It looks as if Bally Sports regional sports networks have failed to strike a deal with streaming providers YouTube TV, Hulu and FuboTV before the first pitch on Major League Baseball’s Opening Day April 1.

Bally Sports, the new name for Sinclair Broadcast Group’s former Fox Sports RSNs, failed to hammer out a deal with the streaming services before 1:10 p.m. ET April 1, the first pitch of the contest between the Cleveland Indians and Detroit Tigers. Bally Sports Great Lakes, formerly Sports Time Ohio, is the TV home of the Indians and was scheduled to air the game at 1:10 p.m. The RSN home of the Tigers, Bally Sports Detroit (formerly Fox Sports Detroit) also is airing the game. 

The Bally Sports RSNs have agreements with most traditional satellite and cable TV providers. But streaming services, like YouTube TV, Hulu Live and FuboTV, which have a younger audience attractive to advertisers, have so far held out.   

Also Read: Changes at Sinclair’s RSNs Just Start With Name Change

YES Network, in which Sinclair owns a minority stake, also didn’t reach a deal with YouTube TV, Hulu or FuboTV in time for the first pitch in its 1:10 p.m. matchup between the New York Yankees and Toronto Blue Jays. 

Earlier Thursday Dish Network officially dropped the three NBC Sports Network RSNs and the Mid-Atlantic Sports Network (MASN).  Dish hasn’t had an agreement for the Sinclair RSNs since July 2019. 

Sinclair RSN spokesman Michael Padavano did not return a request for comment. 

Also Read: RSNs Scramble for Streaming Deals as Opening Day Approaches 

FuboTV dropped the RSNs in January 2020,  YouTube TV dropped them in September, and Hulu Live in  October. 

But there was still some hope that they could reach a deal before opening day. Alas, that doesn’t seem to be. 

As of 1:35 p.m. ET, the only streaming service that is carrying all RSNs is AT&T TV, through its $84.99 per month Choice Plan. 

Also Read: Sinclair RSNs: Timing is Everything 

Fubo TV reached a carriage deal with Sinclair’s Marquee Sports Network, a joint venture with the Chicago Cubs and separate from the Bally Sports RSNs -- on March 31. 

Sinclair bought the former Fox Sports RSNs in 2019 for $10 billion.  Last year gaming giant Bally Corp. agreed to pay Sinclair $88 million over 10 years for naming rights for the 21 regional sports networks.

Pricing of the channels appears to be the main culprit in the standoff. According to Kagan, a unit of S&P Global Market Intelligence, on average, RSN pricing ranges from a high of $6.85 per subscriber per month to the least expensive at 34 cents per subscriber per month. Overall, the average price of regional sports networks is about $3.53 per customer per month, Kagan said. 

According to website The Streamable, YouTube and Hulu also have another reason for holding back on the RSNs -- most of their subscribers don’t watch them.

In a March 10 interview with the Milwaukee Journal Sentinel, The Streamable co-founder Jason Gurwin estimated that only 5% to 10% of streaming TV subscribers watch RSNs. 

"The 90% of subscribers who don't watch it are subsidizing the 10% that do," Gurwin told the newspaper.  "Given that an RSN is one of the most expensive channels in a cable bundle, it's just not sustainable for these packages. Even at a more expensive $65 a month, the services are more or less breaking even on the carriage fees that they pay to carry all the channels in the bundle." 

 Sinclair Broadcast Group has always done things its own way. 

It was among the first to scale up and to use hundreds of TV stations to extract cash from the networks and distributors it works with. It has often been a pioneer in technology. It has also known its share of controversy, from the lawsuits that followed a failed bid to buy Tribune Broadcasting to the commentaries on its newscasts that have cast the company as a right-wing partisan. But when Sinclair, one of the biggest station owners in the country, speaks, the industry listens.

Multichannel News talked with Sinclair president and CEO Chris Ripley about some of the industry’s big-picture issues, including retransmission consent, consolidation, regional sports networks, NextGen TV technology and stations getting into the national news business. The interview was edited for space and clarity.

MCN: We had several retransmission disputes at the end of the year, but I don’t think any of your stations are blacked out now.

