Sinclair Broadcast Group’s long-awaited direct-to-consumer regional sports streaming service will emerge from the dugout on June 23.

Bally Sports Plus will initially be available in five markets where the company’s Diamond Sports Group’s regional Bally Sports networks carry Major League Baseball’s Kansas City Royals, Detroit Tigers, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays.

The app will cost $19.99 a month, or $189.99 a year, and enable fans to watch games without subscribing to a multichannel pay TV cable, satellite or streaming service. 

Rob Weisbord, Sinclair’s chief operating officer and president of broadcast, told Broadcasting+Cable that Bally Sports Plus would have a soft rollout at first, with additional marketing support coming after Major League Baseball’s All-Star break (July 18-21). 

The direct-to-consumer service will be introduced in the other markets where the company has RSNs during the third quarter.

Bally Sports Plus is designed to reach the growing number of viewers who have dropped traditional pay TV or chosen less-expensive bundles that don’t include regional sports networks. The cord-cutting trend has threatened the revenue streams for the 19 regional sports networks Sinclair borrowed about $9 billion to buy in 2019.

“We still think our distribution partners are very, very important to us,” Weisbord said. “But what the leagues and we have to solve for is the next-gen viewer and be able to give them the apps and allow them to subscribe on the platform they want to watch. We’re looking at DTC to bridge the gap.”

Initially, the app will be available for mobile devices and is expected to show up on Roku around baseball‘s All-Star Game.

“The first thing we’re focused on is the quality of the video,” Weisbord said. “The games themselves are our tent poles so there’s a heightened level of scrutiny. We have to be on par with the Netflixes and the Disney Pluses.”

Eventually, the app users will be able to play fantasy and predictive games for prizes, get advanced statistics and buy tickets and merchandise.

“We want to entice the Xbox generation,” Weisbord said. “That’s who we envision as being the heavy app user and they’re used to interactivity. If we build up the interactivity, they’ll stay with the games longer, even if it’s a blowout.”

There will be virtual prizes, real prizes and, in some cases, cash prizes. “We want them to stay with the games and give them a component that makes them lean forward," he said.

Each added feature must be approved by the teams and leagues, so it might take some time to get them all activated.

The app will not have betting, but when activated it will be pretty easy for users to shift to the interactive Bally’s Sportsbook app wherever gambling is legal and the team approves.

Sinclair declared that it would have its direct-to-consumer product available in the second quarter, but the product has faced questions. For a while, it wasn’t clear if Sinclair had the rights it needed to stream games. Last year MLB commissioner Rob Manfred said Sinclair didn’t have enough digital rights to stream games and there were reports that MLB, along with other leagues, were considering launching their own streaming service.

Sinclair and the Bally Sports Plus app should just barely beat the deadline, satisfying Wall Street, but Weisbord said it was more important to make sure that the product worked well coming out of the gate. 

Second Player in the Game

As it turned out, NESN beat Sinclair to market with its NESN 360 DTC app, which launched June 1 and carries Boston Red Sox games. NESN 360 costs $29.99 a month, making Bally Sports Plus look like a bargain.

Earlier users of NESN gave it mixed reviews, complaining about its price, its lack of connectivity with some devices and the inability to watch outside of the Boston area.

Weisbord said he expects Bally Sports Plus to improve as it iterates and adds features. “If our 1.0 is the best that we could do, we’ll be in big trouble,” he said. “It’s similar to a restaurant opening. Each month we expect to get more refined as we move along.” 

To develop the app, Sinclair worked with tech company Deltatre. Bally Sports’ development team was headed by Mike Allen, who was with the NBA’s product team before being hired away by the broadcaster a year ago. 

The Bally Sports app will enable pay TV subscribers to authenticate and watch games, and allow non-pay TV subscribers to join the direct-to-consumer service. 

Advertising will be the same on the broadcasts and the apps. Weisbord is counting on that generating bigger audiences and more reach for advertisers.

Going into the direct-to-consumer product business, Sinclair is setting up an 800 number and a fully-staffed customer service team to help subscribers with any struggles they might have with the app, Weisbord said.

Weisbord declined to say how much Sinclair paid to develop the direct-to-consumer service, but when Diamond Sports got $600 million in new financing earlier this year, Sinclair laid out its projections for the service in a Securities and Exchange Commission filing.

The filing laid out worst-case, middle-case and best-case projections for the DTC. In the best case, Bally Sports Plus would grow from 6.7 million free subscribers in 2022 to 9.6 million in 2027. By 2027 EBITDA could reach $1.03 billion, according to the filing.

Weisbord said Sinclair expected the DTC product to break even in year three.

Many observers have warned that sports moving to streaming would be strike three for the traditional pay-TV bundle. Weisbord said he didn’t think Bally Sports Plus would induce cable subscribers to cut the cord.

Striving for ‘Viewer Optionality’

“I think those people [pay TV subscribers] are comfortable and most people hate change,“ he said. ”The people that have consciously cut the cord or shaved it, that’s really the target market. And I think there’s certain demographics that cut the core and certain demographics that will never cut the cord. Our whole focus is viewer optionality.”

Weisbord declined to say whether Sinclair’s cable and satellite distributors would get a payment for customers who sign up for Bally Sports Plus.

Sinclairis tipping off Bally Sports Plus during Major League Baseball season, when there are plenty of live games to air over a 162-game campaign. Fans get fewer games to watch when they root for their teams during basketball and hockey season. Weisbord think the app will be attractive year-round.

“Our thesis is this will have 12 months of sports on a contiguous basis,“ he said. “There’s that potential that if one team falls out of the race early, you might have some churn. But the value proposition at $19.99 a month, we think, is attractive, especially with how 4K HDR is coming about to really enhance viewers‘ enjoyment of the game. … We think where we have a three-team offering, it buffers that churn.”

When Sinclair starts marketing Bally Sports Plus, the advertising will be aimed at those cord-cutters and cord-shavers. Sinclair is in the process of hiring an ad agency that specializes in DTC products. “The focus will be on those that are unable to get the games,” he said. There might be some chatter about the app during the game broadcasts, but not many ads for it.

“The people getting the RSNs have traditional distribution, so that’s not really going to reach the audience that we’re looking to get to subscribe,” Weisbord said.

Sports is just the first area in which Sinclair is considering going direct to consumers. “You have to have unique content,“ Weisbord said. “And so today, you cannot go with hard news because it is kind of ubiquitous. But we’re always exploring. We believe the subscription business long term is a healthy business for us to be in, and our goal is to be in the e-commerce business.” ■

New England Sports Network, the RSN home to the Boston Red Sox and Boston Bruins, will become the first regional sports network in America to offer its service outside the pay TV bundle as a direct-to-consumer streaming service. 

Starting Wednesday, NESN 360 will be available in the home market for $29.99 a month, with the first month promotionally priced at $1. An annual subscription is priced at $329.99 and includes eight tickets to see the Red Sox, currently a middling fourth place in the American League East and watching the Yankees run away with the division. 

Subscribers can stream NESN’s live feeds and VOD library directly to their computer, iOS and Android mobile devices, and Apple TV or Roku connected TV gadgets and enabled smart TVs. A page outlining the service can be found here. 

Those who already subscribe to NESN through a linear pay TV operator will be able to authenticate and view NESN 360 the ol’ TV Everywhere way. (The service appears based on the legacy NESN app and NESN TV platform, which has long provided pay TV subscribers TVE streaming rights to the channel.)

NESN is only available in the New England region, with Major League Baseball and its MLB TV product controlling national OTT rights. 

“We believe the direct subscription option will build on NESN’s reach in the region,” said Sean McGrail, NESN’s president and chief executive officer, in a statement.

NESN is majority-owned by Fenway Sports Group, which also owns the Red Sox. Its linear channel is currently available across New England, save for Fairfield County, Connecticut, via pay TV bundlers including Comcast, Charter Communications, Cox Communications, DirecTV, Verizon Communications and fuboTV. 

NESN 360 beat Sinclair Broadcast Group to market, with the station owner planning to launch its own DTC service later this summer for its Bally Sports Group RSNs. 

Sinclair has tied up local OTT rights for teams NBA and NHL teams covered by its 19 Bally Sports channels. Sinclair also has DTC rights to Major League Baseball's Kansas City Royals, Detroit Tigers, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays. ■

Comcast will raise its rates for TV and internet service by about 3% in 2022, the company said Monday, in line with increases in previous years. 

News of the price increases, most of which will take effect on Jan. 1, was first reported by TVAnswerman.com.

According to Comcast, the average Broadcast TV Fee, the surcharge levied to help cover the costs of retransmission consent payments the operator makes to TV stations, and its Regional Sports Fee, a separate charge to cover its costs for regional sports networks, will not rise by more than $7 per month combined. 

Charges for wireline voice service will not be affected, the company said.

Also: Comcast Sets Up Big New Years Price Hikes

Not every market will see the same increases. For example, in parts of New Jersey and Connecticut that lost access to regional sports channel MSG Networks in October, customers won’t see an increase in their regional sports surcharge, a Comcast spokesperson said. 

In a statement, MSG Networks said Comcast should go further and refund customers the $10 per month they were paying for the channels they are no longer receiving. 

 “Comcast said they won’t increase their RSN fee for customers who no longer receive MSG Networks. Then how do they explain keeping their customers’ money for the last two months," MSG Networks said in the statement. "It’s simple: they charged more than $10 for MSG Networks, and rebated $3, which leaves more than $7 that they continue to pocket every month. Don’t be fooled: that’s a rate increase.”

According to a Reddit.com post by a Chicago Comcast customer, Broadcast TV Fees will rise by about 21% ($3.50 per month) to $19.75; while the Regional Sports Fee will increase about 20% to $17.30 from $14.45 per month in that city.  Other areas will see bigger and smaller increases. For example, in Sandown, New Hampshire, the Broadcast TV Fee will rise by about 28% ($5) to $24.95 per month from $19.45, and the Regional Sports Fee will increase 10% ($1.10) to $11.85 from $10.75 per month. 

Internet-only customers will see the prices for various speed packages rise by about $3 per month. Some bundled internet customers won’t see as much of an increase for that service, but overall charges for bundled packages will be about 3% higher, a Comcast spokesperson said. 

“Content providers continue to increase the costs they charge us to carry their content, with broadcast TV and sports being the biggest drivers of price increases,” a Comcast spokesperson said in an email message to Multichannel News. “We’re continuing to work hard to manage these costs for our customers while investing in our network to provide the best, most reliable broadband service in the country. Customers also have  the flexibility to choose our industry-leading video platform with X1 or the highest quality streaming product with Flex, the only free streaming TV device with voice remote that’s included with broadband service.”

Comcast’s decision comes on the heels of a $5 per month price hike from Dish Network that became effective to the satellite TV company’s customers in mid-November, and a similar increase for customers of Hulu Plus Live TV that takes effect on Dec. 21 and includes Disney Plus and ESPN Plus. ■

Mark Cuban, owner of the Dallas Mavericks of the National Basketball Association, has made a deal with DirecTV Stream that will give fans of the team a $50 a month credit so they can stream games.

DirecTV is the only streaming platform distributing Bally Sports South, which carries Mavs games. The first 10,000 new DirecTV Stream subscribers who sign up for the Choice package or above get the credit.

Few streaming platforms have elected to carry regional sports networks. Carrying large subscriber fees, some cable and satellite companies have also balked at renewing their RSN carriage deals.

The DirecTV Stream offer was first made to Club Maverick Members. Now it is open to all of the team’s fans, known as MFFLs (Mavericks Fans for Life).

“DirecTV Stream is already the streaming service that gives fans across the country the most access to watch their hometown teams,” said Vince Torres, DirecTV’s CMO. “Knowing that, and given our long-standing relationship with the Mavs, collaborating with Mark Cuban on an opportunity that gives passionate Mavs fans a chance to see their favorite team play on our platform and creates more exposure for DirecTV Stream, is a no-brainer.”

It’s been clear for some time that regional sports networks (RSNs) need help. Ownership changes, dwindling viewership and an outdated product, in many instances, have presented regional and team-focused sports networks with difficult prospects ahead if they don’t change their current business models.

In August, Sports Business Journal reported that RSNs are turning toward streaming to reverse declining revenues. But more is needed than simply expanding the accessibility of games via smartphones and connected TVs. They need a total overhaul of their product, with user engagement and monetization at the center of their strategies from here on.

Today, RSNs largely depend on carriage fees for revenue, but the sustainability of this source is rapidly declining. Distribution negotiations are increasingly contentious and cable and satellite providers are no longer willing to blindly pass these costs along to consumers looking for reasons to cut the cord.

Baseball, with an average viewer age near 60 years old, is at the center of this issue given its audience and reliance on RSNs. These networks must become more agile in their offerings, and do so with a heavy emphasis on attracting younger viewers. But that’s a tough job while at the same time trying to maintain current linear TV revenue.

Secondary viewing experiences are one way for RSNs to dip a toe in the audience engagement waters. Without completely scrapping the current TV product, it’s an opportunity for fan interaction and direct feedback on a device (phone) they’re likely to have already. 

These experiences can be as simple as features like stat overlays, trivia and polls, and as advanced as interactive games around the action, chat, video conferencing and live betting. If audiences see RSN broadcasts as immersive experiences that cater to fans in a unique fashion, it’s an immediate improvement on the status quo. YES Network incorporated some of these overlay features this summer as a simple way to create more interaction, and we’ll undoubtedly see more RSNs take similar steps in 2022 and beyond.

Fans also are attracted to RSNs because they’re looking for a customized experience involving their favorite team. It’s already a home-focused booth calling games, and streaming enhances those abilities even further with the option to integrate a variety of team-specific content and features directly into the live game broadcast.

One viewer may want to watch the action with the local radio call, while another may prefer a team-sponsored fan perspective from inside the stadium. Former players and local celebrities can also be integrated into this alternative commentary strategy, similar in many respects to what ESPN is doing now with the Manning brothers during Monday Night Football broadcasts.

Even before and after the game, RSNs can lean into pre-existing shows featuring the local team to continue to speak directly to diehard fans, while also implementing a twist for younger fan engagement. 

Sinclair pivoted the former Fox-owned RSNs into “Bally Sports” to more naturally integrate sports betting content, yet a good portion of the content on Fox Sports Southwest has little to do with the pro teams in the region. While you could take an existing show on the network like Mavericks Insider and build it into an immersive fan experience, there’s a case to be made for repurposing the hours of paid programming, local high school highlights and American Ninja Warrior rerun slots for specialized shows that connect directly with fans in real-time.

Turning RSNs into hubs that connect fans to this sort of hyper-personalized experience through streaming is a way to be a value-add that also avoids eliminating anything from the main broadcast, where the networks’ bread is still buttered. The fact that you’re seeing Major League Baseball, the National Hockey League and the National Basketball Association push back on RSNs now (via recent statements and talks of launching a competitive service) shows that current approaches toward audience acquisition and retention just aren’t enough.

RSNs are at a crossroads, with a shrinking amount of time left to adapt their current models to the new opportunities in front of them. Integrating social commerce, in-game betting, alternative commentary and other fan-centric revenue-generating features directly into the broadcast experience is a way to engage streaming viewers and modernize their business. Change is always difficult, but there are big rewards ahead for those RSNs who move quickly and decisively along this path.

Count Major League Baseball Commissioner Rob Manfred as not a fan of Sinclair Broadcast Group's $250 million plan to parlay its 19 regional sports networks into a streaming service. 

Also read: Why Sinclair’s $250 Million Sports Streaming Swing Could Deliver a Walk-off Defeat of Pay TV

For one thing, Manfred doesn't believe Sinclair has enough digital rights from the 14 MLB clubs it has licensing agreements with to pull off such an enterprise. 

"The other set of rights they've talked a lot about is gambling rights, they don't have those either," Manfred said Tuesday, speaking at the CAA World Congress of Sports event in New York, an event covered by Sports Business Journal heavyweight John Ourand. 

"We've been very clear with them from the beginning that we see both those sets of rights as extraordinarily valuable to baseball, and we're not just going to throw them in to help Sinclair out.”

Through an Securities Exchange Commission filing in June, Sinclair revealed plans to raise $250 million to create a live sports OTT venture based on its RSNs, which are managed by a separate company called Diamond Sports Group. Sinclair also outlined a plan to restructure about $8 billion in debt. 

Manfred described reports that MLB would agree to taking an ownership stake in order to offer Diamond the necessary digital rights as "not accurate." 

In fact, the commissioner described Sinclair's RSN business as perhaps one MLB has very little interest in integrating with at all. Like all RSNs, the Diamond Sports Group channels have to deal with cord cutting. But the debt makes the story much more "negative," Manfred said. 

"The other part of their problem is there's excessive leverage on that business." Manfred said. "If you think about what they paid for it, how much debt they have on it, I mean, you think it's over 80%, it's a huge number. And that leverage has produced headlines that are more negative."

Dish Network said that AT&T SportsNet and Root Sports regional sports networks were removed from the Dish Network satellite TV service Thursday.

Dish customers can no longer watch AT&T SportsNet Rocky Mountain, AT&T SportsNet PIttsburgh and Root Sports Northwest.

Dish previously stopped carrying other regional sports networks, including the Bally Sports networks owned by Sinclair Broadcast Group.

Another end-of-the-month dispute has blacked out MSG Networks to Comcast subscribers in New Jersey and Connecticut.

“The current RSN model is fundamentally broken,” said Brian Neylon, group president, Dish. “This model requires nearly all customers to pay for RSNs when only a small percentage of customers actually watch them.”

Dish claimed the regional sports networks are demanding that all customers pay for the networks, whether they watch or not.

“Our proposal to offer sports fans access to RSNs is simple, and provides choice and value to all of our customers,” added Neylon. “It would allow Dish TV customers to choose to subscribe to the RSN channels they want — such as the regional AT&T SportsNet and Root Sports networks — on an a la carte basis, similar to premium subscription channels. With this updated RSN model, no customer would be forced to pay for content they don’t watch, and the RSNs would determine the price customers would pay for their channels.”

AT&T, which recently spun off Dish competitor DirecTV, noted that dropping sports networks has been a pattern for Dish and that AT&T SportsNet and Root Sports were among the last RSNs on Dish.

“We are not surprised Dish Network has chosen to deprive their customers of our regional sports networks” said Patrick Crumb, president of AT&T Sports Networks. 

“As each of the nation’s regional sports networks’ agreements with Dish have come up for renewal over the last several years, we have witnessed them remove each RSN from their channel lineup,” Crumb said. “It is unfortunate that Dish has decided to abandon local MLB, NBA and NHL games, but the vast majority of Dish subscribers will have multiple alternative options for TV and streaming providers that carry our networks and we expect that many will switch from DISH to those providers that value premium local sports content.”

AT&T said it is trying to keep the networks on Dish.

“For all three networks we proposed commonly accepted, marketplace terms to continue our relationship, which terms Dish itself has accepted previously, but Dish chose instead to drop our networks, forcing its customers to sacrifice access to their favorite regional sports teams,” said Nina Kinch, VP of affiliate relations and business affairs. “The terms proposed by Dish were not acceptable, and in fact have not been accepted by any RSN in the country.”

AT&T notes that the sports nets are available via cable and DirecTV. AT&T is also making the AT&T SportsNet’s available via DirecTV Stream.  Root Sports and AT&T Pittsburgh are available via fuboTV. 

