Sinclair CEO Chris Ripley Denies $23 Price Tag on RSN Streaming Offering (Report)

Sinclair president and CEO Chris Ripley
(Image credit: Sinclair Broadcast Group)


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.

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.