Chris Ripley: We’re not in any blackouts now.

MCN: Are retransmission fees going to top out, or continue to keep growing as a source of revenue for stations and as a reason for MVPDs [multichannel video programming distributors] to get out of the video business?

CR: Look, nothing lasts forever. But the share shift that’s going on between cable channels is still going to be a trend for many, many years to come. Broadcast still has a very big disparity of its contribution to total viewership versus its share of the [subscriber] fee pie. That’s why you’ve seen such great growth on the retrans side. It’s going to increasingly come at the cost of some of these cable channels. I mean, who watches USA or FX or AMC? You get all of that stuff on the streaming services. When you take a look at what broadcast provides in terms of the quality of programming, it’s the most premium sports that there are; it’s local news, which is still very important. Primetime has suffered, but it is still as good as it gets and syndication still has a loyal following.

MCN: Are you concerned about the supply of quality primetime programming as the big media companies — NBCUniversal, ViacomCBS, The Walt Disney Co. and Fox — increase focus on streaming?

CR: It’s not a streaming thing. The increasing supply of entertainment programming really started with the cable channels two decades ago getting into original programming and that’s just continued now into streaming. It’s a big reason why at Sinclair we’ve chosen to focus on news and sports, because we just see this never-ending supply of new entertainment programming hitting the market, making success in that area very remote, especially for a company our size. We’re small compared to the big media companies and tech companies in that space. But we can compete in local news and sports, where we have core strength and we know there is a predicatible audience for that.

MCN: NBCU’s Peacock is an issue, with the network’s primetime shows streaming before they air on local stations. What’s your relationship with NBC over Peacock?

CR: We don’t have a lot of NBC stations, and I can’t remember which of their shows Peacock airs first. They’re annoyances. They’re not really big game-changers. You know the affiliate association and NBC will tussle over those issues and eventually come to some sort of compromise.

ALSO READ: Sinclair, Bally’s Rebrand Regional Sports Networks

MCN: After Sinclair acquired the Fox regional sports networks, the pandemic hit, shutting down sports for most of last year. [In January, Sinclair and its new partner Bally’s announced plans to rebrand the RSNs under the Bally Sports brand.] This spring, you’re looking for a fresh start and launching a new app. What will it do?

CR: Fox Sports Go will be replaced with a much-needed update, a new digital platform that will have editorial content, it will have streaming. The first version will have TV everywhere. It will be branded Bally Sports. And then the following year we will launch direct-to-consumer products on the same platform.

MCN: Will there be gamification [adding game-like interactive elements to programming] and actual gambling?

CR: The first version won’t have embedded sports betting for lots of reasons, primarily regulatory. Gambling has to exist in the Bally’s Bet [app] world, and there will be a lot of cross-connectivity and crosspromotion and deep links, but you have to go to a separate app to do sports betting.

MCN: So gamification alone will add interest and attention to the games you’re broadcasting?

CR: Oh yeah. All of the research points to a dramatic increase in engagement for people who do sports betting. Those who bet on sports are going to watch more sports at some staggeringly high number. If you’re a sports bettor, there’s a 97% probability you’re watching that event. The other great thing about sports betting, and I believe it’s true about gamification, is that it really skews young. So with 18-to-34-year-olds, about 60% are interested in sports betting or already doing it. If it became easy and it was on their phone and it was legal, that’s a huge number. We think that is a reflection of the video-game generation. They like interactivity. They like rewards. It doesn’t have to be monetary, but in this case monetary works really well. But we can have virtual rewards. We can have recognition. We can have status. If you think about  the social gaming marketplace, it’s a massive business where people are playing games for nothing but the recognition or virtual prizes.

MCN: When betting happens, you don’t get a piece of the handle. You got Bally’s stock and you benefit if it goes up, right?

CR: That’s right. They are going to buy a bunch of advertising and we benefit that way. They
pay us a naming rights fee. We benefit that way. The whole name of the game, the whole point
of all this, is engagement, right? If you do not have consumers engaging with your content, then you’ve lost. And that’s important to us.
That’s important to our team partners. The future of these sports relies on engagement and we need to have the younger generation more engaged with the games themselves. And this is the most potent tonic that we have out there to make it happen. It’s not like the younger generation doesn’t like these sports. They just are not as into watching full games as their parents are. We think they need a different experience for them to spend that time with the actual game content itself.