Dish Network chairman Charlie Ergen told analysts Monday that he was “disappointed” that Sinclair Broadcast Group has decided to negotiate its upcoming retrans agreement in the press, adding that there is still some hope that a deal can be reached.

On a conference call with analysts to discuss Q2 results, Ergen said talks are continuing. Sinclair said earlier this morning that it believed it was unlikely a deal could be reached.

“I’m disappointed that they put a press release out that they expect the networks to come down. I think we have until Aug. 16,” Ergen said on the conference call. “Many negotiations come down to the wire, so we’re still going to bargain in good faith.”

That was likely a nod to Federal Communications Commission requirements that all parties in retrans agreements negotiate in good faith. Ergen added that there are other ways for his customers to receive the broadcast channels, either via antennas, Locast, or streaming services like Paramount Plus and Peacock.

But many analysts had hoped that the Sinclair RSNs -- which Dish dropped in 2019  -- would be included in the retrans talks. Ergen said he sympathized with the broadcaster, adding that regarding the RSNs, Dish first negotiated for the Fox Sports RSNs when they were owned by Disney, which purchased them as part of its $71.3 billion buy of certain Fox assets in March 2019. By the time Disney sold those channels to Sinclair later in May 2019, Ergen said reaching a carriage deal for the channels became a moot point. 

Also Read: Sinclair RSNs: Focus on the Dish Deal 

“By the time Sinclair owned it  and was able to negotiate it, our customers that wanted regional sports had left,” Ergen said. “There was no way in fairness to our customers that we could tax them in a basic package, when almost nobody who wanted regional sports was left. 

“I think there are innovative ways to reinvigorate the regional sports networks, Sinclair themselves have talked about it in a direct to consumer product,” Ergen continued. “We’ll continue to work with Sinclair to the extent they want to try to work with us in a win-win situation. But if not, … my expectation and hope would be that ultimately the companies try to resolve all the issues of concern to both parties.”

Ergen was mostly talking about the broadcast channels, but he said he would be open to any deal that included the RSNs, within reason. 

“If there are some opportunities in regional sports that make sense for us and Sinclair, we’re happy to talk about anything that’s interesting and helps our customers, but we’re not interested in taxing our customers when they don't watch the channels,” Ergen said. “Our customers will understand that. We may lose some customers if the networks go down. We’ve been through this before. The impact of [losing] local channels used to be devastating, and it’s still pretty bad, but it's not the same. And there are other alternatives.”

Later, Ergen said that the dispute with Sinclair is largely due to the fees they are requesting, and not an attempt to bundle the RSN networks with broadcast channels.

“At the end of the day it’s about money, it’s about economics,” Ergen said. “That hasn’t changed in any programming negotiation that I’ve ever been involved in.”

In a press release of its own issued after the conference call, Dish said Sinclair is demanding nearly $1 billion in retrans fees for its stations, which it claims is a “massive increase,” from its previous agreement. 

“Sinclair is making these outrageous demands, turning its back on its public interest obligation and putting customers in the middle of its negotiations,” Dish TV group president Brian Neylon in a press release. “...This negotiating tactic is used to upset our customers and intimidate us into accepting outrageous contract terms — a tactic the channel owner uses frequently.”

Dish directed customers to its DISHPromise.com website for more information, adding that it still hoped a deal could still be reached. 

“There is still time to reach an agreement with Sinclair that is fair for all parties involved, especially our customers,” Neylon said. “We will continue to fight on behalf of Dish customers to keep TV bills as low as possible. Despite the fact that Sinclair has walked away from the table multiple times, we stand ready to negotiate in good faith.”

Ever since the second streaming video player came on the scene -- that means anyone after Netflix -- folks in the press and pundit game have been quick to characterize every move, every deal and every programming strategy in the online video segment as another salvo in the so-called "Streaming Wars."

That particular metaphor has been troublesome for a number of reasons. And at the Media+Tech Collective (formerly the Rocky Mountain Cable Association) virtual fireside chat July 22, MyBundle.TV founder and CEO Jason Cohen said what I have been thinking about for a long time. Cable operators who have been de-emphasizing video for years in favor of higher margin broadband service don’t want fewer streaming players, they want as many as they can get.

"I think the war metaphor is the wrong one," Cohen said on the virtual fireside chat.
"It's a revolution against the set-top box. Obviously, 'Cut the Cord,' took off, but it really should be 'Ditch the Box.'"

It’s been clear for awhile now that operators are moving toward a time when they will eventually abandon, or severely curtail, their video offerings in favor of aggregating programming apps and packaging them in ways that simplify the selection process for consumers. For their trouble, cable operators would likely take a cut from the fees the programmers charge consumers.

It's a concept that has been batted around the industry for awhile, and it doesn't really take a genius to figure out if the traditional video business is dying at the hands of the streamers, the next logical step is aggregating the streamers. 

Already there are companies doing just that. Cohen launched MyBundle.TV in 2019, offering to find the right streaming services for subscribers based on their viewing habits and desires. MyBundle.TV partners with broadband providers -- WideOpenWest and CenturyLink are just two -- as well as some streaming services to help consumers navigate the growing number of streaming services.

And there are others, like Redbox -- which is planning to go public soon -- Amazon -- through its Amazon Channels -- Roku, Apple TV, Struum, TiVo (with TV Match Scores), all getting into the aggregation game. 

There are currently about 75 million pay TV customers in the U.S., a number that has been steadily shrinking over the past 10 years. Cable operators, with about 47 million subscribers, have shed about 4 million customers between 2018 and 2020. At that pace, the industry would reach zero by 2045.

Bernstein media analyst Peter Supino has predicted that the satellite business would dwindle to nothing in five years. Others have said that pay TV will never likely reach zero, but it could get close as consumer viewing habits change and streaming just becomes more convenient. But whoever you believe, it’s pretty evident that the traditional video business is not a fun place to be nowadays. 

Cable operators have been de-emphasizing video for several years -- every major operator has more broadband customers than video customers. Comcast, which held on to the video mantle the longest, had 31 million broadband customers and 19.4 million video customers as of March 31. Charter Communications had 29.2 million broadband customers and 16.1 million video customers as of March 31. Even smaller size operators like Altice USA (4.2 million broadband and 3.1 million video subscribers), have been focusing on high-value video customers -- those that take the highest programming tiers -- as they let less profitable ones cut the cord.  In cable, just as in streaming, broadband is king.

And the kingdom is growing. More and more streaming services are signing on every day, and Cohen expects their rolls to increase, in part because of aggregators like his that make it easier to navigate the crowded landscape.   

“The world doesn't have to be just Netflix, Amazon and Hulu,” Cohen said. “If aggregators like us didn’t exist -- it’s not just us, there are others -- it would be.

“We very much think we’re expanding the streaming markets,” Cohen continued. “So we think of the streaming market as not a war, it’s going the other way. There are going to be more and more players that are going to be able to build a business.”

Cohen named some up and coming streamers like FrndlyTV, which offers 19 channels like the Hallmark Channel, CuriosityStream, Weather Channel, UPTV and LocalNow, for $5.99 per month, but said Sinclair Broadcast Group’s plans to launch a direct-to-consumer version of its Bally Sports RSNs in 2022, could be “really interesting.” 

Also Read: Sinclair’s Streaming RSNS and Warner’s CNN Plus May Be Pay TV’s Biggest Disruptors 

Sinclair has said it would launch the direct-to-consumer offering in 2022, and reports have speculated that they would charge about $23 per month for the service. Sinclair has disputed that figure.  And while the venture into standalone streaming RSNs has had its share of controversy, no one has denied that some type of streaming offering is necessary. 

“They need to have a direct-to-consumer offering, and consumers want it,” Cohen said, adding that MyBundle.TV customers have been asking for more sports. He pointed to a recent survey of MyBundle.TV users who had selected an RSN as a channel they would be interested in, 71% said they would continue to pay for a regional sports network even if their team was out of playoff contention early in the season. 

The MyBundle.TV survey involved 1,712 respondents, all people who had used the service and indicated that they needed their local RSN. Cohen said 29.5% of the respondents had cable/satellite TV, 51.5% had a vMVPD, 6% stream but have no Live TV and 10% stream but use an antenna or Locast for local channels. The respondents were asked if their team was performing poorly during the season and they could cancel at any time, would they?

According to Cohen, 71% said, "No way - I'll watch at home with a paper bag on my head until the last game;" 13% said “Yes - but after 3/4 of the season”; 12% said “Yes- but after half the season;” and 4% said “Yes - but after 1/4 season.”

Although the respondents all appeared to be heavy sports fans and were already interested in paying for RSNs, it is contrary to conventional wisdom that predicts many RSN customers would drop the channel if their team was out of contention at mid season. 

The respondents weren’t asked if they would keep the service for the full year, just until the end of the season, which in baseball lasts about five months. Still, that could be encouraging news for Sinclair and other RSN owners considering the leap into direct-to-consumer offerings. 

Cohen said MyBundle.TV also asked those respondents that have already cut the cord how much they would pay for a direct-to-consumer RSN service in season, 16.7% said they would pay $31 or more, 8% said $26-$30, and 8% said $21-$25. Rounding out the survey, 11% said they would never pay for it, 25% said $1-$10, 17% $11-$15, and 14% said $16-$20.

For respondents that had cable or satellite TV, MyBundle.TV asked if they were to drop their cable or satellite service and could subscribe to a service that just offered their local sports teams, how much would they pay for it. Cohen said 23% said they would pay $21 or more per month for that sports service, while 6% said they would pay $31 per month or more. 

“There is definitely a market for people who will pay $20 per month or more,” Cohen said in an interview. “The question is, is the market big enough to offset if it disappeared from cable tomorrow.” 

Cohen said later that he was most impressed with the 71% figure because it shows that people are interested 

“That’s a big deal. Because if you can get someone to pay $20 per month, are they going to pay for one-and-a-half months or five months? I would venture that that’s going to be the difference maker on the business model,” Cohen said in an interview.

While the sample did only include people who wanted their local RSN -- which he said is also the target market for these DTC services -- it also presents options for offering different packages of games at different prices. 

“Sports fans are sports fans,” Cohen said. “If I was building the product, there is probably a world where for $20 a month you get access to every game and for $10 a month you get access to half the games. Maybe those fans who said the most they would pay is $10 a month are people who aren’t watching 162 baseball games and they'd love the opportunity to catch a game a week. I think there is definitely going to be an opportunity for there to be classic price discrimination to get that net even wider for Sinclair.”

Next week’s Major League Baseball All-Star Game — the traditional midpoint of the season — is just one of a series of crucial events that could profoundly impact Sinclair Broadcast Group’s regional sports network experiment, according to some analysts.

The All-Star Break (the few off days after the All-Star Game, scheduled this year for July 13 in Denver) is usually the point when the baseball gods decide whether teams are in or out of playoff contention. While there have been a few exceptions over the years, it also is traditionally the time of year when fans decide whether it’s worth it to religiously follow said ball clubs for the remainder of the year. 

For Sinclair’s RSNs, owned by subsidiary Diamond Sports Group and marketed under the Bally Sports Networks moniker, it means the beginning of a series of events that could seal the fate of the channels they bought just two years ago for $9.6 billion.

The All-Star break will likely pass without a streaming carriage deal for the RSNs with YouTube TV, Hulu and fuboTV, which earlier dropped the channels over pricing. YouTube TV has been without the Sinclair RSNs since September, while Hulu and fuboTV dropped the channels in October and January, respectively. 

So far there seems to have been little impact from the decision to drop the channels on the streamers. On June 2, Evercore ISI media analyst Vijay Jayant issued a report that downloads for the YouTube TV, Hulu and fuboTV apps were up sharply during June, largely because of sports like the U.S. Olympic Trials, NBA Playoffs and other non-RSN related fare. 

While Sinclair and the streamers appear to be living well without each other, another deadline approaches that could have a far greater impact — Sinclair’s upcoming broadcast retransmission consent negotiations with Dish Network. That deal expires in August and is expected to include at least discussions regarding the RSNs. Dish dropped the Sinclair RSNs in 2019, and restoring that deal is a key part of Diamond Sports’ attempts to restructure its $8 billion in bond debt. According to documents filed with the Securities and Exchange Commission in June, Diamond Sports based its future revenue projections on getting that Dish deal done.    

“The countdown clock is ticking,” said LHB Sports, media & entertainment CEO Lee Berke, adding that the more pressing deal to get done is probably the August Dish deal. “It’s July 8. We’ve got 23 days to go.”

“The All-Star Game is coming next week, pennant races are underway, you’ve passed the midpoint of the season,” Berke continued. “If they [Sinclair] are going to cut deals for the RSNs with vMVPDs and Dish, it’s going to have to happen very, very quickly.”

Dish Deal Looms Large

One sports executive who asked not to be named said the importance of the Dish deal can’t be exaggerated.

“I wouldn’t say it’s do or die, but it is ultra, ultra important,” the executive said.   

Dish has driven a hard bargain in past RSN negotiations and seems to have the advantage with Sinclair. After two years without the channels, the subscribers Dish would have lost as a result are already gone. For some observers, the only incentive for Dish to do a deal for the RSNs would be a steep discount in retrans fees for the broadcast channels. 

“That flies against what everybody is looking for in the marketplace from a broadcast standpoint,” Berke said. “If they can achieve it, that’s what Dish does, they negotiate very aggressively.”

On the other hand, Sinclair plans to launch a direct-to-consumer version of the RSNs next year, which could offset those losses. Still, Sinclair has taken an extremely conservative approach to the DTC service, which according to the SEC documents is expected to have 4.4 million customers in five years. Dish represents about 8 million subscribers to the RSNs.  

In a research note last month, Wells Fargo media analyst Steven Cahall wrote that he believed the Dish deal needs to get done before bondholders would commit to a restructuring.

RSNs in general have been under pressure as distributors seek lower prices and pay TV customers jump ship for streaming services. Cord cutting has carved a huge chunk out of the traditional affiliate fee structure of the RSN business — about 6 million cable, satellite and telco TV customers cut the cord in 2020 — and programmers have been hard pressed to find a replacement. While DTC could solve part of that problem, it isn’t expected to be the be all, end all for the business. 

As a result, programmers are looking for other ways to monetize and distribute sports content in addition to traditional models.

NBCUniversal said it plans to shutter sports network NBCSN at the end of this year and shift some of that programming to USA Network and streaming service Peacock. Others like AT&T’s Root Sports Networks, were put on and taken off the block in the past two years, as demand for the channels waned. Root Sports recently agreed to carry the NBA’s Portland Trail Blazers on its Root Sports Northwest RSN — jointly owned with the MLB Seattle Mariners — beginning in 2022. That deal could mean that NBCU’s NBC Sports Northwest will close its doors.   

Berke added that whether the NBC RSNs are up for sale or not, it appears that come next basketball season, at least NBC Sports Northwest will be no more. 

“That one’s dropping out of the portfolio regardless of what takes place with the rest," Berke said, adding that an RSN losing all the professional teams in a single city hasn’t happened since 2004, when Fox Sports Chicago lost the Bulls, Cubs, Blackhawks and White Sox to Comcast SportsNet.

“That’s a major shift,” Berke said. “It sure seems to confirm that once the basketball season rolls around, they won’t have anything to show.”    

And while sources said that NBCU has not started a formal process to sell its other RSNs yet — no bankers have been hired nor consultants consulted as of July 9 — the programmer has been thinking outside of the box regarding sports programming.

Peacock‘s Philly Experiment

On June 18, 19 and 20 NBC aired a three-game series between the Philadelphia Phillies and San Francisco Giants exclusively on Peacock. The move was thought by many to be another experiment by the league to look at different ways to distribute content.

In a press release, Major League Baseball said the move was part of its “ongoing commitment to deliver unique game presentations via emerging distribution platforms within the evolving media landscape.”

Back in April, MLB chief operating officer Chris Marinak told SportsPro Media  that the league was trying to “figure out what type of structure would make sense for an over-the-top product that may not require authentication.” 

Currently, RSNs stream in-market games to their pay TV subscribers, not on a standalone basis. The league has its own standalone streaming product — MLB.tv — that allows customers to stream every team’s out-of-market games for $44.99 per month or a single team’s out of market games for $34.99 per month. Blackout restrictions apply. 

Some reports have said that Sinclair has failed to secure approvals from some distributors for its DTC offering, but the company appears to be going full steam ahead with its streaming plans. In the meantime, Sinclair is scheduled to report its Q2 results on Aug. 4, and may have some updates on its DTC status, as well as that of its Dish negotiations. Maybe then investors will decide whether it's worth sticking around for the rest of the regular season.  

Sinclair Broadcast Group chief Chris Ripley denied reports that its planned direct-to-consumer RSN service would be priced at $23 per month, but declined to reveal how much the company will charge for the service, according to an interview the CEO had with the Baltimore Business Journal.

Baltimore Business Journal reporter Holden Wilen corralled Ripley briefly during a celebration for Sinclair’s entry into the Fortune 500 on June 21. Wilen asked Ripley about the $23 price point.

"That number is inaccurate and I can’t comment on what the ultimate pricing will be," Ripley said, according to the publication.

That denial also comes on the heels of Sinclair’s 8-K filing with the Securities and Exchange Commission that offered more details -- but no pricing information -- on the proposed DTC service.  

According to the Business Journal report, Ripley said Sinclair is conducting market research to determine a “fair price” for the DTC service, but his reluctance to offer any guidance as to the ultimate price of the service could speak volumes. Is he saying the reported price is too low or too high? 

Ripley and Sinclair have been keeping any information concerning the pricing of the service close to the vest. At the JP Morgan Telecom, Media & Communications conference in late May, Ripley would only say that there would be a “substantial difference” between pricing for the DTC service and  what the RSNs charge traditional distributors. 

According to Kagan, a unit of S&P Global Market Intelligence, the average RSN charges about $3.53 per subscriber per month. The Sinclair RSNs -- which are branded as Bally Sports Networks -- charge distributors between $7.52 and $2.42 per subscriber per month, Kagan said.

Earlier this month the New York Post reported that Sinclair was trying to raise $250 million for the DTC service, which would be launched in 2022 at a price of about $23 per month.  

Media outlets quickly spread the news, with some in markets like Minneapolis and Fort Worth, Texas, where Sinclair has an RSN presence, expressing varied opinions about the cost.

Also Read: Why Sinclair’s $250 Million Sports Streaming Swing Could Deliver a Walk-Off Defeat of Pay TV 

In a March podcast with the Minneapolis Star-Tribune, The Streamable co-founder Jason Gurwin estimated that Sinclair would have to charge as much as $40 per month for the standalone service, less if there is a heavy sports betting component. 

“So if they need to charge the consumer $40 a month in order to break even on rights fees, I could imagine a world where they're like 'Hey, if you are gambling $100 a month through our service, we'll give you the RSNs for free.' But obviously online sports betting is not legal yet in Minnesota," Gurwin said in the podcast.

Sinclair filed documents with the Securities and Exchange Commission on Tuesday that showed in part its plans for the DTC service. While it did not include pricing, it did say that the company expected to have about 4.4 million subscribers to the service within 5 years  that would generate about $1.025 billion in revenue. At that rate, ARPU for the service works out to be about $26 per month, but that could also include advertising revenue. 

