Sinclair Broadcast Group’s Rob Weisbord said he is “cautiously optimistic” about landing more Major League Baseball streaming rights despite public friction between the parties in recent months.
“There are ongoing conversations. I’m cautiously optimistic, now that they got past the lockout,” he said, alluding to MLB’s recent achievement of labor peace with players. “I believe that there is a path for a deal to get additional teams. But it takes a lot of conversations to get there and we’re having ongoing dialogue.”
The exec, who earned COO stripes last month in addition to his role as president of broadcast, spoke during an online event hosted by the Digital Entertainment Group.
Regional sports networks, like the 19 former Fox ones now run by a Sinclair-led consortium and rebranded as Bally Sports, are grappling with cord-cutting’s impact on their legacy business. While many RSNs still generate a lot of cash flow and routinely put up double-digit ratings in local markets, the secular trends are worrying. Bally, which has rights to 42 pro teams in MLB, the NBA and the NHL, has taken on significant debt due to the pandemic and has also been continuing to try to push forward with its streaming effort. The push comes as the company has faced carriage impasses with Dish Network and has gone dark on internet-delivered pay-TV outlets like YouTube TV, Hulu + Live TV and fuboTV.
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Weisbord reaffirmed the company’s guidance that a “soft launch” will happen during the second quarter of a novel direct-to-consumer service. The initial MLB teams to be featured in geo-targeted services include the Detroit Tigers, Miami Marlins, Milwaukee Brewers, Tampa Bay Rays and the Kansas City Royals. Nine additional teams within the Bally footprint have rights controlled by MLB.
The Bally streaming app will have a unified interface, allowing pay-TV subscribers as well as those paying à la carte to sign on the same way. Reports have estimated the price at $23 a month, but Weisbord declined to get specific as to pricing.
The plan is to gauge initial performance before looking to add additional teams and sports in the fall, Weisbord said. The company has locked up streaming rights to 16 NBA teams and 12 NHL teams, but baseball has presented a stiffer challenge given its longtime role as the linchpin of the RSN model. While it may no longer be the sports alpha dog it once was in general, MLB has been an innovator in streaming. Bamtech, its streaming arm, was acquired by Disney after powering a number of services and putting baseball itself on the tech map before any other pro leagues.
Sinclair has maintained a brave public front amid skepticism about its streaming prospects, but MLB Commissioner Rob Manfred has not refrained from comment. Last October at the CAA World Congress of Sports, the commissioner warned of the rights, “We’re not just going to throw them in to help Sinclair out.” The financial shape of Diamond has been a particular source of concern.
Weisbord was joined in the session by Adam Deutsch, a former digital media exec who is now managing director of Deloitte Consulting. Deutsch asked about how Bally will manage churn (the rate of subscribers canceling their service) given the inherent seasonality of sports. “Our business is not a single sport,” Weisbord replied, adding that both monthly and annual subscriptions will be offered.
In the streaming world, where Netflix’s recent move to $15.50 represented a new high point, a $20-plus offering will be the next test of consumers’ appetite. “When you look at the price point, it’s less than two people going live to a game,” Weisbord reasoned. “And the experience from your couch is incredible.” For fans of both baseball and basketball, he said, “It will be worth it not to churn.”
As far as what metrics will show the new service is working in its initial months in the marketplace, Weisbord said “time with the app itself” will be a key one. “Have we delivered on a promise that we are the place for the local fan?”
Matt Del Percio, a director at consulting firm Altman Solon, followed the Sinclair discussion with a presentation about the sports streaming landscape followed by Q&A. He noted recent MLB rights deals for Apple and NBCUniversal’s Peacock, as well as Amazon Prime Video’s imminent exclusive on NFL Thursday Night Football.
Asked about when teams or leagues might decide to go all-in on direct-to-consumer streaming rather than continuing to rely on the RSN model, he said it’s not likely in the near term. One reason is that networks pay teams significant fees in order to air their games, and that money comes without any obligation to secure and retain subscribers, a costly and complex task.
“For a team to fully give up tens of millions from RSNs to go direct-to-consumer, when you do the math, you’ve got to subscribe many, many consumers at a pretty high price point just to replace what revenue you would lose from an RSN in the local market,” Del Percio said. “That revenue can make up a significant portion of a team’s revenue and operating income. Another challenge is, it’s effectively a single-serving value proposition” as opposed to more diversified, lower-priced streaming offerings. “Those direct-to-consumer economics are difficult.”
Nevertheless, “this is clearly an opportunity” for teams and leagues given the functionality of digital technology compared with linear, he said. Sports betting, for example, is seen as an area with rich potential in the streaming age given the technological ability to bring together mobile, social and streaming sports experiences.
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