MCN: Are you going to add gamification to your new shows?

CR: We’re looking at that. Gamification is obvious for sports. We invested in this company called GreenPark Sports, which is taking it to a whole new level. It’s really easy to understand gamification related to sports. It’s a little harder as it relates to news. There are some things, quizzes and polls. There are definitely ways to gamify anything if you really put your mind to it. We generated a bunch of those ideas, but sports is first up in the queue. It has a larger opportunity for us, but we’re definitely going to add elements into news.

MCN: Will you add betting to Tennis Channel?

CR: Tennis is the second most-bet-on sport in the world, and really not that much in the U.S. It’s got a huge volume of content. Everyday there’s a tennis match somewhere with a player you probably recognize. And it has nice breaks in the action that allow for sports betting to happen. I think the U.S. will catch onto that. We’re getting good money from the various [gambling] players that want to advertise on tennis for that reason, and our partner Bally’s is working on specific games that will be tennis-centric.

ALSO READ: NextGen TV Hits Seattle, Its Largest Market Yet

MCN: How many of your stations are transmitting using the NextGen TV ATSC 3.0 standard?

CR: About a dozen. But what’s more important is that by the end of 2021, between us and what we know other [broadcasters] have planned, we should probably reach 60% of the U.S. population by the end of the year. Over half the U.S. population will live in an area that has a 3.0 signal commercially available, up and running. It will have Big Four affiliate content on there and you can have the more modern app-based experience you can have connecting television with the internet.

MCN: Was the upgrade expensive?

CR: It’s not too bad. The repack [related to broadcasters’ voluntarily giving up spectrum for the government to sell] ended up paying for a lot of upgrades. At stations with the latest and greatest antennas and plants, all you need to do is change the exciter card, which is not a very big expenditure. But a lot of people are sitting on 20-, 30-, 40-year-old plants, and that gets more expensive to replace. Eventually, you have to buy that stuff anyway. The new transmitters use way less power. They’re solid state. We still use vacuum tubes, believe it or not, in a whole bunch of transmitters. It’s sort of crazy.

MCN: When will ATSC 3.0 generate revenue? What is the low-hanging fruit?

CR: The low-hanging fruit is targeted advertising and sending additional content to the over-the-air populations. About 20% of the population we just way under-monetize, and so this will give us new opportunities to send new content to these people and monetize them better through targeted advertising, which gets a two to three times CPM lift versus nontargeted.

MCN: When will that happen?

CR: It probably starts to pick up steam in 2022, when you’ve got more than half the country covered and you’ve got people with sets that actually receive the data. But NextGen TV for Sinclair has always been about mobility and we’re very focused on getting mobile phones that receive our signals. Mobile phones turn over much quicker than televisions, so you can get up and running much quicker. We received our first prototype phone. You don’t need to plug anything in, no antenna required. It just looks like a normal phone and it receives NextGen TV signals.

Ultimately, we think the car is the ultimate mobile device. The auto manfacturers will want to upgrade their software one day. It’s too expensive for them to do that over 4G or 5G. This would be a great use case for NextGen TV. You can hit a whole bunch of cars with some big files in a very efficient manner and so they’re quite interested in that.

And when you think about self-driving cars, they need entertainment, information and data. So my prediction is that you’ll get some benefits on the core business by getting into mobile phones, but the next-level opportunity is a connected car application. It’s the killer app.

MCN: Does that mean you’re shifting into a data-delivery business?

CR: We’ve always distributed data over the air. Television, that’s just data. We’ll always distribute  some amount of video over the air. But mostly the new opportunities, the new businesses, will have nothing to do with the video business and everything to do with different types of data forms and distributing those to different devices.

MCN: You started the newscast The National Desk last month. You guys made a big deal about it being straight news. Is that a recognition that the commentaries you’ve been running on your stations are not good for business or the brand?