Other sports pundits have estimated that Sinclair would have to charge between $25 and $30 per month for the standalone streaming service. And they have said that the company’s goal of attracting 4.4 million customers for the DTC service was surprisingly low.

Also Read: Ripley Says Bally Sports Net DTC Offering Will Be a Lean-Forward Experience 

Sinclair has estimated previously that the standalone service would tap into as many as 30 million homes within the networks’ service territory that don’t subscribe to a pay TV service. Add that to the 52 million subscribers to its traditional pay TV offering, and the potential universe for the DTC service looks large. 

Sinclair bought the RSNs in 2019 for about $9.6 billion from The Walt Disney Co., placing the networks in a separate subsidiary called Diamond Sports Group. Diamond has been trying to restructure about $8 billion in debt associated with the purchase for months.  

Sports consultant Lee Berke, president and CEO of LHB Sports, Entertainment & Media, said RSNs across the country are grappling with ways to make up for the rapidly declining linear pay TV customer base, which is shrinking at a 6% to 7% annual clip as consumers increasingly cut the cord. Sinclair is faced with the added obstacle of restructuring its debt, meaning it has yet another party to sign off on its plans -- its bondholders. 

“You need viewers, you need distributors and you need the bondholders to all enthusiastically support this,” Berke said. “So far it seems like there is limited support from all three.”

According to the SEC filing, Sinclair has proposed restructuring Diamond Sports Group’s $8 billion in debt by asking for an additional $1.1 billion in cash from bondholders in exchange for higher interest rates, but that it had not been able to reach an agreement. News of that failure sent the DSG bonds below 66 cents on the dollar for the first time since November, according to The Wall Street Journal. 

The bondholder proposal seems similar to one floated back in April that was outlined in greater detail by Wells Fargo media analyst Steven Cahall. 

“This is not just a Sinclair problem, it’s an NBC problem, it’s an AT&T problem, it’s everybody in the RSN marketplace,” Berke said. “But it sure seems like you’re going to have to come up with something that is more aggressive to get a buy-in from all three parties. The sort of buy-in you need to move things forward.”

Ripley said on Sinclair’s Q1 earnings conference call in May that it has “cleared the path” with distributors regarding the DTC offering, but a Sports Business Journal report claims that at least two major distributors say they have not held “meaningful contact” with the broadcaster and are “in the dark” concerning the direct-to-consumer plans for the RSNs. 

Those same distributors said they would consider dropping Sinclair’s RSNs from their pay TV lineups if they launched a standalone DTC version of the networks, encouraged by Dish Network, which dropped the linear RSNs in 2019. 

In the SEC filing, Sinclair estimated that the linear RSNs would generate about between $3.07 billion and $3.249 billion in revenue in 2021, but that appeared to include Dish subscribers. Dish is set to renew its retransmission-consent agreement with DSG parent Sinclair's broadcast TV stations in August, at which time the RSN agreement could also be renewed.

Sinclair Broadcast Group CEO Chris Ripley said that the gamification aspect of its planned over-the-top regional sports networks offering slated for next year will provide users with more of a lean-in, video game-like experience rather than just another vehicle to watch live games. 

Sinclair has said its Bally Sports Networks RSNs will launch a direct-to-consumer version in 2022 (Bally Sports Plus) for all 19 of its channels. While Ripley did not address reports that the company was trying to raise $250 million for the launch -- and that the DTC version would be priced at about $23 per month -- he did offer some slightly new insights to the product.

At S&P Global Market Intelligence’s virtual Kagan Media Summit Thursday, Ripley said that the DTC service will be more than just delivering games to subscribers. 

“This is really about giving people a whole metaverse around sports, for them to interact with fans that have self-selected teams they like, and giving them opportunities to engage in different types of content, like short form editorial to highlights and then gamification,” Ripley said in a pre-recorded conversation with Kagan senior research analyst Justin Nielson. “When you think about bringing a sport fan who would have historically watched on linear channels, bringing them into a digital environment where you know their name, you know their payment information, you know their preferences, it opens up a whole plethora of opportunities in which you can increase engagement and you can increase revenue opportunities.”

While there has been some speculation that the DTC version of Bally Sports could offer out-of-market games to subscribers, Ripley said that is not the case, at least for now. 

“The core rights that this enterprise will start with, those are limited to the regions the RSNs operate in,” Ripley said, adding that there is still a significant opportunity there. Sinclair has said within its existing footprint of 70 million homes there are about 35 million homes that don’t get live sports. 

“That means that over half of households are not getting their local sports product,” Ripley said. “We think that within that opportunity set there is a significant amount of fans who will  now be able to engage with us.” 

Gamification has been cited as potentially one of the more lucrative aspects of a DTC sports channel -- some research estimates it could be worth as much as $10 billion to $20 billion annually over the next several years. But Ripley said the goal on that end is to give users, particularly younger users, a more interactive experience. He added that Sinclair is working on a new experience with Bally that would allow viewers to watch and play at the same time.

“Currently it’s a passive experience,” Ripley said of watching sports. “In all of our research the younger generation is looking for that video game-like experience, a lean-forward experience, where they are able to interact, to play a game within the game. That’s the goal of the [Bally’s] partnership, to be that cornerstone at least as it relates to the for-money version of gamification, to build out a new sports viewing experience.”

The idea of a standalone streaming sports service on the surface seems like a no-brainer. If sports is often the most-watched programming on linear TV, why wouldn’t a DTC service be equally popular with consumers? But there are a mountain of factors that could affect a streaming RSN product, starting with pricing. While reports have said that Sinclair is targeting a $23 monthly price point for the service, others have said it will probably be closer to $30 per month. But even at the lower price, it’s still a difficult sell.  

Adding to the pressure is that while RSNs currently receive fees from pay TV distributors for all of their subscribers, regardless of whether they watch or want the programming, that won’t be the case with a DTC service. The prevailing wisdom is that about 30% of traditional pay TV subscribers watch sports, but it can be lower. Earlier this week, Altice USA chief financial officer Michael Grau said at the Credit Suisse virtual Communications Conference that about 15% of its nearly 3 million video customers "are reasonably or heavily engaged in watching regional sports networks.”  

Also Read: NBCU Eyes Peacock for RSN Future 

Sinclair is one of the largest TV station owners in the country with about 186 properties in 87 markets; and is the largest individual owner of RSNs, with 19 properties and minority interests in two more --YES Network and Marquee Sports Network. At the Kagan conference, Ripley said that he expects consolidation to continue in both industries and that Sinclair will be a participant.

“We’re always interested in figuring out a way to consolidate the marketplace, both on the TV side and the RSN side,” Ripley said. “The TV side is entirely too small in the world of big tech and big media and it’s really outdated regulations that keep it that way. Consolidating the industry is a commercial inevitability both on the broadcast side and then on the RSN side, it’s also a commercial inevitability there that consolidation will be effected. Being about half the industry there, we will play a major role in that.” 

Sinclair Broadcast Group is trying to raise as much as $250 million to help fund the 2022 direct-to-consumer launch of its Bally Sports regional sports networks, a product that will be, according to some reports, priced at about $23 per month.

Sinclair has said it would launch a direct-to-consumer version of its 19 Bally Sports RSNs next year, and last month CEO Chris Ripley said the service will include a full slate of games for the channels. Sinclair has not revealed pricing for the channels, but most pundits have estimated it would have to cost between $25 and $30 per month. 

According to a report in the New York Post, Sinclair is trying to raise about $250 million for the DTC service, tapping boutique investment bank LionTree to round up potential investors. According to the Post, Sinclair expects to charge consumers about $23 per month for the service.  

LionTree declined comment. 

But according to sources inside the sports network community, even at $23 per month the RSNs may be priced too low. 

The Post, citing unnamed sources in the financial community, said that Sinclair projects that the DTC service would have more than 4.4 million subscribers by 2027 and would break even by 2024. The company has said publicly that it has 52 million subscribers (representing 35 million unique households) to its linear RSNs, but there are more than 30 million homes in its footprint that are potential subscribers to a DTC service.

Sports consultant Lee Berke, president and CEO of LHB Sports, Entertainment & Media, said if the Post is right, the amount of money to be raised and the potential subscriber growth for the standalone service seems shockingly low. 

“You get 4.4 million subs after five years of operation,” Berke said. “That still seems low in terms of the results you need to make up for the losses of subscribers on the pay TV front, both now and for the next five years.”

That’s a key observation, because no matter what programmers say is their motivation for going direct-to-consumer, the main catalyst is the rapidly declining traditional pay TV subscriber base.

Cable, satellite TV and telco TV distributors have averaged a loss of 3.7 million subscribers per year over the past six years, according to MoffettNathanson, but the pace has quickened in the past two years. Traditional TV lost 6.14 million customers in 2019 and 6.17 million in 2020, nearly twice the pace of 2017 and 2018 -- when losses were 3.2 million and 3.8 million, respectively. In the first quarter of this year, losses were about 1.7 million, about the same as the prior year.

With pay TV subscriber losses only expected to increase over the years, adding 4.4 million subscribers over half a decade won’t remotely take up that slack. 

And then there is the question of scale. After five years, the 19 Sinclair RSNs will effectively have roughly one-third of the subscribers of ESPN Plus, which launched three years ago (2018) and has currently about 13.8 million subscribers. Entertainment-focused streamers have gained even more customers, led by The Walt Disney Co.’s Disney Plus, which launched in 2019 and has more than 100 million customers.  

Berke also was skeptical that $250 million would be enough to launch a successful DTC streaming service. 

“I know that’s a lot of money in absolute terms, but is it enough in terms of the infrastructure to pull this together? I don’t know,” Berke said.   

Sinclair’s attempt to raise cash for its DTC service comes a few days after the NBA Portland Trail Blazers reached a four-year carriage deal beginning next season with Root Sports Network, the regional sports channel owned by Major League Baseball’s Seattle Mariners and AT&T. The Trail Blazers had been carried by NBC Sports Northwest -- which according to some reports is about to be shut down -- and the team said it had explored distribution alternatives, which some have interpreted as  been said to be investigating launching its own direct-to-consumer product, but decided against it. 

“The thing about the Northwest transaction that is really interesting from my perspective is that you have the Blazers rights moving from a network that reportedly is shutting down over to a network that may or may not be up for sale,” Berke said. 

AT&T has said in the past that its RSNs, including Root Sports, were up for sale and later took them off the block. Once part of its DirecTV unit, the RSNs will remain with AT&T after the deal closes next year, and AT&T has said it will continue to license the content to DirecTV and others. But that was before AT&T agreed to spin off its WarnerMedia unit with Discovery, which could further cloud the issue of the sports networks.  

Sinclair’s RSNs have been under fire practically since the broadcaster purchased the channels from The Walt Disney Co. in 2019 for about $9.6 billion. The channels, rebranded as Bally Sports Networks in April, are still carried by the major pay TV distributors.  But they lost carriage with three key streaming services -- Hulu Plus Live TV, YouTube TV and Fubo TV -- in the past several months. In addition, Diamond Sports Networks, the Sinclair entity that actually owns the RSNs, has been trying to renegotiate terms for about $8 billion in debt over the past several months. Some pundits have suggested that raising money for the standalone streaming option is partially an attempt to show investors that it is serious about eventually going fully direct-to-consumer.

While DTC offerings are rife throughout the content business -- every major network either has a direct-to-consumer option or is working on one -- sports networks have unique challenges, mainly churn.

Berke said that unlike entertainment streamers, RSN customers are much more likely to churn once the regular season of their favorite team ends, or even sooner if the club is out of the running for the playoffs. While many RSNs offer games from multiple leagues -- MLB, NBA, NHL and MLS to name a few -- others only have one major league affiliate, which can make it difficult to keep viewers for a full year.

“If your baseball team is out of contention by July 1, you’re going to cancel,” Berke said. “If your NBA team is out by February, you’re going to cancel. The same with your NHL team.”

While the current RSN distribution model has come under fire recently, its true beauty lies in the concept that everyone pays for the channels whether they watch them or not. In the past, analysts have speculated that only about 30% of pay TV customers watch sports, which means that breaking free of the old model would either require a huge spike in fees, a dedicated streaming subscriber base as large as the current pay TV universe or multiple revenue streams. RSNs are expected to continue to reap advertising revenue through their DTC offerings, although there are questions on how much they will get. And there is the prospect of gamification, which could be potentially lucrative but is still thought to be a few years away.

Berke said gambling could help solve some, but not all of the RSNs' problems.

"The question then becomes does gambling in and of itself make up for the ongoing losses in affiliate revenue," Berke said. "It ameliorates it, I don't think it totally covers it."

Sinclair Broadcasting Group CEO Chris Ripley offered a little more insight into plans to launch a direct-to-consumer version of its Bally Sports RSNs next year, adding that the offering will likely include a full slate of live games and be priced high enough as to not upset its MVPD partners.

Bally Sports has about 19 regional sports networks across the country. While the networks have struck carriage deals with most major traditional MVPDs, it has drawn some attention after streaming services YouTube TV and Hulu Plus Live TV dropped the channels last year. Dish Network dropped the RSNs in 2019.

Sinclair first said it would launch a direct-to-consumer version of the RSNs in 2021, but later extended that timeframe to mid-2022. At the JP Morgan Telecom, Media & Communications conference Tuesday, Ripley offered more insight into the plan.

Sinclair has long said while the RSNs have about 52 million subscribers, mainly through traditional MVPDs, that represents about 35 million unique households, or about half of the homes in the markets of the teams it represents. 

“That, plus the growing fandom of people outside the pay TV bundle, which our research points out to be quite significant, the demand for the direct-to-consumer offering is quite large,” Ripley said at the conference.

Also Read: Sinclair RSNs Face Tumultuous Period Analyst Says 

Ripley touched on the issue of pricing, which most analysts see as the key factor in the success or failure of a DTC offering. While the Sinclair CEO wouldn’t give specifics, he mentioned that it would be a “substantial difference” between what traditional MVPDs are currently paying and what consumers would pony up for the standalone channels. 

Sinclair is currently working out the details of the DTC offering, including the exact games, whether they would focus on monthly or annual pricing, all of which will be revealed closer to the launch date.   

Ripley said the industry is already moving toward a hybrid of linear and DTC distribution, and Sinclair is no different.

“The pay TV bundle has become a multi-platform, app-based experience across distributors, then you’ve got the direct-to-consumer experience which is natively app-based and modern in terms of the user experience,” Ripley said. “That hybrid environment is where we’re going to move to on both sides of our business over time. The key component on how we view the pay TV bundle and direct-to-consumer is really a pricing difference. There will be a substantial difference in prices of what the distributors buy on a wholesale basis versus what a retail customer would pay for a direct and unbundled offering.” 

Ripley wouldn’t get into pricing details, but said it would be high enough so as to protect the existing MVPD relationship.

Also Read: Bally Sports Networks Strike Out with Streamers on Opening Day 

“We will give pricing protection to the distributors to preserve the concept of wholesale pricing into bundled offerings versus retail pricing,” Ripley said. “There will be significant difference there in terms of what the value proposition is for distributors.”

Some analysts have predicted that a direct to consumer offering that included all of the games would have to be priced as high as $25 to $30 per month, more than four times what Sinclair charges monthly for its priciest RSN, Bally Sports Detroit, which costs distributors about $6.85 per subscriber, according to Kagan, a unit of S&P Global Market Intelligence. 

But according to sports consultant Lee Berke, president and CEO of LHB Sports, Entertainment & Media, even at that price point, Sinclair fails to address the main issue – attracting new subscribers to combat the shrinking pay TV universe for RSNs along with the loss of most vMVPD distribution.

Sinclair, like other RSNs, is faced with the unenviable task of trying to appease the segment that is generating most of its revenue -- MVPDs -- while attracting streaming subscribers who want to pay less. It’s not an easy situation, and it is particularly tricky for sports networks. While entertainment streamers like Disney Plus, Netflix, Amazon Prime and HBO Max can manage through enormous scale to charge between $10 and $15 per month for service, RSNs, which have high sports rights costs and live programming that is not always year-round, have to charge more just to break even. 

“The problem with that is, it’s not necessarily a consumer-focused strategy,” Berke said of a $25 to $30 price point. “If you please the distributors and yet the fans don’t purchase the service, then what have you done? As I see it, you haven't really solved anything. The problem isn't that the distributors are upset. That’s a symptom of what is going to happen by going direct-to-consumer. The problem is that the universe is shrinking.”   

For sports nets, the answer is in part by offering DTC customers more. Ripley said engagement with its authenticated apps is driven by games, but also by VOD and editorial content created by Sinclair. 

“It's not just about putting the games over the top, it’s about the platform you create around that,” Ripley said, adding that as the business moves more toward digital distribution, opportunities around ticketing, social media and gamification become more important. 

“If you think about where this is headed, there’s been a lot of talk in the video game industry about creating a metaverse around various game experiences,” Ripley continued. “This is no different. The winner here on direct-to-consumer sports will have a metaverse.” 

But the real game changer could be sports betting. Bally Corp., the gaming giant that purchased naming rights to the Sinclair RSNs last year, began beta testing its mobile sportsbook, Bally Bet, in Colorado earlier this month.  The company expects to launch the service in three additional markets this year and in other areas in 2022. 

Ripley said the  opportunity around sports betting is huge, adding that the company is working on a “Watch and Play” experience that would allow viewers to bet on games while they’re watching them. Ripley called gamification the third major prong of sports rights monetization and would eclipse advertising revenue, and maybe even subscription fees, once it hits its stride. 

Also Read: Sinclair RSNs: Timing is Everything

Ripley added that early versions of a “gamified experience” could surface next year, while the overlay of sports betting would depend on which states allow it.

“In four or five years you’re gonna be in many, many markets where you can have a real time gamified experience while you watch, play the game within the game,” Ripley said. “When that becomes widespread, that’s when the real economic opportunity becomes quite significant.”

One month after the 2021 Major League Baseball regular season threw out its first pitch, virtual multichannel video programming distributors YouTube TV, Hulu Plus Live TV and Fubo TV are still without Sinclair Broadcast Group’s regional sports networks.

About 19 of Sinclair’s RSNs, rebranded under the Bally Sports Networks name this month, went dark to YouTube TV and Hulu Plus Live TV customers in the fall (Fubo TV dropped the channels in January 2020), but there were hopes that the networks would return in time for opening day of the Major League Baseball regular season. That didn’t happen. 

Pricing appears to be the reason for the decision to do without the channels, and apparently there has been little movement on either side regarding negotiations. 

In addition to the Bally Sports channels, YouTube and Hulu also passed on carriage for another RSN in which Sinclair owns a minority interest -- YES Network, TV home of the New York Yankees. Marquee Sports Network, owned by the Chicago Cubs and also minority-owned by Sinclair, reached a carriage deal with Fubo TV on March 31, but still doesn’t have a deal with YouTube TV and Hulu. 

Despite the impasse, the networks have enjoyed strong ratings, according to people familiar with the channels. The YES Network, which launched a new authenticated app in March, said its opening week TV audience was its largest in nine years.

YouTube dropped the Sinclair RSNs in September, Hulu in October and Fubo TV in January 2020. Back in March, Sinclair said that it was working toward an agreement with the streamers, but so far that hasn’t been successful. Sinclair did not return a request for comment. 

Sinclair is scheduled to release its Q1 financial results on May 5, so they are likely to field a few questions about the dispute on its quarterly conference call with analysts. 

