1. Sinclair Thinks Fox’s RSNs Are The Bomb

The last open question on the Fox/Disney deal was answered this week when Sinclair, the nation’s largest operator of independent broadcast stations, bought the remaining RSNs off of Disney for $9.6 billion, far less than many observers had expected. Private equity (PE) firms were the only other bidders, as the Silicon Valley crew, which many had expected to take a swing, decided not to play ball. (See what we did there.)

Why It Matters

RSNs are valuable in that the people who watch them are frequently hardcore fans who base their TV viewing decisions on which MVPD or vMVPD is carrying the RSN they want to see.

A casual sports fan will be satisfied with ESPN, but a die-hard Yankees fan will insist on the YES network and its absence will be a deal breaker. (NB: YES, which carries Yankees and Brooklyn Nets games, was purchased separately by a combination of Sinclair, Amazon and PE firms—Amazon's presence there was what led people to suspect they'd also bid on other RSNs.)

When teams are doing well, RSNs can also bring in broadcast network-like ratings and revenue, giving brands access to coveted demos and otherwise printing money.

The downside is that when teams aren’t doing well, they can be a major drain on profits, and while it’s a big niche, sports is still a niche market and there’s often little overlap between say baseball fans and hockey fans.

There’s also little overlap between various local RSNs, and so sports fans in the Los Angeles area have to deal with no less than five separate RSNs, and if there are multiple fans of multiple teams in the house, that can get expensive.

There’s also the question of what Sinclair’s ultimate goal is.

They recently launched STIRR, a service that gives viewers access to their local stations via a streaming app. While they are currently claiming otherwise, rolling up RSNs into STIRR would be a smart idea as it would also allow fans who were not local to watch their favorite teams and allow successful teams to expand their fan bases.

Both those scenarios may have legal issues around them, sports leagues being more territorial than wolves, but even providing streaming access for local fans would be a lucrative move.

Then there’s a fact that there are two things people want to watch live--sports and news--and Sinclair, being a broadcaster, now has both of them. While Sinclair’s news division sits to the right of Fox, they’ve promised not to mix the two, and the local news plus live sports equation is going to let them establish an even more dominant position in the local broadcast arena, and, more importantly, keep that arena open because right now the streaming services can't touch it. (Streaming-only RSNs, plus a streaming-based local news app could seriously have killed off a lot of local broadcasters over the next five years.)

Finally, there’s ATSC 3.0, the “NextGen TV” tech that Sinclair is so hot on. Among other things, it allows for over the air reception on smart phones as well as addressable advertising on TV sets, both of which would be ideal ways to reach sports fans. While it will likely be three to five years before ATSC 3.0 has any real traction, Sinclair can afford to play the long game here.

What You Need To Do About It

Not much anyone can do since the deal is not being contested, but one thing to watch is whether the FCC takes note of how big Sinclair is getting and makes moves to break them up. Current FCC head Ajit Pai has already stuck it to Sinclair once, nixing the Tribune merger deal, and while that was 100% Sinclair's fault (because avarice) he's unlikely to kick them again. A Democratic held FCC, OTOH....

If you’re a professional sports league, you’ll need to keep doing the math to decide if it’s worth it to let your franchisees sell the rights to broadcast their games to Sinclair or if you should try and bring it all back in-house somehow (and whether the various contracts you’ve signed over the years even make that possible.)

2. Pluto’s Getting More Firepower From Viacom

We were very impressed when Viacom bought Pluto earlier this year. It seemed like a very prescient move, as it would give Viacom a home for all of the notable library programming it owned, all those shows from MTV, VH1, Comedy Central, and, especially Nickelodeon.

Not to mention all the ad revenue that would come with it.

Now Viacom is following through, integrating its ad sales force with Pluto’s, investing in improving Pluto’s tech stack, striking carriage deals with various MVPDs and making sure that all those famous old shows wind up on Pluto.

Why It Matters

Pluto gives Viacom a way to reach that part of the coveted 18-34 year old audience that is not watching linear TV and/or is watching a lot of streaming. In either case, it helps them be the default mass market advertising location for brands looking to reach that demo, which likely includes the numerous DTC brands that, having outgrown Instagram, are looking to TV to both expand their base and increase their gravitas.

That’s in the right now.

In the future, when a CBS-Viacom merger is likely to happen, it gives the combined networks a place to park all that CBS library content too, and to make Pluto a key part of a future CBS/Showtime/Viacom/Pluto app, an app that would likely be at least partially ad-supported (a la the current CBS All Access model) and a formidable competitor to the other Flixes.

Also in the future: Nickelodeon was a major hit factory in the 90s and 00s, cranking out cartoons like SpongeBob Squarepants and sitcoms like iCarly that are the touchstones of the younger Millennial/older Gen Z generations. Much in the way that Friends and The Office are killing it on Netflix right now, expect to see a whole lot of similar comfort food viewing from 20somethings of their favorite old Viacom shows.

What You Need To Do About It

If you’re one of the other Flixes, especially the one that begins with “NBC” you might consider buying one of Pluto’s rivals--there are a bunch of them out there, some of which also use Pluto’s quasi-linear menu UX, which is a great way to combat the “decision paralysis” caused by the massive number of choices viewers now have. Because last time we checked, NBCU likely has a whole lot of library content 20somethings will want to see.

If you’re an MVPD or vMVPD, picking up Pluto and making it part of your offering will be a good way to draw younger viewers in while giving them one less reason to cut the cord.