CR: No, it’s got nothing to do with that. We’ve had both conservative and liberal commentary on our stations. That hasn’t hurt our brand or hurt our business. But we get criticized for it. So we make sure we point that out just to avoid the criticism, which is total unwarranted in our opinion. But if we say we’re going to come up with a new news product, a certain set of people just assume that it has a bunch of commentary on it. We have to make sure we point that out, or else [commenters] won’t do the work, won’t watch the show and just write some crazy article. We know who we are and we know how people perceive us. And so we just have to message accordingly.

ALSO READ: Sinclair Set to Launch ‘National Desk' Jan. 18

MCN: Will the TV business continue to consolidate?

CR: It’s a tale of two cities. On one hand, you’ve got the Supreme Court case this summer. Every time the FCC’s tried to deregulate, it’s gotten stuck in the [3rd U.S. Circuit Court of Appeals] spin cycle. The Supreme Court has the chance to break that, so that’s huge. 

On the other hand, a Democratic FCC is coming that’s likely going to have no interest in further deregulation. So the industry will still be encumbered from consolidating. It will be handicapped versus big media and big tech and will continue to be handicapped as it relates to our true competitors, which is unfortunate. It probably means less local news, less services, plus an inferior consumer experience. More consolidation will happen if it can happen and it needs to happen for the viability and the vibrancy and the survival of the industry. Unfortunately, that’s not happening anytime soon, despite the recognition that big tech is a wrecking ball that’s smashing right through the industry.

MCN: So is local TV still a good business?

CR: Yes, 100%. If you’re in the media business, you’re getting disrupted in a myriad of ways. At the end of the day, we have content that matters. We have local news that matters. We have sports that matters. It needs to be transformed and it needs to be on platforms where consumers want to find it. It needs to have new features, like gamification. All of that is easier said than done, no doubt about it. But it’s still a big business and it’s up to us as stewards of the business to transform it into the future. 

Sinclair Broadcast Group’s decision to essentially sell naming rights to its 21 regional sports networks to gaming giant Bally’s could provide the broadcaster with needed capital during an unprecedented time, while also serving as a possible blueprint for other sports channels. 

Bally’s agreed to pay about $88 million
over 10 years for the naming rights to 21 of Sinclair’s RSNs — YES Network and Marquee Sports Network, both minority-owned by Sinclair, were not included in the deal. Bally’s also agreed to purchase a set amount of advertising on the 21 channels, estimated by some analysts to be in the $10 million range. Sinclair received warrants to purchase Bally’s stock in the future. 

Sports betting is expected to be a $12 billion business by 2025, growing to $50 billion at maturity. Though only a handful of states have legalized sports gambling since the U.S. Supreme Court opened up the door in 2018, aligning with a well-known name in the gaming industry could be a good thing for Sinclair. 

“I think the idea of entitling RSNs is a smart idea,” LHB Media & Entertainment president and CEO Lee Berke said, adding that corporate branding of sports and entertainment networks isn’t really that new. But he said networks, when choosing a branding deal, have to be aware of existing relationships that teams have with other companies. For example, he said the NBA’s Detroit Pistons have deals in place with FanDuel and DraftKings. 

“You’ve got to navigate the relationships you have with your key teams,” Berke said. “Things need to be coordinated.” 

Whether other RSNs will follow suit depends on the network. The second-largest RSN group, Comcast’s NBC Sports Regional Networks, probably wouldn’t see an advantage to such a deal, but smaller channels might.

“Do I think that networks in general will be looking at entitlements? Yes,” Berke said. “And not just sports.”

Sign of the Times

The Bally’s deal is a sign of the changing times in the RSN industry, which has been hit hard by the pandemic as major professional sports leagues have curtailed their seasons. Major League Baseball saw the biggest impact, playing a severely shortened 60-game season followed by playoff and World Series games, all without fans. Sinclair said it had to return about $128 million to distributors in Q3 for games that weren’t delivered because of the COVID-19 outbreak. RSN revenue in the period was $597 million, about 1% below consensus estimates and Q4 guidance is for a further decline to $548 million in Q4.