According to sources familiar with the negotiations, Sinclair and the streamers haven’t met for months. And as the impasse continues, the prospect that a deal will be reached this baseball season, seems farther from reality. 

At the beginning of the month, sports consultant Lee Berke, CEO of LHB Media & Entertainment, guessed that maybe one of the streamers would reach a deal with the Sinclair RSNs, but not all of them. His reason: streamers just don’t see sports as the glue that holds the bundle together, like traditional distributors do. 

At the time, Berke said that regular season baseball would be the litmus test for the streamers. If their subscriber rolls weren’t materially affected by the loss of games, then they probably could do without the channels all-together.   

“It’s difficult to see all three of them coming back in,” Berke said a month ago. 

Today, his mind hasn’t changed. 

“I don't think it’s a good sign for the RSNs,” Berke said Friday (April 30) of the continued impasse. “That being said I don’t think a month alone will do it,” adding that baseball fans get more engaged later in the season as pennant races heat up. So there is still some time left to figure out the true impact of not carrying the networks. 

YouTube TV, Hulu and Fubo TV are not devoid of sports without the Sinclair RSNs. The vMVPDs carry ESPN and MLB Network, TBS and TNT that carry national baseball games. They just don’t have all the games of all the local professional teams, which are primarily carried on RSNs.

“They [the vMVPDs] are trying to see if that allows them to skate by,” Berke said. “You’ve got large numbers of younger fans that want to see these games through their virtual MVPDs. But if it’s not in numbers large enough or compelling enough to make them change their strategy then they are going to continue to go forward with it. The crunch point is going to be in the next couple of months.”

Sinclair purchased the RSNs in 2019 from The Walt Disney Co. for about $10 billion. Dish dropped the Sinclair RSNs in July 2019, shortly before it closed the Disney deal, and since then pay TV distributors have increasingly resisted big price increases from RSNs.  Although Sinclair has carriage deals for the RSNs with most major traditional distributors, the streaming channels, which have a younger audience, are starting to fight back.

Also Read: Sinclair RSNs Face ‘Tumultuous Period, Analyst Says 

YouTube TV has been in the news lately for a different battle with streaming box maker Roku. Today (April 30), YouTube let its Roku deal expire. 

Current YouTube TV customers would continue to be able to access their subscription via the Roku device. They just won’t be able to download the YouTube TV app from the Roku store, which would prevent new customers from signing up via Roku. Access to the free YouTube internet app would be unaffected. 

Also Read: Who Needs Roku? YouTube Already Dominates Worldwide Video 

Some fans have taken to social media to voice their displeasure, with several tweeting that the Roku impasse, coupled with dropping the RSNs could be the last straw. 

“Between this and losing the regional sports channels you used to have, and that I wouldn't have switched to you if you didn't have - Fix these problems or I'm gone,” said one YouTube TV user. 

So far, Sinclair doesn’t seem to have taken the usual path of a programmer in similar disputes -- asking fans to put pressure on the distributor either by calling and emailing the distributor or switching providers. The Bally Sports Twitter feeds are mainly focused on game highlights, although Sinclair did set up a dedicated microsite -- www.getmyhometeams.com -- in December that directs fans to other providers like AT&T TV, DirecTV, and Spectrum (depending on the market) to get access to the RSNs. Sinclair has had a reputation of being an aggressive adversary in distribution disputes -- look back on any of its major retrans battles for proof of that -- so its current stance is a bit unusual. 

Whether the current battle escalates or not, Berke said a lot of the controversies that have surrounded Sinclair and other RSNs are missing the larger point, which is the erosion of the current RSN model.

“The RSN model works extremely well when cable pay TV penetration is growing or is at least stable,“ Berke said. “But it was not set up to profitably handle the retrenchment of pay TV penetration. That is what needs to be addressed. And you address that by offering up your networks to as many platforms as possible. That’s easier said than done, but it’s imperative.”

Wells Fargo media analyst Steven Cahall told clients Tuesday that he believes Sinclair Broadcast Group’s regional sports networks could face a “tumultuous” period over the next few months, as uncertainty mounts concerning its upcoming carriage renewal with Dish Network and its ongoing battle with streamers YouTube TV and Hulu Live.

Sinclair’s RSNs, which were rebranded on April 1 as Bally Sports Networks, have been under the gun lately, after they failed to reach carriage deals with YouTube TV and Hulu before Opening Day of the Major League Baseball season. Now the networks -- which are housed under the umbrella of Diamond Sports Group -- are facing another potential battle as carriage negotiations with Dish Network are expected to start in the coming months. 

Also Read: Sinclair, Streamers Still at Impasse Over RSNs 

Dish dropped 16 former Fox Sports RSNs in July 2019,  shortly before Sinclair acquired the networks in August 2020. In a research note, Cahall wrote that he believes a deal eventually gets done, but will depend on the liquidity situation at Diamond. If Sinclair is able to favorably recapitalize the holding company -- which it is in the process of doing -- it should have the upper hand in talks with the satellite TV company. If not, Dish would have the advantage. 

But Dish has managed to survive for more than a year without the channels and has a reputation for taking an extremely hard line when it comes to sports channel carriage. That could also play a role in negotiations. 

“Dish is arguably the toughest MVPD negotiator and has financially benefited from dropping the RSNs,” Cahall wrote. “Thus, we believe a deal is likely, but our best guess is Dish returns with some sort of win/win partnership. Time will tell.”

Dish did not immediately respond to a request for comment. 

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

Sinclair and Diamond first started to try to restructure its debt in October.  Now, according to Bloomberg, Sinclair is entertaining creditor proposals to restructure the debt and was close to new marketing deals with other sports betting companies. 

According to Cahall, Bloomberg said that Diamond is in talks with creditors and outside investors on a number of issues, and one proposal by its unsecured creditors would have them pumping at least $500 million of new cash into the company and exchanging their bonds for new debt with tighter covenants. Other secured lenders have proposed a $500 million term loan which Sinclair could use to exchange existing unsecured debt.

If that comes to be, Cahall wrote that Sinclair’s $1.7 billion in unsecured debt (out of about $8.1 billion in total obligations) would become secured. That gives debtholders a little more security, especially in the event of a liquidation. Diamond’s liquidity is an issue -- Cahall estimated that it would run out of cash in 18 months if nothing is done -- and in the early stages of the negotiations six months ago, bankruptcy was an option that was being considered. 

“The unsecured bonds are trading at $48 - a steep 52% discount,” Cahall wrote. “Given our latest EBITDA and FCF outlook for Diamond the cash starts to run out in the next 18 months. That's both a bad backdrop for renegotiating with Dish - thus a self-fulfilling negative prophecy - and if liquidity issues were to ultimately push Diamond into a liquidation, the unsecured lenders would likely not receive much recompense. Therefore, a haircut today with future security is arguably a positive outcome for these lenders.”

YES Network said Friday that it has averaged about 391,000 viewers for each of its first six telecasts during the opening week of the 2021 baseball season, its best showing since 2012 and comes despite being blacked out by a trio of streaming services.

YES Network has been without carriage on three top streaming services -- YouTube TV, Hulu Plus Live TV and FuboTV for months. The regional sports network, which airs New York Yankees baseball games in the New York metro area, cited Nielsen ratings for the New York DMA. According to YES, it was the RSN’s best opening week since 2012, when Nielsen said it averaged 416,000 viewers for the first week of that season. 

That news comes after YES said its Opening Day game between the Yankees and the Toronto Blue Jays broke streaming records for the channel. YES said its April 1 telecast of the game attracted 543,000 total viewers, including 72,739 unique viewers to its authenticated YES app. That made it the most streamed live game on the network ever, either on its recently launched YES app or its predecessor Fox Sports GO. 

Also Read: Bally Sports RSNs Strike Out with Streamers on Opening Day

YES went dark to YouTube TV and Hulu Live Plus TV customers in October. FuboTV dropped the channel in January. The Yankees network is available via traditional distributors like Comcast, Charter Communications, Altice USA’s Optimum, DirecTV and Verizon Fios in the New York metro area.  

Sinclair Broadcast Group owns a minority interest in YES and has been negotiating carriage talks for that channel as well as 21 former Fox Sports RSNs. Those former Fox sports channels -- rebranded under the Bally Sports name on March 31 --  also are not available on the streaming services, but Sinclair officials have said they are trying to work on a deal. 

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

The lack of streaming RSN programming isn’t limited to the Bally Sports Networks and YES. Sling TV, the OTT arm of satellite TV service Dish Network, which dropped the former Fox Sports RSNs in 2019, has been without Mid-Atlantic Sports Network (MASN), home of the Baltimore Orioles and Washington Nationals, and three NBC Sports RSNs (NBC Sports Washington, NBC Sports Bay Area and NBC Sports California) since April 1.

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." 

fuboTV, the sports-oriented streaming service, said it made a deal to carry the Marquee Sports Network--the home of the Cubs--in the Chicago area.

Marquee Sports Network was launched before last season as a joint venture between the Cubs and Sinclair Broadcast Group, which owns a string of other regional sports networks that are being rebranded as Bally’s starting April 1.

"We are thrilled to have fuboTV offering Marquee Sports Network to Cubs fans. fuboTV has prioritized live sports and we look forward to them carrying Cubs baseball all season long," said Marquee Sports Network General Manager, Mike McCarthy.

A key issue with Marquee’s launch last year was gaining a distribution deal with Comcast, which covers most of the Chicago area. A deal was worked out in time for opening day.

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

The fuboTV deal comes at a time when other virtual multichannel video programming distributors aren’t carrying regional sports networks. Dish Network, along with its Sling vMVPD are among those without RSN deals.

“As we kick off the hotly anticipated 2021 baseball season, fuboTV is thrilled to bring consumers Marquee Sports Network’s extensive coverage of the Chicago Cubs,” said Ben Grad, fuboTV’s senior VP, content strategy and acquisition. “The addition of Marquee Sports Network to our leading sports, news and entertainment portfolio makes fuboTV a great streaming choice for Cubs fans, as well as other Chicagoans looking to cut the cord.”

Also Read: Sinclair-Bally’s Deal Could Be a Sign of the RSN Times

fuboTV stock has gone on a wild ride over the past year. Some analysts have questioned the potential profitability of the vMVPD business, while others see promise in its strategy to get into the gaming and betting business. The company reported a $167.8 million loss in the fourth quarter.

“We’re excited to add Marquee Sports Network and their coverage of the Chicago Cubs to fuboTV,” said fuboTV’s co-founder and CEO David Gandler. “Our Fubo Gaming subsidiary is headquartered in Chicago, and the midwest market, particularly Indiana and Iowa where we recently closed market access agreements, will be a key cluster for our gaming strategy in the future.”

Dish Network added Mid-Atlantic Sports Network, home of the Washington Nationals and Baltimore Orioles major league baseball teams, to the list of regional sports networks that potentially could go dark to its customers on April 1.

Dish already has warned customers that three NBC Sports RSNs -- NBC Sports Washington, NBC Sports Bay Area and NBC Sports California -- could go dark on April 1. Dish had already dropped the remaining NBC Sports RSNs -- NBC Sports Chicago and networks in Philadelphia, Boston, and the Pacific Northwest -- in 2019.

News that MASN had been added to the list of potential drops was first reported by TV Answerman.com.

On its Dish Promise website, the satellite TV provider said that it has proposed to all RSNs that they be sold a la carte to Dish customers, a proposal that every pay TV operator would like, but none have.

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

“Dish has made this consumer-friendly proposal to NBC and MASN, but they have been unwilling to accept, choosing instead to continue with the old, broken model,” Dish said on the Dish Promise site. “We continue to remain open that the Regional Sports Networks will work with us to offer their content in a way that provides choice and value to all customers.”

RSNs usually require carriage on the most popular video tier of distributors, enabling them to capture the most advertising dollars. But high fees of RSNs and claims by distributors that the majority of their customers don’t watch them, have put the two at loggerheads for years. 

The news of the potential Dish blackout comes weeks after MASN said it had reached a multi-year carriage deal with Comcast. In announcing that deal, MASN said it had agreements with 24 cable, satellite, telco and digital distributors in 17 Nielsen markets in its seven-state exclusive home television territory, spanning Harrisburg, Pennsylvania to Charlotte, North Carolina. 

With the baseball regular season fast approaching -- Opening Day is officially April 1 -- several regional sports networks are facing deadlines to hammer out deals with over-the-top players and streaming services, but according to some observers, they shouldn’t hold out too much hope of landing a deal by the first pitch. 

Satellite TV giant Dish Network and its OTT arm Sling TV, have set an April 1 deadline for dropping three NBC Sports RSNs --  NBC Sports California, NBC Sports Washington and NBC Sports and NBC Sports Bay Area. Dish already dropped the remaining NBC Sports channels -- NBC Sports Chicago and networks in Philadelphia, Boston, and the Pacific Northwest -- in 2019. If the recent blackout threat holds, Dish and Sling TV customers will miss baseball from the San Francisco Giants and Oakland A’s, hockey from the Washington Capitals and San Jose Sharks, and basketball from the Golden State Warriors and Washington Wizards. 

“As of 4/1/2021, NBC Regional Sports Networks will no longer be on SLING. We are committed to providing the best value with the flexibility our customers deserve and, unfortunately, we were unable to come to an agreement on those terms,” Dish said in an email to customers, according to The Streamable. 

Also Read: Sports and OTT: Streaming Could Squeeze the Last Vestige of Appointment TV 

Pricing is the main culprit in the failure to reach a Dish deal. Dish Network chairman Charlie Ergen has battled with programmers -- particularly sports programmers - for years over what he believes are exorbitant fees. If Dish drops the NBC Sports networks it will be totally devoid of RSNs, having dropped others like MSG Network decades ago.    

Ergen has said he has nothing against sports, but it’s evident that most pay TV customers don’t watch them and in turn don’t want to pay for them.

“I think you’ve got to change that model,” Ergen said of RSNs on Dish’s Q3 earnings call in November, adding that the value of regional sports to his customers was “overrated.”  

Also Read: Comcast’s Xfinity Flex Adds MLB.TV

While most RSNs have managed to hammer out agreements over the past couple of years with traditional distributors, the failure to launch with streamers should be especially troubling. RSNs like YES Network and Sinclair Broadcasting Group’s Fox Sports Networks (rebranding as Bally Sports on March 31) still don’t have deals with the likes of Sling TV, FuboTV, Hulu Live + TV and YouTube TV (although YES recently agreed to stream 21 Yankees games on Amazon Prime Video). Streaming services are supposed to be the future -- it’s the way all the kids are watching content today -- and failure to land carriage could hurt the networks in the long run. 

According to The Streamable, AT&T TV is the only OTT service provider that offers access to every RSN. But AT&T TV is priced at about $84.99 per month, making it eerily close to the traditional TV package that most youngsters abhor.

While distributors are trying to find programming that people are compelled to watch, and sports is still a ratings grabber, it doesn’t always justify the cost. RSNs have been under fire for their pricey affiliate fees and operators have begun to push back.

Also Read: Pluto TV Winds Up to Launch MLB Channel

Sports consultant Lee Berke, president and CEO of LHB Media & Entertainment, said the current stance by streamers harkens back to their early days. When streamers like Hulu Live and YouTube TV launched, they avoided RSNs because of their high price. The turning point was in 2016 when Sling TV agreed to carry some Fox RSNs. 

Now that most of the vMVPDs have national deals with sports networks like ESPN and FS1, local broadcast deals that also include games and out-of-market packages with several leagues, the strategy has shifted. 

“I think they are trying to see if they can get by without the RSNs,” Berke said of the streaming services, adding that the start of the MLB season could be the moment of truth. 

“That’s the crunch point,” Berke said. “Will the overwhelming number of games that are being offered up by the league cause enough grief with the streamers to say they’ll come back in and strike a deal.” 

In the past many of these deals with traditional MVPDs were done literally seconds before the first pitch of the regular season, mainly because ultimately those distributors realized that sports was the glue that held the bundle together. Streamers don’t feel the same way.

“Maybe one of them will,” Berke said on the possibility of a last-minute streaming RSN deal. “It’s difficult to see all three of them coming back in.” 

Unlike the dynamic between MVPDs and RSNs, streamers seem to hold the advantage, at least for the short term. Berke pointed to Minnesota Twins president Dave St. Peter, who complained recently that fans on his Twitter feed are frustrated they can’t see games on Fox Sports North because the RSN doesn’t have a streaming deal, over which the team has no control. The RSN is available through a traditional pay TV subscription. 

"I don't enjoy going to my Twitter account as often as I used to because there are some people who are taking it out on me," St. Peter told the Minneapolis Star-Tribune. "That's OK. I've got a thick skin. Look, life is hard in a lot of cases and people want to be able to watch their teams. I don't think that is an unrealistic or unfair expectation from our fans." 

That should be a wake-up call to both streamers and traditional MVPDs.

“People who are on his [St. Peter’s] Twitter feed are relatively younger and tech savvy,” Berke said. “They could watch Twins games on Comcast or Spectrum or whatever on a linear pay TV service, but that’s not part of who they are anymore. They stream. So if they’re not getting it as part of Hulu or YouTube TV, from their standpoint they can’t see those games.” 

While Berke added that a big enough drop in subscribers could force the streamers to the table, eventually the model will have to shift to direct-to-consumer. Already a few RSNs have set the stage for such an offering. Earlier this month, YES Network debuted a dedicated streaming app that offers a 24/7 feed of the network, including live games from the New York Yankees, Brooklyn Nets, NYFC and New York Liberty. Viewers still need to authenticate through their pay TV subscription to see the programming, but that could easily change in the future. Sinclair has said it plans to launch a DTC app next year. 

Berke added that direct-to-consumer should be the goal for RSNs and distributors alike.

"From a streamers standpoint, from a network standpoint from an RSN standpoint, you have to be able to say, 'I’m going direct-to-consumer,'" Berke said. “And by the way, when you’re negotiating with Comcast, they’re going direct-to-consumer as well. We’re trying to defend the bundle, meanwhile we’re doing everything possible to undercut it. But that’s fair enough, that’s what they should be doing. That’s the way media technology works.”

He added that the shift to streaming is in part being done because of necessity. Pay TV subscribers are declining at an accelerated rate that doesn’t seem to be slowing. 

“There’s a reckoning that is coming to pass for every network,” Berke said. “You’re seeing the strategies being laid out with all the streamers and how they are laying out programming, how they're categorizing it, how they’re pricing it, how they’re producing content, sports entertainment and news. But when it comes to sports in particular, when it comes to the RSNs in particular, they are going to have to make those moves in the next few years, and they are going to have to start preparing for it now.”

Almost six years after splitting the company to unlock value, Madison Square Garden Entertainment said it has agreed to combine with MSG Networks in a tax-free exchange of shares.

The recombination is expected to bolster MSG Entertainment, which includes Madison Square Garden arena, Radio City Music Hall and other venues that have been hit hard as the pandemic has shut down the concert business. The entertainment unit is building a state-of-the-art facility in Las Vegas -- MSG Sphere at the Venetian -- which is scheduled to open in 2023. The company also has said it plans to build a second MSG Sphere in London, pending necessary approvals.

The company said the combination of the entities’ media, digital and venue assets should help MSG Entertainment capture a greater share of the burgeoning sports gaming business. Some analysts have estimated sports gaming could become a $12 billion business by 2025.   MSG Networks controls two regional sports networks -- MSG Network and MSG Plus.

