner Natalie Portman (who promoted the club on "The Tonight Show" last night), media entrepreneur Julie Uhrman and venture capitalist Kara Nortman. A former Fox Sports colleague, David Nathanson, also is in the ownership group.
  
  
• LaLiga has opened an official account on Twitch, becoming the first major European sports league to join the streaming platform. The top flight of Spanish soccer will publish original shows produced by LaLiga North America. Content launching this week will focus on Saturday's El Clásico between FC Barcelona and Real Madrid.
  
  
• Streaming service Quibi is "shutting itself down," sources tell WSJ's Ben Mullin, Joe Flint & Maureen Farrell. Chair Jeffrey Katzenberg and CEO Meg Whitman raised about $1.75 billion from "high-profile investors" including Disney, NBCUniversal and WarnerMedia. But the service has been "plagued with problems since it launched in April." Among the sports productions on Quibi were a LeBron James-produced documentary on the 2017 Astros cheating scandal, a Chris Paul-produced documentary on former Clippers owner Donald Sterling and “The Replay,” an ESPN-produced recap and highlight show.
  
  
• During Day 2 of the espnW: Women + Sports Summit today, ESPN’s Flora Kelly and Wasserman’s Shelley Pisarra talked about the importance of marketing to female sports fans. Their main message: women make up more than 50% of sports fans and control $40 trillion of global discretionary income.
  
  
• Only 36% of Univ. of Maryland students are willing to attend a Terps sporting event before getting a COVID vaccine, according to a poll of 4,000 students conducted by the Povich Center. (Full disclosure, I am on the Povich Center’s advisory board; I thought this poll was interesting enough to pass on).

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Something on the media beat catch your eye? Tell us about it. Reach out to either me (jourand@sportsbusinessjournal.com) or Austin Karp (akarp@sportsbusinessjournal.com) and we'll share the best of it. Also contributing to this newsletter is Thomas Leary (tleary@sportsbusinessdaily.com).