Sinclair also took a $4.2 billion charge related to its RSN assets in Q3 after distribution revenue fell to $597 million, fueled by the loss of two major virtual MVPD distributors, Hulu + Live TV and YouTube TV, which accounted for about 10% of its subscriber base.  

In a research note, Wells Fargo Securities media analyst Steven Cahall wrote that the Bally’s deal was a solid one for Sinclair, but not quite a game-changer. He added that the impact could become more material if Bally’s marketing spend approaches that of some of its sports gambling peers like DraftKings, which is expected to spend about $400 million per year on that expense line.  

Sinclair spent about $10 billion for the RSNs in 2019, purchasing the channels — acquired by The Walt Disney Co. in its purchase of 21st Century Fox, but then divested for antitrust reasons — through a newly formed subsidiary, Diamond Sports Group. Diamond financed much of the deal with debt, taking on partners like Entertainment Studios founder Byron Allen to help with funding. The 21 channels have retained the Fox Sports brand. 

“So for now, even with better ad monetization, Diamond remains heavily underwater vs. its ~$8 billion in debt,” Cahall wrote. 

While there is hope a COVID-19 vaccine will be widely available in time to keep seasons intact, there is still a possibility that the NBA regular season, slated to begin in December, could be postponed, as well as the 2021 MLB regular season if cases surge. For now, the NBA plans to begin preseason games on Dec. 11, with fans gradually allowed back into arenas on a team-by-team basis. For example, the Atlanta Hawks plan to allow fans at about 10% capacity by Jan. 18. MLB has said it plans to play a full 162-game season, beginning on April 1.

“As much as entitlements are a value for any network, the main issue that all these RSNs are facing is, where do the leagues stand in terms of their respective seasons? How many games will they provide?” Berke said. “Coupled with that is the fact that streaming has been accelerated by this [pandemic], and they really need to be looking at how quickly you can offer up content directly to consumers while still maintaining a presence in the bundle.” 

Fees Will Level Off 

RSN fees, which nearly doubled between 2009 and 2019, are expected to level off in the next three years, according to Kagan, a unit of S&P Global Market Intelligence. Total RSN fees paid will be about $6.6 billion in 2023, Kagan estimates, up from $6.2 billion in 2020. 

Berke said that is to be expected given the maturity of the industry. But sports content is still among the most-watched programming available and still has value to distributors, he added. So while distributors may complain about high costs and how most of their customers don’t watch the games, they will most likely continue to pay up. 

Berke said he doesn’t expect the same level of fee increases in the future, but said RSNs have a lot of opportunities to exploit, including streaming, while still maintaining a relationship with traditional pay TV.

“You just have to adjust how you’re being distributed,” Berke said. “That’s the challenge. The content is there, the technology is there, the interest is there. You just need to match up the business model and the distribution.” 

YouTube TV said it would be dropping the Fox Sports regional networks, which were acquired by Sinclair Broadcast Group last year.

The move, which also impacts YES Network, in which Sinclair bought a stake, is effective Feb. 29. Sinclair is also trying to get carriage for Marquee Sports Network, its joint venture with the Chicago Cubs.

In a series of tweets, YouTube TV said that the move reflects the rising cost of sports networks. It also noted that other pay TV outlets have also dropped RSNs. Dish Network was among the first to drop the Sinclair-owned RSNs and there is no sign that it plans to bring them back.

“To bring you 70+ channels, we have contracts with content owners that are periodically renegotiated. Sinclair Broadcast Group, owner of Fox Regional Sports Networks and YES Network, is one of the largest owners of local TV stations in the U.S.,” YouTube TV said.

RELATED: Outlook Uncertain for RSN Business Overall

“We purchase rights from Sinclair to distribute content to you. Despite our best efforts, we’ve been unable to reach an agreement with Sinclair. As a result, we will no longer offer Fox Regional Sports Networks, including YES Network, beginning February 29th,” YouTube TV said.

“We do not take this decision lightly. This is a reflection of the rising cost of sports content. You may have noticed several other TV services have also decided to remove Fox Regional Sports Networks from their lineups,” it said. “Thank you for your membership as we strive to build the best possible streaming experience for you. You will receive an email today if you’re impacted by this change.”