“MSG Entertainment is actively executing a plan designed to grow the Company beyond its established collection of assets into one that is pioneering the next generation of entertainment,” MSG Entertainment CEO Andrew Lustgarten said in a press release. “We have always believed in the value of live sports and look forward to welcoming MSG Networks back into the fold as part of a transaction that we are confident would enhance our financial flexibility and set the stage for continued growth and value creation.”

The deal is expected to close in the third quarter. Moelis & Company LLC and The Raine Group are serving as independent financial advisors and Wachtell, Lipton, Rosen & Katz is serving as independent legal counsel to the Special Committee of the Board of Directors of MSG Entertainment. LionTree Advisors LLC and Morgan Stanley & Co. LLC are serving as independent financial advisors and Davis Polk & Wardwell LLP is serving as independent legal counsel to the Special Committee of the Board of Directors of MSG Networks. Debevoise & Plimpton LLP is serving as legal counsel to the Dolan family.

The two companies were originally part of Cablevision Systems Corp. which spun off MSG -- including its professional sports teams and regional sports networks unit -- in 2010. In 2015, the assets were split into The Madison Square Garden Co., which included the teams and concert venues, and MSG Networks, housing the RSNs. In 2020 The Madison Square Garden Co. split again into MSG Entertainment, housing its concert venues, and MSG Sports, which included its professional sports teams. Cablevision was sold in 2016. MSG Sports continues to be a separate entity.

According to the deal, MSG Networks shareholders will receive 0.172 shares of MSG Entertainment Class A or Class B stock for each share of MSG Networks they own. 

A federal judge in Colorado late last month said that an antitrust suit brought by regional sports network Altitude Sports against Comcast can move forward, a development that could have broader implications for future negotiations between sports channels and distributors. Or maybe not.

The rift between Altitude Sports and Comcast started more than a year ago. Back in November 2019, the RSN, owned by Colorado Avalanche, Denver Nuggets and Los Angeles Rams owner Stan Kroenke’s Kroenke Sports & Entertainment, claimed that Comcast refused to extend its carriage deal and instead proposed putting the channel on a separate sports tier, a move that would drastically reduce its revenue. Altitude Sports claimed that Comcast was taking that stance in a move to take over the RSN’s  programming for its own sports channel -- NBC Sports Network -- and further exert its monopoly influence in the Denver market.

Comcast moved to have the case dismissed and in making his Nov. 25 decision to let the case go forward, U.S. District Court Judge William Martinez dismissed many of Altitude’s claims. For instance, he didn’t buy the idea that Comcast was trying to monopolize the Denver market because by dropping Altitude, it faces losing subscribers and diminishes its market power. But he cautiously accepted at least one of the programmer’s claims -- that Comcast’s hard line stance in the negotiations could be proof that it is refusing to deal with the channel. That is a fine line -- Comcast claims it wants to move the channel to keep costs down for its other customers -- but one the judge says he must consider fully, citing prior cases that have shown instances where “[a] refusal to deal may cross the line from permissible to predatory,” according to the suit. “... Although Comcast characterizes Altitude’s allegations that it will enter the market with its own RSN as baseless and speculative, viewing the allegations in the light most favorable to Altitude, and drawing all reasonable inferences in Altitude’s favor, as the Court must at the dismissal stage, the Court finds Altitude has alleged facts sufficient to show that its allegations of anticompetitive conduct are plausible.”

In a statement, Comcast said it is “encouraged that the Court dismissed most of Altitude’s frivolous claims at this early stage in the proceeding, and expressed skepticism about the one claim it did not reject outright. We agree with the Court’s skeptical view of the remaining allegations and look forward to getting the rest of the case dismissed promptly.” 

Altitude Sports is available in 10 states -- Colorado, Kansas, Nebraska, Idaho, Montana, Wyoming, Utah, Northern New Mexico, Northeast Nevada and Southwest South Dakota. The RSN carries games and programming from the NHL Colorado Avalanche, the NBA Denver Nuggets, Major League Soccer’s Colorado Rapids, the National Lacrosse League Colorado Mammoth and college sports from the University of Denver.

Last year the RSN reached a deal with DirecTV in November after a two-month blackout. The network had previously gone dark to Dish Network in August 2019 and has yet to reach a deal. Dish has said it would return the channel to its subscribers if it was allowed to sell it directly to customers who want it, with all the proceeds going to the network. That is similar to putting the channel on a tier and Altitude has declined that offer.

Distributors have been trying for years to move sports channels to pricier tiers to offset their costs and to appease non-sports loving customers who complain about paying for channels they don’t watch, all to no avail. For the networks, being moved to a tier is basically a death sentence -- it drastically reduces the number of subscribers it is exposed to which severely lowers advertising rates. In the suit, Altitude said under its old deal with Comcast, it was available to about 70% to 85% of the distributor's customers in the Denver area. In a separate sports tier, that exposure would plummet to 15%-to-20% or less.

The Comcast dispute comes at a time when regional sport networks are coming under fire. Sinclair Broadcast Group, which paid about $10 billion for Disney’s former Fox Sports RSNs, has seen revenue plunge at those channels as the pandemic has shortened seasons for teams across the board. In Q3, Sinclair took a $4.2 billion charge related to its RSN assets when distribution revenue took a nosedive after the loss of two major virtual MVPDs (Hulu + Live TV and YouTube TV) and increased traditional subscriber losses. 

So it’s pretty obvious that regional sports channels are looking for ways to make up the difference. And though it looks like Comcast could prevail, this is 2020, anything can happen. 

But I’m not sure much changes, no matter which side wins. 

If Comcast wins, they could technically put every sports network on a tier, but that doesn’t mean the networks have to accept that, so it’s likely the status quo would remain. And if Altitude does prevail in receiving broader carriage through the courts, they may get more than they bargained for, according to some analysts.  

“It’s the law of unintended consequences,” MoffettNathanson principal and senior analyst Craig Moffett said.  “If the Court decides that RSNs are within their rights to demand carriage on the basic tier, then it will only mean that more and more distributors will drop them entirely.”

One good thing that may come out of this is as the pandemic has bolloxed up the sports leagues, it has backed up the courts as well. Chances are it will take a while before a final decision comes. 

“These are the sorts of procedures that in regular times take multiple years and my understanding is that the courts are slowed up in general because of the pandemic, so this is a long process,” said sports analyst Lee Berke, president and CEO of LHB Media & Entertainment. “If there are any implications from any of this, it will be years out. I don’t think it is anything that impacts current activity.” 

So my guess is that everything remains relatively the same. Altitude is no pushover and Comcast has been known to play hardball with RSNs -- it didn’t carry the YES Network for the entire 2016 baseball season over a carriage dispute, but reached a deal in January 2017, with the network returning on March 31,just before Opening Day. But I think this time might be different.  

This is simple economics. Even in an era where more and more customers are dropping video for streaming services, sports draws viewers, and Comcast probably doesn’t want to lose any more video customers than it has to. And Altitude probably doesn’t want to give up the affiliate fees and ad revenue associated with cable carriage for the uncertainty of streaming-only just yet. So, it is likely that they reach a deal, probably around the start of the NBA regular season (Dec. 22) or the NHL regular season (Jan. 1) give or take a few days or weeks, with both sides getting a little of what they wanted and a little of what they didn’t. That way, everyone gets to say they won. 

Revenue was flat, impacted by $78.7 million in regional sports network credits the distributor has earmarked for customers, and broadband subscriber additions nearly doubled for Altice USA in the third quarter.  

Altice USA reported revenue of $2.43 billion in the quarter, down 0.2% from the previous year. The cable operator said revenue would have risen 3% in the period, excluding RSN credits it expects to return to residential and business customers. Altice said it expects to return about $76.7 million to residential customers and another $2 million to business customers as a result of the affiliate fee credits it anticipates will come from RSNs for events and games not delivered during the past nine months during the pandemic. Adjusted EBITDA increased 5.5% to $1.13 billion.

Altice added 26,000 broadband customers in the quarter, up from the 15,000 additions it had in the prior year. Video customer losses increased to 86,000, more than twice the 32,000 video subscribers lost in the same period in 2019.

“We delivered strong subscriber and financial performance in the face of the ongoing pandemic, driven by strong underlying revenue, Adjusted EBITDA and Free Cash Flow trends,” Altice USA CEO Dexter Goei said in a press release. “Our cable business continues to outperform during this unprecedented time, and we also saw resilience and recovery in both our Business Services and News and Advertising businesses. We remain excited about the long-term outlook of our business and continue to focus on opportunities to drive value for shareholders."

Sinclair Broadcast Group is reportedly considering its options concerning its regional sports networks, including a possible bankruptcy, about a year after it paid $9.6 billion for 21 former Fox Sports RSNs. A lot of reasons have been given for the need for a restructuring. The pandemic, which has decimated sports teams and networks as seasons were shortened or canceled; the pressure to issue rebates to distributors for undelivered games; and the decline in overall linear programming viewership have all contributed to RSN declines. And while those reasons are certainly valid, one very important factor in the Sinclair RSN’s current dilemma is missing: timing.

Sinclair got into the RSN business at a time when regional sports networks were on the decline, but were still considered to be one of the few places left that encouraged live viewership, so-called “appointment TV.” Part of the concessions The Walt Disney Co. made in gaining approval for its purchase of certain 21st Century Fox assets -- the government ordered the divestiture of the Fox RSNs because Disney already owned a dominant sports network, ESPN -- bidding for the channels was intense. But pricing was not. Originally, Disney thought it could attract as much as $20 billion for the networks. And though there was a lot of interest, as the rounds progressed it became apparent that they wouldn’t get anywhere near that valuation. 

The problem: while sports was and is still considered one of the few things that TV viewers watch live, the cost of the channels was getting out of hand. At the same time, distributors were pushing back against sports channel affiliate fee increases, claiming that not enough subscribers watched the channels to justify the cost. Cord cutting made the idea of carrying expensive programming even less attractive. 

Now, that all appears to be coming home to roost. According to a report in the Wall Street Journal Wednesday,  creditors of the unit that holds the RSNs -- Diamond Sports Group -- are preparing to possibly restructure about $8 billion in debt. Sinclair, which set up Diamond Sports to bear most of the debt load of the Fox Sports acquisition -- the broadcaster is only on the hook for about $170 million of that obligation -- had earlier tried to restructure the debt through an exchange offer. Bondholders, who would have had to take a substantial haircut in that exchange, took a pass.

In a research note, Wells Fargo Securities media analyst Steven Cahall said bondholders will have to consider whether to keep Sinclair as the operating partner for the RSNs -- a service for which they take about $100 million in EBITDA annually -- or go with another partner. The analyst prefers a Sinclair exit.

“We think the RSNs have been Sinclair’s Achilles heel as it's a distraction for investors, an asset in decline and a potential drain on retrans to support RSN carriage fees,” Cahall wrote. “While there's no equity value in Diamond these factors also mean less equity value in TV. Ultimately we view a separation of the RSNs as the best case scenario for Sinclair as it removes a big overhang that's needed management's attention since the get go.

But others believe the RSNs current problems seem more tied to the pandemic and that isn’t going to last forever.      

“They definitely took a hit on baseball, you lost 100 games per team,” said one sports executive who requested anonymity, adding that the possibility remains that the 2021 NBA, NHL and MLB could start late and could be compressed. “...Nobody is saying they aren’t watching games. The ratings for baseball regionally were very strong. If there is a finite number of games lost, it’s not the end of the world. The content is still valuable.”

And the sports exec added that Sinclair is still doing RSN deals and hiring people, an indication that it still feels the business is moving forward.  

Related: Why Sinclair’s Sports Bet is a Risky Play 

In its last quarterly earnings conference call with analysts, Sinclair CEO Chris Ripley said that it had locked up about 85% of its RSNs total customers for two years and beyond. That figure included the carriage deal for its Marquee Sports Network with Comcast. Marquee Sports was not part of the Fox RSN buy, instead it is a separate partnership between Sinclair and Major League Baseball’s Chicago Cubs. 

Related: Worry Over Sinclair’s Sporting Chances 

While it has been able to strike long-term deals wit h traditional distributors, Sinclair has had a tougher go with virtual MVPDs. In the past year it has lost carriage with YouTube TV, fuboTV and Sling TV. On Oct. 22, Hulu Live + TV added its name to the list, telling its customers that the 21 Sinclair RSNs, Marquee Sports and the YES Network would go dark as of Oct. 23.  That leaves only AT&T TV Now among major vMVPDs that carry the networks.    

While those disputes, like most carriage fights, probably center around pricing, there are some in the sports industry that believe that Sinclair’s RSN problems are more tied to the rights fees the networks are paying the teams whose games they carry. 

“That is what it comes down to, are the RSNs covering their nut to the teams,” said one RSN executive who asked not to be named. “It doesn’t matter if the [LA] Clippers stink or not, they are still going to get top dollar from Fox Sports San Diego or Fox Sports West.”

Related: RSN Redux 

Others feel that while affiliate fees are still strong, the overall decline in pay TV customers means that the RSNs are getting less money as part of their deals. 

According to MoffettNathanson, traditional pay TV -- cable, satellite and telco -- has lost about 10 million customers since 2018. And the bleeding is expected to continue. Kagan, a unit of S&P Global Market Intelligence, estimates that by 2025 the pay TV universe will lose about 31 million customers.

That has some pundits wondering if the deterioration of the traditional model where linear networks pay fees to sports networks based on their total number of subscribers, is on the way out. 

But there is a danger in switching to a direct-to-consumer model, mainly that sports networks will have to rely on revenue from customers that want to watch them, not everyone with a pay TV subscription. That could be a big difference -- currently there are about 80 million TV homes, and some analysts estimate that only about 30% of those customers watch sports. That could mean that a D2C regional sports offering would have to charge about three times more per month just to make as much money as it was receiving under the old model. As a result, many in the industry are hoping for some kind of hybrid model. 

“At some point, you have to be thinking, ‘how do we offer this on a streaming basis as well,’” the sports exec said. “The pandemic, as awful as it is, is finite. But it’s accelerated the drop off in pay TV penetration. If you’re any network, you now have to figure out far more quickly than you thought how you’re going to handle streaming. It’s not abandoning pay TV, it’s a question of can you coexist on both.”

And then there is the question of ad revenue -- with less potential eyeballs, networks could be worth less to advertisers. And there is the threat that customers would drop the service after their favorite team’s season ends, meaning that the RSN could see a big drop off in revenue toward the end of the year. 

That could be especially hard for RSNs that basically only carry games in one professional sport, like SportsNet New York, home of the New York Mets. 

“From October until March, they could potentially have no income,” said the RSN exec who asked not to be named.   

In the meantime, some were hoping that legalized gambling would help the networks, both in terms of additional advertising and the potential of allowing actual wagering via the TV remote or online for everything from the final outcome to specific plays. That has not worked out to be the windfall it was expected to be. 

Related: Not Quite All In On Sports Betting 

So far, according to some reports, as of August only 18 states have passed legal gambling bills since the Supreme Court opened the door to sports wagering in 2018. Four states, -- Virginia, North Carolina, Tennessee and Washington - have passed bills allowing sports gambling but are not yet operational. And there are active bills in another nine states, and 12 states have rejected legalized sports wagering. But save for a few ventures, sports gambling hasn’t been the savior most RSNs expected. 

Sinclair was also counting on sports gaming being a bigger part of the business, and hired former Poker Central & Estars Studios chief business officer JR McCabe to head up its D2C Gamification unit.

In a research note Wednesday, LightShed Partners analysts Rich Greenfield, Brandon Ross and Mark Kelley issued a report on the state of RSNs, noting that even if legal gambling were more widespread, it probably wouldn't have made much of a difference and could have negative effect on viewership of sports channels. 

The analysts said that although the leagues’ claims that gambling would boost viewership is “intuitive,” albeit hard to quantify, it could also “catalyze the loss of community around sports and could produce offsetting effects.” They also noted that illegal sports betting has been around for decades, and so far hasn’t moved the viewership needle as much as could be expected. 

But the sports exec said that could change as the pandemic winds down. States will be looking for new sources of revenue, and gambling could fit the bill. 

“They need revenue, and gambling is an easy way to get it,” the exec said. “In terms of looking forward, in the next three-to-five years, I think you will see a majority of states, two-thirds or more offering gambling.”

Again, it’s all a matter of timing. And timing is everything.  

Sinclair Broadcast Group said it has named veteran sports journalist David Morgan as VP of Digital Sports News for its 21 regional sports networks.  

Morgan has extensive experience in growing large scale sports news operations at USA Today Sports Media Group and Yahoo! Sports. He also spent 20 years at the Los Angeles Times, where he worked in various roles including as deputy sports editor. 

In his new role Morgan will oversee day-to-day editorial operations and news content strategies for the RSN digital platforms and Stadium, Sinclair’s multi-platform sports network. In addition, Morgan will be instrumental in building out and overseeing a national editorial team for the RSNs.

"I look forward to working alongside Sinclair's talented team, contributing to the continued excellence of the RSNs' premium sports coverage," Morgan said in a press release. "I'm excited to be joining Sinclair, the leader in both sports and local news broadcasting, in providing the best in sports news for fans across the country."

Morgan’s appointment comes at a time when the Sinclair RSNs could be facing tough decisions. According to a report in the Wall Street Journal, creditors at the entity which controls the Sinclair RSNs -- Diamond Sports Group -- are considering several options to restructure about $8 billion in debt, including a possible bankruptcy reorganization.   

Sinclair’s RSN portfolio includes Fox Sports Arizona, Fox Sports Detroit, Fox Sports Florida, Fox Sports Midwest, Fox Sports North, Fox Sports Ohio, Fox Sports San Diego, Fox Sports South, Fox Sports Southwest, Fox Sports Southeast, Fox Sports Sun, Fox Sports West, Prime Ticket and SportsTime Ohio. Working alongside RSN departments including sales, marketing, operations and other areas, Morgan will also drive digital audience growth as a cohesive strategy across all RSNs.                                                                                                                                                        

"David has time and again led the charge in bringing excellence to sports coverage, and we couldn't be more thrilled to have him be a part of our RSN leadership team," said Sinclair President and CEO Chris Ripley  in a press release. "With his longtime dedication to sports journalism, we look forward to David working with us on even more high-quality coverage."

Regional sports channel the YES Network went dark to Frontier Communications customers on Sept. 1, around the same time as customers of the troubled telco lost access to several Fox Sports regional sports networks.

YES Network, which carries games from Major League Baseball’s New York Yankees, the National Basketball Association Brooklyn Nets, the Women’s NBA New York Liberty and Major League Soccer’s New York City FC, confirmed it went dark to Frontier customers on Sept 1. According to a website for YES customers, the RSN is encouraging Frontier customers to seek out other pay TV distributors to access its programming.

“We negotiated with Frontier in good faith and were eager to get a deal done, but unfortunately were unable to come to an agreement,” YES said on the website. “Frontier subscribers should switch today to one of the many providers that carry YES and its Yankees, Nets, NYCFC and Liberty games.”

While the battle with YES rages on, several Fox Sports RSNs also appear to have gone dark to Frontier customers. Fox Sports RSNs were purchased by Sinclair Broadcast Group last year (it also purchased minority interest in YES last August) and have battled with distributors in the past. 

