In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about Sinclair Broadcasting Group looking to develop a streaming platform to attract and reach more customers.
You can read the full column below.
Regional Sports Networks (“RSN”) were one of the first major profit centers for professional sports teams in the initial move to control more content output and revenues going from fans to teams. An RSN is a cable or satellite-based channel that houses sporting content (games) for a certain college or professional universities or teams in geographic area (e.g., Fox Sports West, etc.). However, with the introduction of streaming technology and other resources, RSNs have become less favorable to streaming and traditional broadcast channel options. RSNs are viewed as too restrictive and expensive.
One of the Los Angeles Dodgers initial and seemingly ongoing challenges with their SportsNet LA channel was that although the team will earn $8.35 billion dollars over the 25-year life of the deal, it is limited to fans who have a certain cable or satellite provider. Although the SportsNet LA channel is now available with more cable providers, the restrictive nature is still an issue. In some geographic areas, cable or satellite providers do not offer services, whereas with streaming an internet connection is all one needs to access content from anywhere. However, the restrictive nature also makes content exclusive to the channel, which drives up the price. Supply and demand.
The re-branded Sinclair broadcasts to Bally Sports, which cashes-in on the growth of sports betting partnerships across the United States post Murphy v. NCAA (2018), is now trying to meet the consumer where the tide is going, streaming. At least for National Basketball Association (“NBA”) games licensed by Sinclair, the Bally-branded sports broadcasts will now include a streaming option. The move to add streaming to their content and distribution portfolio also comes with $600 million dollars in funding to develop the distribution platform.
Back in 2019, Sinclair Broadcasting Group purchased the Fox Sports RSN’s that needed to be offloaded by Disney in the Disney-Twenty-First Century Fox purchase in order to receive the U.S. Department of Justice approval to avoid antitrust litigation. Sinclair finds itself in debt, with its main revenue coming from existing, but a shrinking customer base for the 21 regional sports networks that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball (MLB) teams, 16 National Basketball Association (NBA) teams, and 12 National Hockey League (NHL) teams. The aforementioned with the $85 million dollars for the 10-year Bally naming rights deal is not nearly enough to cover the $8.1 billion dollars of Sinclair debt.
As gaming and mobile use continue to grow closer together, the ability of Sinclair to expand their offering to streaming only expands their customer base. Assuming there will be a corresponding phone application, fans will be able to watch from their mobile devices as well (or at least from an internet window). Sinclair needs those customers, streaming and mobile, to survive the next generation shift.
Furthermore, as entertainment, media, and sports companies continue to move away from cookies in advertising, Sinclair could also stand to benefit from targeted advertising sales through new technology like OpenAP. Cookies are small pieces of code that are added to a user’s web browser as they visit different websites—users will usually get notifications to select their preferences and settings when first visiting a website. This is partly because states like California are putting restrictions on advertisers through the California Consumer Privacy Act (“CCPA”).
Sinclair will be relying on their customers and new customers to pay for the streaming service, but also brands to pay to advertise on the streaming service. The additional revenue will help pay down Sinclair’s debt. Sinclair’s move also follows RSN-competitor AT&T and their deal with FuboTV to stream AT&T SportsNet Rocky Mountain (Utah Jazz, Vegas Golden Knights and Colorado Rockies) games on the well-known television streamer. Both moves are a sign of things to come—more streaming, or better stated, more options for consumers. The issue going forward will be what broadcast and streaming rights are available (and when) to make the adjustment to streaming.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clientele in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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