RELATED: Marquee Sports Network Steps Up to the Plate

On the YES Network website, the RSN said “we hope that we can reach an agreement with YouTube TV. However, based on the discussions we have had to date, we are not optimistic”

YES Network told subscribers there were other pay-TV services they could switch to in order to keep getting the network.

“There are other streaming services that offer the YES Network, including Yankees and Nets games, and these services are easy to sign up for, in a matter of minutes,” YES said.

For more stories like this, visit our sister website Next TV.

Three months after winning the bidding for the 21 Fox Regional Sports Networks from The Walt Disney Co., Sinclair Broadcast Group could face some major pushback from a key distributor for the channels, Comcast.

Concerns about the RSNs — typically among the highest priced in the industry — has weighed on the broadcaster’s stock, which is down nearly 20%, to $35.84 per share from $44.39, since it closed the RSN deal in August.

Sinclair’s $9.6 billion bid topped that of Liberty Media chairman John Malone, whose company had teamed with Major League Baseball to bid on the networks that Disney was forced to divest after its acquisition of 21st Century Fox’s cable and studio assets. Another bidder was rapper Ice Cube, whose Big3 Networks had planned the channels to bolster its professional three-on-three basketball league.

Sinclair acquired 21 former Fox RSNs, in markets including Detroit, Miami and Cleveland.

Sinclair also is a minority partner in the YES Network, a separate, New York City-area network that was formerly in the Fox RSN stable and was purchased in August by the New York Yankees and Amazon.

So far, Sinclair has managed to reach deals for carriage of the RSNs from key distributors, including Charter Communications in July, Cox Communications in August and AT&T and Mediacom Communications in October. But in July, Dish Network dropped the channels, complaining of high prices.

Comcast’s carriage agreement with Sinclair for stations and channels expires in June 2020. The cable operator has expressed concern over the high costs of sports programming and recently went to the mattresses with another regional sports network, Denver’s Altitude Sports.

Rocky Mountain Row

Altitude, which televises Denver Nuggets and Colorado Avalanche games, went dark to the cable operator in August. In late November, Altitude sued Comcast in U.S. District Court in Colorado, claiming the cable operator, after carrying the network on its expanded basic tier for 15 years, insisted Altitude be moved to a higher-priced sports tier and accept a lower fee. That, Altitude said in court documents, would drive the channel out of business.

Comcast has said the suit is without merit.

Tiering sports networks, especially pricey ones like the Fox Sports RSNs (which can cost as much as $6 per subscriber per month), could become more common. Distributors looking to keep costs down as more and more consumers cut the pay TV cord (the pay TV business lost about 3.8% of its customer base in Q3) are increasingly looking at sports channels. RSNs are often considered to be must-have programming, but some distributors are finding that missing them doesn’t necessarily have that much of a negative impact. Case in point: satellite-TV provider Dish Network’s decision to drop the Fox RSNs in July over pricing concerns.

RELATED: Sinclair, Chicago Cubs Will Launch RSN

About 5 million of Dish’s 12 million total subscribers get the Fox RSNs, and in Q3 the two-month blackout had little impact on results: total TV subscribers were up by 138,000 in the period, compared to a loss of 341,000 customers in the prior year. While that was mainly due to increases at its streaming service Sling TV, the satellite service lost just 66,000 customers in the period (compared to a loss of 367,000 a year ago) prompting some to see it as a sign that cord-cutting at the satellite giant may be slowing.

Evercore ISI Group media analyst David Joyce reduced his 12-month price target on Sinclair stock on Nov. 21 to $40 per share from $50 “due to the ongoing absence of a key distributor of the company’s regional sports networks.”

In a note to clients, Joyce estimated that without a major agreement, the $1.3 billion in RSN cash flow he was expecting for 2019 will drop to just over $1 billion in 2020.

In an email message, Joyce said Ever-core’s estimates don’t anticipate another Dish-like distributor drop, but added that “with cord-cutting and cord-shaving impacting the tiers in which the RSNs reside more so than the rest of the industry, we see (6)% subscriber declines while the sports rights continue to grow with contractual escalators.”