"While we had tremendous success in renewing carriage deals that expired recently, we are disappointed that Frontier has dropped a number of our regional sports networks, leaving subscribers without access to their favorite local teams and programs," Fox Sports said in a statement. "We worked with Frontier in good faith and really wanted to get a deal done, but unfortunately they were unwilling to agree to fair terms consistent with the terms on which many other subscribers carry the RSNs. Frontier subscribers should switch today to one of the many providers that carry their favorite teams."

According to sources familiar with the sports programmer, the Frontier blackout involves all Sinclair-owned RSNs with the exception of Marquee Sports Network, the joint venture Sinclair struck with the Chicago Cubs last year. Frontier was one of the first distributors to sign up with Marquee Sports. 

In a statement, Frontier acknowledged the YES and Fox Sports blackouts, which were effective Sept. 1, adding that they too tried to reach a deal.

"Frontier worked hard to negotiate a fair deal, however, we were unable to reach an agreement," Frontier said in a statement. "Our customers are very important to us and we’ll continue to strive to provide them with the best content experience, including access to their favorite shows and content including other networks that carry sports programming on -Frontier TV. These include ABC, CBS, CBS Sports Network, ESPN/ESPN2 /ESPN Classic/ ESPNews /ESPNU, FOX, FS1/FS2, Longhorn Network, NFL Network/NFL Red Zone, NBA TV, NBC Sports Network, NBC, NHL Network, SEC Network, TBS/Turner, and TNT. No provider is immune from network negotiations and programming removals. It was economically unsustainable for Frontier to continue carrying these regional sports networks, and ultimately it was the Network’s decision to remove their programming from our lineup." 

Frontier subscribers have taken to Twitter to voice their displeasure, including former Dallas Morning News TV critic Ed Bark, who called the impasse a deal breaker.

“Our cable provider, Frontier, has now cut Fox Sports Southwest from its lineup due to contract impasse,” Bark wrote on his Twitter feed. “This follows their removal of MLB network & Mark Cuban’s AXS TV & movie net for same reason. But haven’t cut consumer prices. Unless this is remedied soon, that’s it for me.” 

Other Frontier customers of Fox Sports RSNs, including Fox Sports Florida and Fox Sports Sun -- which carry games from MLB American League East Division leader the Tampa Bay Rays -- Fox Sports West expressed similar feelings.

Frontier filed for Chapter 11 bankruptcy protection on April 15, and has had its reorganization plan approved by the federal court. Earlier this month it said it named former Verizon Communications executive John Stratton to be its executive chairman once the company emerges from bankruptcy protection. That is expected early in 2021. 

Frontier has had a spotty relationship with RSNs. Last year it dropped SNY, the home of MLB’s New York Mets.

Comcast is getting ready to issue credits to its video customers for regular season Major League Baseball games not played due to the ongoing pandemic, and according to people familiar with the company, subscribers will receive those benefits in the “coming weeks.”

Just how much Comcast customers would receive is not yet known. But according to the cable operator, once Comcast determines what it will receive from the RSNs for games not delivered, it will pass them along to customers.

“We have consistently said that we would pass along all credits or any other adjustments we receive from RSNs to our customers and will be offering adjustments to our customers based upon the MLB games that weren’t played in the second quarter because of the COVID-19 pandemic,” Comcast said in a statement.

Determining how much each customer will receive is a complicated process, depending on their market, the number of RSNs in that market and the teams that are part of the particular RSN. For example, a customer in an area with one RSN will likely get a smaller credit than one in a market with four RSNs.

Adding to the complications is that each RSNs has to determine how much of a credit they will give each operator, who in turn has to pass along that savings to the appropriate customer. That will take some time, but according to one person familiar with Comcast’s thinking, Comcast is estimating how much it will receive from the RSNs so it can issue credits sooner.

“It will be in the coming weeks,” said the person familiar with Comcast ‘s thinking about the credits. “They’re working through the whole process right now.”

The issue of giving rebates to video subscribers has been a big one ever since the pandemic postponed the seasons of the National Basketball Association, the National Hockey League and MLB back in March. At the time, the NBA and NHL had completed the majority of its seasons, and likely won’t have to give any money back for lost games to RSNs.

But baseball is another story.

Major League Baseball cut its 162-game regular season to 60 games because of the pandemic. And since the shortened season began on July 24, some of those games had to be canceled after teams revealed some players contracted COVID-19.

To help offset the high cost of sports programming, many operators have been charging all video customers a sports surcharge. During the pandemic, when most sports were canceled, customers have chafed at paying a surcharge for games they can’t watch. For Comcast, the sports surcharge averages about $8.75 per month, but depends on the market. Larger cities generally have more RSNs -- New York has four -- and therefore the sports fees in those areas would be higher.

Comcast also owns the NBC Sports Network RSNs, which would be issuing rebates to distributors.

According to a report in the Philadelphia Inquirer, NBC Sports Philadelphia said the amount of rebates due distributors would be determined after the number of regular season games each league played is finalized. Any credits or adjustments would be passed along according to individual agreements.

In April, New York State Attorney General Letitia James asked cable operators to look into returning at latest some of those fees to customers. 

Other pay TV providers have said they would return some sports fees as they receive rebates from leagues or networks. In May, DirecTV said it would offer subscribers to its MLB Extra Innings and MLS Direct Kick credits for any payments the had made for the out-of-market sports packages and said they could cancel without penalty up to two weeks after play resumed. 

Comcast said during its Q2 earnings conference call that it expects to receive rebates from RSNs, but that it hasn’t been determined what those amounts will be as of yet.

“...[W]e expect that we'll be getting some monies back from some of the sports leagues based on games played or not played in the U.S.,” Comcast chief financial officer Mike Cavanagh said on the Q2 earnings call on July 30. “And when that does happen, we as we've said, we'll pass that back along to customers.”

LHB Sports, Entertainment & Media president and CEO Lee Berke said the amount that the operators could receive from RSNs will vary depending on the teams involved, the markets and the number of games delivered. He added that while baseball could account for about 40% of a total RSN fee, the amount due to an operator could vary and it could be spread out over time..

“If you’ve lost 100 games, you’ve lost roughly 40% of what you were providing,”Berke said. “There are a variety of ways this could play out. It may be offered up in stages, it may be spread out over the course of several years, the term of the deal could be extended to ameliorate the hit. There may be something paid out immediately, but I think the overall financial hit may be spread out over a couple of years.”

While it could take time for any money to change hands, Comcast apparently is ready to offer its video customers credits even before it receives the rebates from the RSNs, based on estimates.

Other operators have said they expect to receive some form of compensation for lost games, but so far haven’t received anything.

“We continue to be in close contact with all the networks," Charter Communications said in a statement. "If and when we receive any COVID-related rebate for canceled sports, we will pass that along to our affected customers.”

On its Q2 conference call with analysts, Charter chief financial officer Christopher Winfrey said that the operator had not yet received any RSN rebates.

“We did not accrue any RSN fee savings in our programming expenses in the second quarter as the certainty, amount and timing of any credits is not yet clear,” Winfrey said. “If and when any COVID rebate for lost games occurs, we will pass that along to our video customers.”

At Cox Communications, spokesman Todd Smith said, “Right now, networks continue to charge us full price for this programming. If we receive any money back from the networks, we will pass all of it along to our customers.” 

Sinclair Broadcast Group, owner of about 21 regional sports networks across the country, offered analysts a sliver of insight into its sports rights deals Thursday, adding that it could expect some rebates from leagues for undelivered live games during the COVID-19 pandemic, but that they would probably be small and wouldn’t come until at least next year.

Sinclair, which acquired 21 RSNs from The Walt Disney Co. last year and has interests in Marquee Sports Network (the Chicago Cubs RSN), The YES Network (with the New York Yankees) and smaller sports-centric channels like The Tennis Channel, told analysts during its Q1 earnings conference call Thursday that any rate relief would be based on individual rights deals.

On the call, Sinclair CEO Chris Ripley said the rights agreements between its RSNs and various leagues typically include a minimum game delivery obligation and that the RSN would receive a rebate if a respective league falls short of that obligation. Without specifying what those game delivery minimums are, Ripley said that the NBA and NHL, which were pretty much finished their regular seasons when they suspended play in March, have likely met their minimum requirements. And any refund, if warranted, would be determined at the end of the year.

Related: Want Sports Rate Relief? Not So Fast

“The mechanism for truing up for any content not received under our sports rights agreements or not delivered under our affiliation agreements generally takes place at the end of the season or calendar year,” Ripley said on the call. “While we believe that sports will come back this year and be in high demand, at this time the leagues have not indicated when games will resume. Therefore, we do not know where we will end up in relation to the game delivery minimum. Keep in mind that the NHL and NBA regular seasons were almost complete when the seasons were suspended, so shortfalls in those weeks if any should be minor.”

But Ripley added he expected at least some leagues to fail to deliver the required games, which would require a rebate of a portion of their fees. He just said it is impossible to determine how much that would be at this time.

“We think we're likely going to be headed into a situation where there [are] rebates,” Ripley said on the call. “We won't know the magnitude of those until we get more clarity on when the games will be played and how many will be played. What we will do is update our guidance once we have a clear picture -- my guess is that will be the next quarter -- and from there you'll be able to tell what the impact is.”

There has been an outcry lately from consumers and legislators angry that pay TV customers still pay high sports fees for networks that aren’t showing live games during the pandemic. Three of the four major sports leagues -- the National Basketball Association, the National Hockey League and Major League Baseball -- suspended their regular seasons in March, and haven’t played live games since. With sports fees accounting for more than half of some pay TV distributors’ total programming costs, cable, satellite and telco TV providers have said if they receive any rate relief from sports programmers, they will pass the savings on to customers.

New York State Attorney General Letitia James fired off letters to pay TV distributors in her state last month calling for them to voluntarily provide “appropriate refunds” to consumers for lost games. But distributors have argued that they are the last link in the chain -- they can’t provide rebates until they receive them from programmers, which can’t give refunds until they receive them from the leagues.

Baseball is the remaining wildcard, because it hasn’t played any games yet. While each agreement is different, according to Sports Business Journal, some contracts call for MLB to deliver between 120 and 150 games per season. That could get tricky as the pandemic continues to keep Americans in lock down. The MLB season is 162 games long, so some pundits warn that to avoid any rights deal problems, regular season play would have to start soon.

According to ESPN, MLB is expected to offer its proposal on resuming games in about a week. ESPN said that one offer on the table is resuming spring training on June 10, with the season to start on July 1, meaning that  about 80 to 100 regular season games would be played. Earlier during the pandemic, there was a proposal to play all games in the Phoenix, Arizona area -- which has 10 stadiums within a 50-mile radius -- but more recent offers call for most games being played in teams’ home stadiums. 

Sinclair Broadcast Group and its regional sports network arm Diamond Sports Group dipped into their revolving credit lines to the tune of nearly $900 million to give the company added liquidity as uncertainty around the COVID-19 outbreak rages.

According to an 8-K statement filed with the Securities and Exchange Commission Monday (March 23), Sinclair said it drew about $648 million from its revolving credit facility and Diamond Sports Holdings, which includes the 20 regional sports networks it purchased from The Walt Disney Co. last year, as well as its 20% interest in YES Network, drew about $225 million from its revolver on March 17. 

Those debt transactions were made as “precautionary measures to preserve Sinclair’s financial flexibility in light of the current uncertainty in the global economy resulting from the novel coronavirus pandemic (“COVID-19”),” the company said in the filing. Proceeds, if needed, would be used for working capital and general corporate purposes. After the transactions were completed, Sinclair Broadcast Group had about $600,000 remaining on that revolver, while Diamond had about $425 million available on its line of credit, according to the filing.

Sinclair shares were up 13% ($2 each) to $17 in morning trading Tuesday.

In a research note, Fitch Ratings director Patrice Cucinello wrote that the drawdowns were a precautionary move, adding that Diamond Sports already faces pressure from Dish Network’s decision to drop the RSNs last year. As a result, Sinclair reduced its fiscal year 2020 sports segment cash flow guidance to between $939 million and $974 million, below the $1.5 billion it generated in fiscal 2018 and $1.3 billion in fiscal 2019.

Cucinello added that Fitch expects Diamond’s total leverage to rise to about 8 times cash flow based on those revised estimates and its roughly $8.175 billion in total leverage. She noted that Diamond has a separate debt structure than Sinclair.

The lack of sports content because of the coronavirus continues to put pressure on regional sports networks, and Cucinello added that it could affect upcoming carriage negotiations for Diamond Sports.

“Arguably, the Coronavirus is a temporary overhang to the RSN sports programming,” Cucinello wrote. “However, the real risk is that this further pressure Sinclair’s negotiating leverage with distributors. Sinclair continues to negotiate with Dish to renew carriage. With no sports programming, the potential for renewed carriage is diminished and even if Sinclair does manage to get Dish back it’s likely at a substantial re-rate. Also, upcoming carriage negotiations could be more challenged. The next one is with Comcast (mid 2020). Sinclair has renewed 75% of its RSN subscribers onto new long-term distribution agreements.”

Moody’s Investors Service said the cancellation of professional and college sporting events in the wake of the coronavirus pandemic could be tough on programmers, especially broadcasters, cable networks and regional sports networks that count on games to deliver eyeballs and ad revenue.

Over the past week the NCAA has canceled the March Madness men’s and women’s basketball tournaments, the NBA, NHL, MLS have all suspended their seasons, The Kentucky Derby and The French Open have been moved to September and Major League Baseball has invoked a two-week delay to Opening Day. But according to Moody’s, if the pandemic continues for months -- and it could -- “the loss will be a credit negative for a long list of US media companies.”

“Live sports is one of the few programming categories that still garners large, predictable, non-time shiftable live TV audiences and the effect on advertising revenue and engagement will be significant,” Moody’s said in its report. “...If the suspensions extend into the playoffs, which typically generate stronger viewership and engagement relative to the regular season, the pain will worsen for media companies and leave news as the primary remaining live anchor programming.

According to Johns Hopkins University, coronavirus cases in the U.S. have nearly tripled to 5,700 from 2,000 in the span of a few days. Globally, the number of confirmed cases has risen to 194,217 and the number of deaths to 7,864, according to Johns Hopkins.  In the U.S., President Trump admitted Monday that Americans may have to continue to work from home and avoid crowds into August.

Moody’s added that the impact may be greatest on regional sports networks, which unlike their broadcast and cable network counterparts don’t have substantial non-sports programming that could fill in the hole created by the lack of games.

“Standalone RSNs, along with Leagues and teams, face the most risk,” Moody’s said. “This is because they cannot easily replace the live game programming, nor lost revenue.”

Larger more diversified media like Disney and AT&T can offset the lack of games with other programming and not having to pay for the games that aren’t played. But Moody’s added replacement programming won’t have the same audience and networks could be forced to pay “make goods” to advertisers for missing ratings targets. In addition, they could face backlash from consumers that don’t want to pay for sports network subscriptions with little live programming, which could impact affiliate fees.”

Of the standalone RSNs, Diamond Sports, a partnership led by Sinclair Broadcast Group, faces the greatest exposure with 22 regional sports networks. Comcast has 8 RSNs, AT&T 4, Charter Communications 3 and Cox Communications 2.

After the RSNs, Moody’s estimates that Disney, which owns sports channel ESPN and broadcaster ABC, has the most exposure because of its ownership of rights to NBA and MLB. ESPN is also impacted because its flagship SportsCenter is a big provider of game highlights, and without games viewership could decline.

Comcast’s NBC network also faces some uncertainty come July, when it is supposed to air the Olympic Games in Japan. Comcast has said it has adequate insurance should the Games be canceled because of the coronavirus. And the International Olympic Committee said Tuesday that the Games are expected to go on as scheduled.

“The IOC remains fully committed to the Olympic Games Tokyo 2020, and with more than four months to go before the Games there is no need for any drastic decisions at this stage; and any speculation at this moment would be counter-productive,” the IOC said in a statement. 

Hours after YES Network alluded in its own dispute with YouTube TV that the streamer had yet to strike a carriage deal for minority partner Sinclair Broadcast Group’s other regional sports networks, Sinclair said it has secured renewals for most of those networks.

Sinclair said YouTube TV has agreed to carry 19 of Sinclair’s 21 RSNs: Fox Sports West and Prime Ticket were not part of the transaction and will no longer be carried by the streaming service as of March 5.

The channels involved in the agreement include Fox Sports Arizona, Fox Sports Florida, Fox Sports Midwest, Fox Sports North, Fox Sports Ohio, Fox Sports San Diego, Fox Sports South, Fox Sports Southwest, Fox Sports Southeast, Fox Sports Sun and SportsTime Ohio.

Earlier today YES Network, in which Sinclair is a minority partner, said it was dropped by YouTube TV. In making that announcement, YES said Sinclair, “for its own reasons, elected to make a deal for some but not all of its programming services which excluded large-market RSNs featuring iconic franchises and star players.”

Whether that means that Sinclair’s joint venture RSN with the Chicago Cubs -- Marquee Sports Network -- also lacks a carriage agreement is unclear. Marquee Sports was not mentioned in the announcement.

“We are pleased that YouTube TV was able to agree to terms on 19 of our RSNs and that they will continue to provide subscribers with access to some of the most in-demand sports networks in the nation,” said Sinclair SVP and general counsel David Gibber in a press release. “Millions of fans across the country tune into sports content daily and, at Sinclair, our goal is to make this as widely accessible as possible.”

He continued that Sinclair was “deeply disappointed” with YouTube TV’s decision to pass on Fox Sports West and Prime Ticket. “We offered competitive market terms but, ultimately, YouTube TV declined,” Gibber said in the release. “We encourage YouTube TV subscribers who value these RSNs to turn to other streaming services or their local cable or satellite provider for continued access, or to directly contact YouTube TV with feedback.”

Prime Ticket and Fox Sports West remain available on various other streaming platforms. Sinclair has asked fans of these channels to visit here to learn more about their streaming options. 

Dish Network said regional sports network NBC Sports Chicago pulled its programming from the satellite TV service provider’s customers on Oct. 1, after the two failed to reach a carriage agreement.

NBC Sports Chicago had warned Dish customers earlier in September that it may go dark after the final regular season game for Major League Baseball team the Chicago Cubs. The Cubs formed their own RSN -- with broadcaster Sinclair Broadcast Group -- earlier this year, called Marquee Sports Network. NBC Sports Chicago no longer has the rights to carry Cubs programming.

NBC Sports Chicago, owned by Comcast,  has beefed up programming from other teams -- it carries games from the NBA Chicago Bulls, NHL Chicago Blackhawks and MLB's Chicago White Sox -- and has directed Dish customers to other providers that carry the channel. 

Dish has claimed that NBC Sports Chicago, despite the loss of the Cubs games, was demanding payment on a minimum number of subscribers. 

“The regional sports model has been broken for years, and we’re facing a critical point in our industry,” Dish SVP of programming Andy LeCuyer said in a statement. “NBC Sports Chicago is losing its most popular content in the Cubs, while demanding payment on a guaranteed minimum number of subscribers, when only a fraction watch the channel. It simply makes no sense for our customers.”

Dish said it offered a short-term contract extension to keep the channels available while negotiations continued, but NBC Sports Chicago refused.

In a statement, NBC Sports Chicago said that it values Dish and is working in good faith to reach a deal, but claims the satellite TV service provider is "unwilling to meaningfully engage."

“NBC Sports Chicago thanks the many distribution partners who recognize the great value of our channel and have decided to continue serving fans with the most local games and best coverage of Chicago sports," the RSN said in a statement. "We are disappointed Dish has dropped NBC Sports Chicago, denying its subscribers more exclusive local Blackhawks, Bulls and White Sox games than the network has ever had before. Dish subscribers have other options and can learn how to switch providers on www.mysportschicago.com.”

Regional sports network Altitude Sports and Entertainment made good on its promise that Dish Network customers would be without its Colorado sports team coverage unless its carriage deal was renewed by midnight, going dark to the satellite TV service’s subscribers as the clock struck 12 on Aug. 29.

The blackout affected Dish customers in nine states -- Colorado, Utah, Kansas, Montana, Nebraska, New Mexico, Nevada, South Dakota and Wyoming.

Altitude Sports and Entertainment is owned by Kroenke Sports & Entertainment, the sports team and arena vehicle of billionaire Stan Kroenke. Altitude carries games from the NHL Colorado Avalanche, the NBA Denver Nuggets, Major League Soccer’s Colorado Rapids, the National Lacrosse League’s Colorado Mammoth and college sports from the University of Denver. On Wednesday, the channel warned it could go dark at midnight Wednesday if a deal with Dish isn’t reached. The channel also has renewal agreements with DirecTV and Comcast that expire on Saturday (Aug. 31). 

The blackout comes as preseason games for the Avalanche (Sept. 17) and the Nuggets (Oct. 8) draw near. 

In a press release Thursday, Dish blamed the blackout on Altitude’s demand that a new deal includes a guaranteed minimum of subscribers, as well as high affiliate fees.

“This comes down to Altitude demanding payment on a guaranteed minimum number of customers,” said Dish senior vice president of programming Andy LeCuyer in a press release. “We’re no longer going to support the broken regional sports TV business model that seeks to have the majority of pay-TV customers pay for the few who watch.”

Dish directed customers to its DishPromise.com website for more information.

According to Altitude, Dish, DirecTV and Comcast have carried the RSN for 15 years, but despite the network’s good-faith efforts to negotiate, the distributors “want to play by their own rules and are making unrealistic demands on Altitude. Their actions will affect hundreds of thousands of regional sports fans and negatively impact hundreds of local businesses that continue to support their home teams.”

This is the second regional sports network to go dark for Dish customers. In July, 15 Fox RSNs and the YES Network went dark after Dish could not reach a deal. Dish chairman Charlie Ergen warned that unless a compromise is made, the Fox RSNs may never be carried by the satellite TV service provider. 

Dish also is in negotiations with Disney regarding five networks -- FX, FXX, FXM, National Geographic and National Geographic WILD -- that were scheduled to go dark on Aug. 28. Disney granted Dish an extension to avoid a blackout, and sources said talks were progressing. 

MSG Networks stock fell hard Wednesday after the regional sports network said subscribers dropped 6.5% in the fiscal fourth quarter.

MSG Networks, which includes New York area RSNs MSG and MSG +, said its subscriber base fell more than 6.5% in the period, resulting in a $3.3 million decline in affiliate fee revenue. Overall revenue was down 2% to $168.4 million in the quarter. MSG said in a press release that the affiliate fee decline was also due partly to the absence of a favorable $1.2 million affiliate adjustment recorded in the prior year.

RELATED: Cord Cutting Will Decelerate in Q3, Analyst Predicts

MSG shares dropped as much as 14.2% ($2.39 each) to $14.46 per share in early trading Wednesday. The stock was priced at $14.72 each (down 12.7%, or $2.14 each) by 11:42 a.m. Aug. 21.

RELATED: Cord Cutting Starts to Pinch Affiliate Fees

The subscriber decline seemed to validate concerns that regional sports networks are losing favor with distributors as their monthly affiliate fee prices rise and more and more over-the-top service providers offer packages light on sports programming. Also during the day, Sinclair Broadcast Group, which earlier this year agreed to pay nearly $10 billion for 21 former Fox Sports RSNs, saw its stock fall as much as 5.6% ($2.47 each) to $42 per share in early trading Wednesday. Sinclair shares were priced at $43.22 each (down 2.8%) as of 11:47 a.m. on Aug. 21.

MSG Networks has been speculated in the past as a possible future target for Sinclair, in that it would fill out a hole the broadcaster has in the New York market. 

Cord-cutting was on a torrid pace in the third quarter, reaching about 5.5% in the period according to some analysts.

MSG Networks problems also are exacerbated by the performance of its teams — last season, the NBA New York Knicks finished last in the league’s Eastern Conference and the NHL New York Rangers finished seventh out of eight teams in the Metropolitan Division. MSG airs games from the NHL New York Islanders (finished second in the Metropolitan Division), New Jersey Devils (finished last in the Metropolitan Division) and the Buffalo Sabres (finished sixth in the Atlantic Division) and other content from the NFL New York Giants (last in the NFC East) and Buffalo Bills (third in the AFC East).

In a note to clients Wednesday, Evercore ISI Group media analyst David Joyce wrote that the subscriber loss was nearly double his estimate of a 3.7% decline, and dramatically lower than the 3.9% decline MSGN reported in fiscal Q3. Joyce noted that RSN losses have been abnormally high in the most recent period, mainly due to the expiration of promotional offers, meaning that he does not expect the heavy declines to continue. But he added that the “the underperformance experienced by MSGN vs. the broader industry is concerning.”

As a result he lowered his rating on the stock from "in-line" to "underperform" and dropped his 12-month price target on the shares from $22 to $18.

Despite the losses Joyce said MSGN continues to be a strong generator of free cash flow -- at $63 million in the period that segment was up by 45%, but still about $6 million below his estimates on the affiliate revenue decline and increased expenses.

“This cash flow should help de-risk the balance sheet and counter some of the business model risk,” Joyce wrote. “We also think it is possible that the company could allocate some of its [free cash flow] to share buybacks to signal comfort in the business model.”

On a conference call with analysts to discuss results, MSG Networks CEO Andrea Greenberg said the declines were primarily related to two unnamed distributors, one who has said publicly that it is being impacted by a roll-off of promotional customers. Both said they experienced overall subscriber growth in the prior year period, which resulted in difficult year-over-year comparisons.

“Subscriber declines are aspects of the business we continue to monitor closely, and we continue to pursue new distribution outlets for our networks,” Greenberg said.

MSGN EVP, Business Affairs Adam Levine said on the call that the company is focused on all opportunities for incremental distribution with existing and new distributors, and expects its networks to be available on a new pay TV broadband offering from an existing partner scheduled for later this year or early next year, and is discussing new potential content offerings with new and existing partners.

“There’s no shortage of interest in sports content, especially live professional sports content,” Levine said. “As exclusive rights holders for live games for seven local professional teams, we’re going to continue to explore all opportunities that properly value our content and make sense for our business.”

MSGN’s 10-year carriage deal with Altice USA’s Optimum unit expires in about three months. On the call, Levine and Greenberg said they are confident a favorable deal can be reached.

“We have multifaceted relationships with virtually all of our distributors, and we expect that to continue with Altice,” Greenberg said. 

Since dealing to buy 21 regional sports networks, valued at $10.6 billion, from The Walt Disney Co., Sinclair Broadcast Group has seen a dramatic shift in sentiment as investors, worried about upcoming carriage deals, have driven the stock down more than 12% in the past two weeks.

Shares in Sinclair rocketed nearly 35% from $44.95 per share to $60.48 after it announced the deal, on May 6, as investors saw the addition of the RSNs as a way for Sinclair to not only solidify the retransmission-consent dominance for its TV stations, but also create new opportunities in advertising, legalized sports betting and for its streaming video service, STIRR.

On a conference call with analysts after the deal was announced, Sinclair CEO Chris Ripley said the deal would double the broadcast group’s annual revenue to $6.7 billion and nearly triple its cash flow from $900 million to $2.6 billion annually.

“We will become the leading local sports and news company in the country,” Ripley said. “There is a lot to like about this transaction.”

Investors thought so, too, driving Sinclair stock as high as $61.81 per share by May 10. But by May 13, the stock started to slip as investors began to worry whether upcoming carriage deals would prove more difficult than originally thought.

Bulk of Subs Up for Renewal

The former Fox Sports RSNs are slated to renew the vast majority of traditional linear carriage deals in the next two years. First up is Dish Network, with its 9.6 million satellite-TV and 2.4 million Sling TV OTT subscribers, in July. Then comes Charter Communications (16 million customers, in October); AT&T’s DirecTV and DirecTV Now (24 million subscribers, in September 2020); and Comcast (21.9 million video customers, in June 2020).

Sinclair has been aggressive in retransmission-consent negotiations and most operators have feared that the station group — currently the largest with 191 TV stations in 89 markets — would use the combination of the RSNs and TV stations to drive up affiliate fees. Sinclair, which has never officially said it would do that, nevertheless drew ire from several industry lobbying groups over the deal.

ACA Connects, which represents more than 700 small, independent cable operators across the country, objected to the RSN purchase because it believed it would drive up pricing for critical programming.

“Big Four broadcast network programming and RSN programming are both critical for ACA Connects members,” the trade group declared on May 6. “By jointly negotiating these assets when they serve the same market, Sinclair can raise prices to cable operators for both offerings.”

In a note to clients, Wolfe Research managing director Marci Ryvicker wrote that some distributors have said privately that they would not allow Sinclair to make it so their retrans and RSN deals expired at the same time, something she said the station group never said it would do.

“My response is many fold,” Ryvicker said. “1) [Sinclair] negotiates these types of contracts all the time; 2) it is not like [Sinclair] didn’t know what it was getting into when it actually bid for these RSNs; 3) no one at [Sinclair] ever said it was trying to get these contracts coterminous; 4) [Sinclair] also said that affiliate fees will likely remain ‘status quo.’”

Other distributors pointed to the price Sinclair paid for the channels as evidence that they matter less to consumers than probably ever before. When the RSNs first went on the block in October — part of the conditions Disney agreed to for federal approval of a $71.3 billion purchase of certain 21st Century Fox assets — many analysts believed they would fetch a price north of $20 billion. Sinclair paid $9.6 billion in cash for the channels, and with its partners — Byron Allen’s Entertainment Studios owns a small piece of the entity that includes the RSNs — the networks are valued at about $10.6 billion.

The first big renewal might be a strong indication of Sinclair’s success or failure. It’s a tough test. While Dish declined to comment on the carriage talks, the satellite provider has taken an increasingly hard line on costs — it is currently in a seven-month dispute with HBO — and has been willing to drop sports networks in the past. For example, Dish has never carried the MSG Networks RSNs in the New York market.

Dish chairman Charlie Ergen said on the satellite provider’s first-quarter earnings call that Sinclair and Dish have been working together on ATSC 3.0, and he hoped the broadcaster was successful with the RSNs.

“I am hopeful we can be productive and get aligned in an agreement that will be aligned for both of us and that would be productive,” Ergen said of Sinclair. “We are pretty easy to work with as long as people look to do something that’s fair and not try to take advantage of the situation.”

Cable Exec: Sinclair Will Feel Pain

A cable executive who asked not to be named highlighted a dilemma for Sinclair even if it is able to pass through fee increases. Distributors will likely pay any increases imposed by Sinclair, the cable executive said, but will fully pass those costs onto consumers. The problem for Sinclair is that even if those increases result in more video customers cutting the cord, distributors won’t be that concerned. Video customers might bail out, but they more than likely will remain customers of higher-margin broadband products.

“Our disaster mitigation plan is good; for [Sinclair], it’s not so good,” the distributor said. ”Once Sinclair loses a customer, they’re gone. I don’t see how this ends well.”

Sinclair Broadcast Group would have to face the issue of its fitness to be a licensee if it seeks Federal Communications Commission permission to transfer licenses related to the Fox regional sports networks it is buying from The Walt Disney Co.

An FCC spokesperson said, when asked by inquiring minds like The Wire’s whether or not the FCC will have to review that transaction, that it is up to the companies. That sounds darned sporting of the regulator, but what they meant by that was that, yes, if Sinclair wants to transfer the licenses for, say, transmitting live sports footage back to studios, it must seek the commission’s permission.

But there are other options, as AT&T demonstrated in its purchase of Time Warner, which it was able to structure such that the CNN newsgathering licenses were not being transferred.

According to the FCC, Sinclair can transfer the licenses, thus subjecting the deal to agency review, and expose Sinclair to that fitness issue raised in its aborted effort to buy station group Tribune Broadcasting. Sinclair also could let the licenses expire and reapply for them, or it can turn them in and reapply for them, both of which would also let folks talk about whether Sinclair is.

“But we can’t tell them what to do,” the spokesperson said. Perhaps in this case, but in others you could probably get some industry argument on that point.

Revenue increased 8.5% at Sinclair Broadcast Group in Q1, but tougher comparisons with the prior year meant a decline in profits at the broadcaster during the period, according to financial documents filed with the Securities and Exchange Commission Wednesday.

Revenue at the broadcaster, which earlier this week agreed to purchase 21 regional sports networks from The Walt Disney Co. in a deal valued at $10.6 billion, rose to $722.1 million in Q1, compared to $665.4 million in the prior year. Operating income was down 12.1% to $93.6 million in the first quarter compared to $107.3 million in Q1 2018. Sinclair said the prior year period included $21 million of gains on asset dispositions, making comparisons difficult. Net income for the period was $21.7 million, down 49.7% from $43.1 million in the prior year.

Related: Sinclair Stock Soars After RSN Deal 

Political revenue was down to $2 million in the quarter, compared to $7 million in Q1 2018, an election year. Distribution revenue, which includes retransmission consent fees and affiliate fees from its cable networks, was up 12% to $352 million in the quarter, compared to $314 million in the first quarter of 2018.

Sinclair offered guidance for the second quarter, expecting revenue to be in the $716 to $725 million range in the period. Of that total the company expects to report political revenue of between $4 million and $5 million and distribution revenue of $365 million to $368 million in Q2.

"This is a very exciting time for Sinclair led by our recent announcement to acquire 21 regional sports networks, industry collaboration on the implementation of the ATSC 3.0 broadcast standard, and continued success of our local news organization," Sinclair CEO Chris Ripley said in a press release. "We are transforming the company, diversifying our content sources and revenue mix, and building a leading local news and sports organization on all platforms. In addition, during the first quarter, we launched our free, linear and on-demand multi-channel streaming service, STIRR, which is exceeding initial expectations. We announced a joint venture with the Chicago Cubs for the launch in 2020 of Marquee Sports Network, and entered into a definitive agreement to purchase 21 RSNs for a very attractive and accretive $9.6 billion purchase price, representing a $10.6 billion enterprise value. Meanwhile, we also exceeded our guidance for the first quarter in the key financial metrics."

About eight months after it agreed to purchase certain 21st Century Fox content assets for $71.3 billion, The Walt Disney Co. has set March 20 as the closing date of the transaction.

According to an 8-K filing with the Securities and Exchange Commission on March 12, Disney and Fox said holders of Fox stock have until March 14 at 5 p.m. to select the form of consideration they wish to receive as part of the acquisition. Fox expects to distribute all shares as part of the deal on March 19 and that the transaction will be completed by 12:02 a.m. on March 20.

The closing ends what has been a sometimes contentious path to a deal. Disney first agreed to purchase the Fox assets in December 2017 for about $52.4 billion. Comcast, which had been an early bidder for the assets, made an unsolicited offer for the Fox properties in June 2018, touching off a brief bidding war for the assets, which ended in July with Disney agreeing to pay $71.3 billion for the assets. 

With the closing, Disney has 90 days to finalize the sale of 22 regional sports networks it inherited in the deal, a condition of federal approval of the Fox transaction. Disney put the RSNs up for sale in October, and at least one property -- YES Network -- is close to a deal. The RSNs were expected to fetch a price in the $20 billion range, but bids have come in at about half that, according to reports. 

NBC Sports Regional Networks has named Matt Murphy as senior VP and general manager of NBC Sports Bay Area & California as of Jan. 2. He is responsible for the networks, their multiplatform content and relationships as the league’s local sports networks of the San Francisco Giants, Golden State Warriors, Oakland A’s, Sacramento Kings, San Jose Earthquakes, and San Jose Sharks, NBC Sports said in a release.

He reports to Bill Bridgen, president and group leader of NBC Sports Regional Networks. The opening was created when the prior GM, Tom Stathakes, opted to step down, the networks group said.

“As we continue to put fans first and strive to serve them with the most engaging content across all platforms, it became clear that Matt’s expertise and leadership in this space made him the ideal candidate to take these networks to the next level,” said Bridgen.

Murphy had been SVP of platforms and strategy for NBC Sports Regional Networks. Most recently, he led the launch of the MyTeams by NBC Sports app, a team-centric app for the 25 pro teams covered by the RSNs, NBC said.

Murphy had served for 20 years at Disney and ESPN Media Networks, lastly as SVP of digital video distribution. A Connecticut native, Murphy and his family will relocate to the Bay Area, NBC said. (Photo courtesy of NBC Sports Group.)

Online retail giant Amazon is among the bidders for 21st Century Fox’s 22 regional sports networks, according to CNBC’s David Faber, including the jewel in the crown, the New York Yankees’ YES Network.

The latter bid is especially interesting given that more observers have expected the Yankees to exercise a right of first refusal in their deal with Fox. According to reports, the Yankees have been talking to private equity firms about financing a deal.

Faber said on his “Squawk on the Street” that in addition to the other RSNs, Amazon and a sovereign wealth fund are part of a group that is joining with the Yankees in a bid.

The RSNs were part of a larger Fox asset sale to the The Walt Disney Co. earlier this year. But Disney agreed to sell the RSNs, which Guggenheim Partners has estimated to be worth more than $20 billion, as part of the conditions of regulatory approval of the larger Fox deal.

According to Faber, Amazon has joined the fray after the first round of bidding concluded on Nov. 8. According to a transcript, Faber reported that in the first round bids, no “club deals” were allowed, meaning that bidders could not partner on a bid, but were encouraged to give JP Morgan and Allen & Co., who are running the auction, a ballpark idea of how much they were willing to spend. Fox, which had been expected to submit a bid for the channels, did not participate in the first round, but could come back in later rounds.

According to Faber, Apollo Global, KKR & Co., The Blackstone Group, Sinclair Broadcast Group and Tegna all made first round bids for all 22 networks.

NBC Sports also did not submit a bid and is not expected to. NBC Sports chief Mark Lazarus said at an industry conference in Connecticut last week that regulatory issues would prevent it from bidding.  

The regional sports network landscape is poised to change dramatically in the next several months as The Walt Disney Co. begins to weed out what could be a crowded field of buyers for 22 regional sports networks formerly owned by 21st Century Fox.

Disney agreed to divest of the RSNs, which include networks in Kansas City, Phoenix, Detroit and Indianapolis, as part of the federal approval of its $71.3 billion purchase of Fox’s studios, cable networks and other assets. The Justice Department gave its nod to the larger Disney-Fox combination in June, on the condition that the RSNs are divested at least 90 days after the closing of the bigger transaction. Disney has said it expects to close on the Fox deal in early 2019.