In the research note, ISI looked at both the bull and bear case scenarios for the networks. “We think there is a risk in that bear case that there could be further re-tiering of the RSNs or price reductions,” Joyce said in the email.

While the Comcast negotiations are months away, the Dish battle is ongoing. Early in the fight, Dish chairman Charlie Ergen said it is very likely the Fox RSNs would never return to the satellite giant. Ergen similarly opined that Univision channels might never return after getting dropped in 2018, before restoring them under a new contract in March 2019.

Based on Dish’s Q3 results, though, the case for keeping the regional sports networks off only gets stronger with time.

The biggest impact of the Dish blackout so far seems to be it resulted in Sinclair having to pay Disney less for the Fox RSNs. On a conference call with analysts to discuss Q3 results, Sinclair CEO Chris Ripley said as part of the RSN purchase, there was a purchase price reduction of about $400 million “related to potentially protracted negotiations with Dish.”

Ripley: We’re Not Worried

Ripley said on the call that Sinclair considers the Dish stalemate a “temporary issue” and that he is confident of the RSNs’ value proposition. Viewership, he said, is greater than the top 10 entertainment programs combined, and hopefully the satellite TV service will recognize that value over time. If not, Ripley isn’t sure if Dish, which has lost more than 1.3 million satellite-TV subscribers over the past seven quarters, is in a position to matter much.

“Either we come to a deal with Dish or their relevance in the industry will be reduced over time,” Ripley said on the call.

Sinclair has gone all in with sports in the past few years: it bought Tennis Channel in 2016 and wrestling promotion Ring of Honor in 2011. In 2017, Sinclair created Stadium, a joint venture focused on college sports and professional highlights. This year, Sinclair formed Marquee Sports Network with the Chicago Cubs, planning to launch in the 2020 baseball season. According to Sinclair’s Ripley, with the inclusion of the Fox RSNs, more than 70% of the company’s revenue will be derived from distribution fees.

While that has helped the broadcaster rely less on the increasingly volatile advertising market, it also has placed a huge burden on Sinclair’s ability to attract and maintain high carriage fees for its networks.

“There’s a feeling that maybe RSNs aren’t as much a ‘must have’ for viewers as was once thought,” TV [R]ev co-founder and lead analyst Alan Wolk said, noting that even as Dish did lose about 66,000 subscribers, it was nowhere near the 1.4 million that AT&T shed in the quarter.

“Given the number of games that MLB, NBA and NHL teams play, it seems increasingly difficult for fans to watch most of them,” Wolk continued. “Add in the fact that they can check scores in real time online, and see highlights online as well in close to real time, the need may indeed be diminishing.”

Liberty’s Malone, during a Q&A session at its annual Investor Day in New York Nov. 21, said pundits should not to read too much into the Dish numbers in relation to the Sinclair blackout.

“A substantial part of his [Charlie Ergen’s] base doesn’t have a choice,” Malone said at the Investor Day. “That’s less intense than somebody that has three or four immediate competitors in a local market. It’s a tougher call.”

Malone: Tiering Could Prove Painful

If the inability to secure proper carriage for the RSNs led to the insolvency of Diamond Sports, the Sinclair subsidiary that owns the sports channels, Malone joked, it “would break my heart.” But the perception that distributors are getting fed up with pricey sports channels is becoming a dilemma throughout the industry. Live sports and news are the two main drivers for linear video viewership and advertising, but for some distributors the cost is just too high.

Malone said that Liberty’s Fox RSN bid was “a little more rational” and didn’t tie carriage of the networks to other properties like broadcast stations’ retransmission, which he said has helped accelerate the decline of the overall programming bundle. Sports rights, he said, have been a major factor in driving the cost of the bundle beyond many consumers’ budgets.

“If you didn’t have that component, there would be far [less] cord-cutting for economics,” Malone said.

Malone said eventually sports programming, because of escalating costs, will have to be placed on premium tiers.

“That’s a process that will take years,” Malone said of the transition of major dollar sports rights to premium tiers. “In a world where [sports programmers are] extracting multiples of their fair value from the distribution system, they’re not going to voluntarily go that route. This is going to be painful and it’s going to take years.”