Clock Already Running

The process to sell them has already begun, and Disney chairman and CEO Bob Iger said “conversations are starting, interest is being expressed” during an Aug. 7 conference call with analysts to discuss fiscal Q3 results. But Iger is in no rush. “It’s likely that we’ll negotiate a deal to sell them, but the deal will not be fully executed, or won’t close until after the overall deal for 21st Century Fox closes,” Iger said on the call.

Disney has a lot of options. According to FBN Securities media analyst Robert Routh, it can simply sell the RSNs after it completes the Fox deal, distribute them tax-free through a new entity directly to Disney shareholders or hold a Dutch auction to distribute shares in a new entity containing the RSNs after the Fox deal closes.

“If they do decide to simply sell them, there are many entities that likely have interest in at least considering the deal,” Routh said. Those potential suitors include cable pioneer John Malone, personally or through his Liberty Media; Madison Square Garden’s ruling Dolan family or Dolan-controlled entities such as MSG Networks; AT&T; Verizon Communications; or Comcast, in addition to local broadcast entities.

Routh said tech giants like Facebook, Apple, Amazon, Netflix and Google (the so-called FAANG stocks) could also show interest, although he believes that will be unlikely. More of a possibility are private-equity firms that have shown interest in cable properties over the years, he said.

Sports consultant and CEO of LHB Sports, Entertainment & Media Lee Berke said the sheer number of networks on the block will attract potential buyers from practically every corner of media. In an interview, Berke said there haven’t been this many RSNs up for sale at once since the concept was created in 1986.

“We’re in a unique situation,” Berke said. “I’m used to dealing with one or two RSNs being sold every 18 months. Now, we have 22 being sold in the next nine months.”

Individual sports teams could also get involved in the scramble, Berke said, as will private equity, broadcasters and pay TV networks and distributors. But he doesn’t see the Fox RSNs being sold in one chunk to a single provider.

“I think there will be a bidding war,” Berke said, adding that with so many interested parties expected to enter the fray, “it points toward selling to a variety of buyers instead of just one.”

Analysts have speculated that one of those teams could be the New York Yankees, owners of a 20% stake in the YES Network with the option of buying out Fox’s 80% interest. But with YES being valued at north of $4 billion, the Major League Baseball team will likely have to take on a partner to do that, Berke said.

RSNs are attractive because live sports is one of the few programming segments that draws in strong ratings from every demo. But RSNs also are high-priced — Kagan, a unit of S&P Global Market Intelligence, estimated that per-subscriber, per-month affiliate fees for the Fox RSNs range from $6.37 to 85 cents.

Kagan sports analyst Adam Gajo valued the Fox RSNs around $20 billion, but said Disney may be hard-pressed to get that price.

“RSNs aren’t as attractive as they once were, primarily because of the high carriage fees and the increased number of options in the market for non-sports fans,” Gajo wrote in an email message. “The segment as a whole, however, understands this, so the teams are starting to be more realistic with their expectations on sports rights fees — so that helps.”

Whoever buys the networks would best utilize them as leverage for carriage of other pay TV channels, Gajo said.

“To purchase the RSNs and simply maintain them would be fine, but it would be much more advantageous to use them as a springboard into local sports rights, or to launch a service, or something to that effect,” Gajo wrote.

Sinclair In the Mix

Potential suitors include broadcast TV station groups like Sinclair Broadcast Group and Nexstar Media Group. Sinclair, which watched its $3.9 billion merger with Tribune Media unravel after a 15-month federal approval process, has been trying to assemble news and sports assets to complement its stations across the country. It already owns the Tennis Channel and on its Aug. 8 conference call with analysts to discuss its Q2 results, Sinclair CEO Christopher Ripley said the Fox RSNs would be a “good fit.”

“There are a lot of deals coming on the marketplace, as I’m sure you’ve all heard,” Ripley said on the call. “Adjacencies continue to be an interest to us, including cable, content, digital media and I would put RSNs squarely in that adjacency bucket. I think they are fairly interesting. They are a good fit with the broadcast footprint and operations. Of course, it all has to be for the right value and the right deal.”

Talent from the NBC Sports Regional Networks will be heading to PyeongChang, South Korea, to cover the Olympics.

NBC Sports Washington’s Julie Donaldson returns as Olympic News Desk host, and Ahmed Fareed will host NBCSN’s daytime NBC Olympics coverage.

NBC Sports Boston’s Trenni Kusnierek and NBC Sports Bay Area’s Jim Kozimor will cover curling. And reporting from their first Olympics will be Abby Chin of NBC Sports Boston, who will cover cross-country skiing and ski jumping, and NBC Sports Chicago’s Leila Rahami, who will cover women’s hockey.

Related: NBC Sports Rebrands Comcast RSNs

“It is an honor to have six of NBC Sports Regional Networks’ on-air talent contributing to the 2018 Winter Olympic Games,” said Ted Griggs, president, group and strategic production & programming leader for NBC Sports Regional Networks. “Their participation in the Games is a testament to the talent and strength of our group.”

NBC Regional Sports Networks has jumped into the direct-to-consumer market by launching NBC Sports Gold’s Blazers Pass, a streaming product that lets fan buy 15 telecasts of the NBA's Portland Trail Blazers games without subscribing to cable.

The Blazer Pass costs $34.99 for all 15 games, with a 10% discount if purchased by Dec. 1.

NBC Sports Northwest will continue to offer Trailblazer games on traditional TV and streaming via its TV Everywhere app,

“When we set out to renew our rights last year, distribution was a top priority,” said David Preschlack, president, NBC Sports Regional Networks and Platform and Content Strategy. “In today’s media environment, fans have the ability to follow their favorite teams in a variety of ways. We’re pleased to offer Rip City this new DTC product, so that fans can follow Damian Lillard, CJ McCollum, Jusuf Nurkic, and the team during key games. In addition, we’re pleased to offer NBC Sports Northwest customers access to more games than ever before.”

NBC Sports has gotten into the direct-to-consumer game by offering Gold Passes to sports including Premier League Soccer, rugby and cycling.

“NBC Sports Regional Networks has worked hard to make our games accessible to our passionate fan base,” said Chris McGowan, president and CEO of the Trail Blazers. “This DTC offering is another example of our two organizations working together to provide a way for all fans in the region to watch across any platform. We continue to make access to our games a top priority."

NBC Sports Gold is available on Apple iOS, Android, Apple TV, Roku, Amazon Fire TV and Chromecast platforms and online at NBCSportsGold.com. NBC Sports Gold is powered by Playmaker Media, NBC Sports Digital’s technology service.

Blazers Pass subscribers will also receive a complimentary gift package, and will be entered into a monthly drawing for a chance to win a pair of tickets for a courtside experience to a home game. Fans can also enter at http://www.nbcsports.com/blazerspass.

NBC Sports Chicago said it promoted Kevin Cross to vice president of content, a new post at the regional sports network.

Cross, who had been senior director of news and original content, will be responsible for NBC Sports Chicago’s growing portfolio of multi-platform content, including live events, programming, digital media news and original content.

Related: NBC Sports Rebrands Comcast RSNs

The RSN also named Jessica Felten director of marketing.

“Both Kevin and Jessica have been major contributors and integral assets to the growth of NBC Sports Chicago,” said Bill Bridgen, president of group leaders, NBC Sports Regional Networks. “Their experience, leadership, and forward-thinking mindset will be critical factors in our multi-platform efforts moving forward.”

Felten had been marketing manager at NBC Sports Chicago for the past four years. Before that she was with Crate & Barrel.

The Fox Sports Network Engineering & Operations hub in The Woodlands, Texas, about 40 miles north of Houston, delivered 78 live events over the weekend of the disastrous rainfall and flooding from Hurricane Harvey, even though only about 120 employees were able to be there (about 40% of the staff).

Through last Wednesday (Aug. 30) the live events figure was up to 104, and some employees still were unable to get to the building because of the flood conditions.

About 20 close family members also took residence in the facility, which is the master control center for all 21 of Fox’s regional sports networks.

Fox said a number of employees suffered severe losses in terms of home and vehicle damage. The Woodlands did not receive as much rainfall as Houston, but still had 19 inches of rain as of last Monday (Aug. 28) with more expected that day.

“The company and the facility have come through with flying colors so far,” Eric Shanks, Fox Sports president and chief operating officer, told The Wire. He added: “But that’s not our main concern. It’s the people who actually live in the area, now that it’s only going to get worse from here on out.”

Fox is focused on providing financial assistance, Shanks said, matching contributions to United Way of Greater Houston and priming the pump with $100,000. And 21st Century Fox is setting up an internal fund for employees to apply for grants “to repair whatever they need to repair, living expenses, to get back to where they need to be.”

Shanks said the facility was designed to be able to live out of: “walk-in freezers, sides of beef, red beans and rice cooking every day, showers, everything.” Hot water, though, has been in short supply.

This article appears in the Sept. 4 edition of Multichannel News's Through the Wire.

NBC Sports is renaming its regional sports networks, replacing their Comcast Sports Net and TCN titles with NBC Sports, effective Oct. 2.

For example, CSN Chicago will become NBC Sports Chicago, and TCN Philadelphia will become NBC Sports Philadelphia.

Comcast’s NBCUniversal unit has been pushing the Peacock logo on the regional sports networks since 2012 to make them more clearly associated with NBC Sports.

“We’re excited to complete the brand evolution of our remaining RSNs, which will now include the iconic NBC Sports name on all of our networks,” said David Preschlack, president, NBC Sports Regional Networks and NBC Sports Group Platform and Content Strategy. “This development is a reaffirmation of our continued commitment to provide the best, most compelling local sports coverage to our fans across the country.”

Related > Sports Gave TV Advertising a Boost in July: SMI

The brand change is separate from programming changes that have been happening at the networks over the past year. Schedule game broadcasts will not change.

Comcast's West Coast RSNs changed their names in April to NBC Sports Bay Area and NBC Sports California. Other network name changes include CSN Mid-Atlantic becoming NBC Sports Washington, TCN Mid-Atlantic becoming NBC Sports Washington+ and CSN New England becoming NBC Sports Boston.

Walter Cade has been promoted to senior VP of sales at the NBC Regional Sports Networks.

Cade, who had been VP of ad sales and national sales manager at CSN Chicago, will be responsible for managing revenue across the NBC regional sports networks and work with NBCUniversal’s 29 owned NBC and Telemundo stations on multi-market and cross platform sales.

Last year, NBCU realigned its TV stations and RSNs so they can work together to maximize local business

Cade will report to Frank Comerford, chief revenue officer and president of commercial operations for NBCU Owned Television Stations.

Read more at broadcastingcable.com.

Cable networks, plagued by sagging ratings and lower affiliate fees as consumers shifted to over-the-top and online viewing options, could be in for a rebound in the calendar fourth quarter. But analysts warn that the volatile political climate — which helped drive news networks to new heights in the just-passed presidential election — could also depress results for general entertainment channels.

Several top cable programmers are expected to release earnings results next week, with most analysts encouraged by the prospects for top names like 21st Century Fox and The Walt Disney Co.

Fox is expected to be first out of the gate, releasing fiscal second quarter results today (Feb. 6). The home to perennial ratings winner Fox News Channel, general entertainment powerhouse FX, several regional sports channels and FS1 should have a strong fiscal second quarter, driven by strong ratings for Fox News and the sports channels.

Morgan Stanley media analyst Ben Swinburne estimated Fox’s cable networks should report revenue of $3.96 billion in the fiscal second quarter, up 7% from $3.70 billion in the prior year. Broadcast-TV revenue — driven by an expected 5% hike in advertising sales — should rise 8.8% to $1.85 billion from $1.7 billion in the prior year, Swinburne wrote in a research note.

Cash flow for the cable channels also should be up nicely in the period, according to Swinburne. He predicted that cable network EBITDA would rise 8.3% to $1.3 billion from $1.2 billion in the prior year, while cash flow at the broadcast division should grow by 27% to $353.6 million from $279 million.

COMCAST RENEWAL BENEFITS

Swinburne was encouraged by recent renewal deals with Comcast, which included the return of its YES Network RSN to the operator after a one-year hiatus. Some of Fox’s smaller networks, like Fox Sports 2 and FXM, could also add to growth as their subscriber penetration increases.

Credit Suisse media analyst Omar Sheikh ratedFox his top pick for the year, saying in a recent note that the company’s plan to acquire the remaining interest in U.K. satellite giant Sky it doesn’t already own has removed the M&A discount from the stock and allowed the programmer to focus on organic growth.

Fox News Channel, currently President Trump’s favorite news network, has been riding a wave of ratings growth well past the November election. But what’s good for Fox may not be so for the rest of the cable henhouse. General entertainment networks could feel the pain as viewers are glued to news channels to watch the latest controversy involving the new presidential administration.

That could serve as a blow to programmers that compete directly with news programs, like Discovery Communications, according to Sheikh.

“We expect the political news cycle to remain strong through at least the first half of 2017, driving viewership at major news networks (e.g. CNN, Fox News, MSNBC),” Sheikh wrote. “These networks directly compete with seven of Discovery’s networks for the audience of adults 25-54, therefore strength in news will further pressure Discovery’s domestic ratings, in our view.”

He noted that analysts’ consensus estimates for Discovery’s domestic ad-revenue growth are flat to 1%, and could be even lower.

“We believe there could be some downside risks to this,” he wrote.

UPSIDE SEEN FOR ESPN

Surprisingly, the analysts were bullish on Disney, which has taken it on the chin as subscribers have fled from its flagship sports network ESPN. In his report, Swinburne estimated that ESPN’s could be in for a reprieve from its 2% annual subscriber erosion over the past three years.

“We believe risk now skews to the upside,” Swinburne wrote, adding that skinny bundles and online video distributors — the two businesses many blame for ESPN’s subscriber decline — could be catalysts for growth.

“We believe the combination of moderating skinny-bundle headwinds and the emergence of new, low-priced streaming options create opportunities for incremental ESPN distribution,” he wrote.

Swinburne was also optimistic the Worldwide Leader in Sports will continue to grow affiliate fees in the next renewal cycle, beginning in 2018, largely because of new distribution players.

“We also believe new entrants (such as Hulu Live or YouTube Unplugged) will pay premium affiliate fees, suggesting a positive mix shift tailwind to rate,” Swinburne wrote.

Disney has said it plans to launch a standalone over-the-top ESPN offering using sports rights it currently owns but can’t monetize on its existing networks. While few details have been released about the service, which is expected to debut later this year, Swinburne believes it can coexist with ESPN’s existing linear networks.

“It remains a time of transition at Disney, as it evolves its ESPN/ABC distribution model to attempt to reach consumers that have been opting out of the pay TV bundle,” Swinburne wrote. “We expect the a la carte and bundled offerings will coexist for a long time, creating more earnings stability than the market presumes.”

VIACOM ON THE BOUNCE?

Swinburne upgraded the entire programming sector last week to “attractive,” slapping “overweight” ratings on Disney, Fox and even Viacom, which has experienced the greatest impact from the shift to mobile and online viewing. Swinburne believes that after a period of management upheaval and disappointing results, Viacom, which reports its fiscal first quarter results on Feb. 9, has nowhere to go but up.

“We believe new management has about a year before any significant renewals to try and improve the programming and ratings trajectory, notably for MTV,” Swinburne wrote, adding that Viacom’s biggest EBITDA contributor, kids’ network Nickelodeon, has shown healthy growth over the past year.

But not everyone was quite as optimistic. Sanford Bernstein media analyst Todd Juenger, who rightly predicted the linear network ratings declines years ago, foresees a difficult period for pay TV.

“We see no evidence of fundamental trends to support a view that things are getting less worse,” Juenger wrote last week, adding that pay TV subscribers and conventional TV audiences continue to fall while subscription VOD services like Netflix gain viewers.

“All the media Bulls are clinging to is: hope,” Juenger wrote. “Hope on macro/political (tax rates, GDP). Hope that OTT launches will slow the rate of sub decline. Hope for M&A.”

UPDATE:No Game, No Talks Between YES, Comcast

Barring a last minute — and unlikely — reprieve, the Opening Day games of two of the most popular teams in Major League Baseball — the New York Yankees and the Los Angeles Dodgers — will be dark to more than 1 million pay TV customers on April 4.

The ongoing big-market disputes are a sign that perhaps sports programming, once thought to be bulletproof, is weakening in the era of skinny bundles and over-the-top video.

Comcast in November refused to pay what it called a 33% increase in fees charged by YES Network, the New York-area RSN that features most Bronx Bombers games. Comcast’s customers missed out on Brooklyn Nets National Basketball Association games, but many thought the operator would cave in by the start of the baseball season. YES, owned by Fox Sports Network Group and the Yankees, was carried in about 900,000 Comcast homes in parts of New Jersey, Connecticut and Pennsylvania.

L.A. FADEAWAY

Time Warner Cable’s SportsNet LA, home to the Dodgers, continues to be spurned by distributors in Southern California including AT&T, DirecTV and Cox Communications. Time Warner Cable, which carries the RSN in L.A. along with Charter Communications and Bright House Networks, even agreed to offer a one-year discount — later extended to six years — and was still rejected.

Distributors have complained about the high cost of sports programming for years, but as sports rights charges have climbed and fees for networks have hit the stratosphere, pay TV providers are pushing back.

Some analysts say sports programming, once thought to be must-have content because of its live viewing nature and predominantly young male audience, is vulnerable as operators attempt to create “skinny” bundles for price-conscious customers.

“Clearly, there’s an appetite for a lower-cost package with less sports programming,” Telsey Advisory Group media analyst Tom Eagan said.

Comcast executive vice president of consumer services Marcien Jenckes said he sees the YES dispute in simper terms: the operator’s perception of the value of the network doesn’t match the price. Comcast has claimed that its customers in the New York market aren’t big YES watchers and haven’t much missed the channel since it came off on Nov. 18.

At $5.93 per month per subscriber, according to SNL Kagan, YES is the priciest RSN in the country — and at about $2.50 per subscriber per month higher than another New York area RSN, MSG Network, according to Kagan.

“At a more reasonable price, they would be a great value proposition,” Jenckes said.

YES CEO Tracy Dolgin has taken Comcast’s argument to task. He said YES programming is rated No. 1 in Comcast’s New York area territories on game days. And he said YES also out-rated SNY, partly owned by Comcast, by a margin of 5 to 1 in its Connecticut footprint on game days.

About 40% of Comcast’s 900,000 subscribers in the New York area consider themselves Yankees fans, Dolgin said.

YES: RATE WAS NO SURPRISE

While Comcast has said it is looking for a lower price, Dolgin noted the operator had been paying the higher rate for more than eight months — its deal originally expired in February. Dolgin said it is misleading to say a price that it has been paying for nearly a year is suddenly too high.

Dolgin said that other RSNs vary in price depending on the market; operators on the fringes of a team’s territory usually pay less than those in the heart of the market. YES does not have so-called zoned pricing like others do, including Comcast-owned RSNs.

“What we charge for YES is less than what Comcast charges for some of their owned-and-operated regional sports networks in the intermarket where the Comcast subs are,” Dolgin said, calling the Kagan estimate “way over” what Comcast was paying.

YES will keep running ads urging Comcast customers to switch providers, Dolgin said.

“It’s not easy, but Yankee fans are very passionate. In the month of April there are 23 Yankee games and 20 are exclusively on the YES Network. If you’re a Yankee fan, you either feel like a victim, or you switch.”