1. Sinclair’s RSN Apps May Be DOA

Earlier this year, Sinclair announced that it would be teaming with Bally's sports betting service to launch streaming apps for the 21 Regional Sports Networks (RSNs) it owns. There were even leaked rumors suggesting that the apps would cost around $23/month

MLB Commissioner Rob Manfredi appeared to put the kibosh on that though, explicitly stating at the Sports Business Journal’s World Congress of Sports that “Sinclair does not have enough digital rights from enough clubs in order to have a viable direct-to-consumer product.”

And if that wasn’t clear enough, he added, “The other set of rights they’ve talked a lot about is gambling rights, they don’t have those either.”

Ouch.

Why It Matters

There is so much to unpack here and none of it is good for Sinclair. Or sports fans in general.

I’ll try and keep it painless.

RSNs carry pretty much every game their local NBA, MLB and NHL team plays. They attract a different type of fan than an ESPN. An ESPN fan is happy to watch an NBA game so long as it’s a good match-up. An RSN fan is happy to watch an NBA game so long as the Boston Celtics are playing in it. (See the difference?)

RSNs have traditionally charged MVPDs an arm and a leg for carriage and refused to allow themselves to be “tiered” (placed in an add-on, extra fee bundle the way that HBO and Showtime are.)

The high cost of that carriage fee is then passed on to consumers, many of whom don’t watch sports, which makes the cost of the pay TV bundle as much as $20-$30 higher each month.

Those high carriage fee prices are starting to come home to roost though as a number of providers—most notably the vMVPDs Hulu Live TV and YouTube TV—have dropped Sinclair’s RSNs, which does not seem to have cost the vMVPDs all that many subscribers.

The non-virtual MVPDs however are aware that the only reason many of their subscribers have not cut the cord is access to their local RSN. They are equally aware, however, that the reason many others have cut the cord is the high prices necessitated by the carriage fees paid to the RSNs. What they’d really like is the ability to offer access to the RSNs on a separate tier, but the teams just see that as lost revenue with no real benefit for them.

Then there are the complex relationships between the teams and the leagues. The leagues are all clearly thinking about how nice a league-wide streaming app would be, but are aware of how much money the teams make from their MVPD carriage deals. So it’s a delicate dance, especially around who gets final approval over the rights to what.

This makes things difficult for Sinclair, who, as the owner of the nation’s largest network affiliate group, is probably not any sports league’s first choice for a partner. (There’s also Sinclair’s much publicized political stance, which is likely to raise flags with players, fans and owners.)

Finally, there’s the fact that the fan base for all four major sports leagues is rapidly aging and younger viewers are not coming onboard. The consensus is that streaming apps with extra bells and whistles—interactivity, betting, stats—is the way to attract a younger audience, but the question the teams struggle with is how to get there without giving up all the money they’re making on cable right now.

What You Need To Do About It

If you’re a sports league or team you need to look at the future and realize the value of some short term pain for lots of long term gain. 

Meaning you will need to figure out a way to get an app up and running—either on your own or (more likely) via a third party since you have zero experience running a streaming service. And you need to do this while slowly but surely disengaging with the MVPDs. Let them do the tiered thing, even if you wind up getting less money from carriage fees in the short term because it will allow you to keep your fan base happy when there is no streaming alternative. That said, the future is streaming and the sooner you get there, the better. Especially with younger fans. 

If you’re an MVPD, you need to start playing hardball, at least when your RSN carriage deal is up. You are going to want to be able to put the RSNs in a separate tier where hardcore fans will be happy to pay you for the privilege of watching. This will then allow you to lower the price of your service for non-sports fans, which will allow you to keep more subscribers in the fold.

Just remember to be nice to the RSNs and (especially) the leagues. At some point in the not too distant future, you are going to want to be able to offer some sort of deal where you are bundling broadband, a set number of Flixes and a number of RSN-like sports streaming apps that the leagues will likely own. So keep that in mind.

If you’re a fan, just sit tight. It may take another year for everyone to get their act together, but they will eventually get there. 

2. Local News Grows On FASTs

The fact that access to local news is one of the key factors that keep people tied to their old school pay TV packages has not gone unnoticed, especially by those in the FAST industry. 

That’s why we’ve seen a number of announcements around increased availability of local news.

Amazon, whose Fire TV interface has rapidly been adding local news channels, announced that it was expanding its current offering from 88 cities to 156, with the number of stations jumping from 126 to 159. According to Amazon, they can now provide some form of local news to 90% of US TV households.

Similarly, Redbox Free Live TV has added local news from Cox Media, while Fox-owned Tubi has been supplementing its local Fox station broadcasts with deals from Cox, Scripps and Tegna.

Why It Matters

Local TV news is something of a mish-mash in the U.S.

There are network owned and operated (O&O) stations, big affiliate groups that can make deals for dozens of stations at once, individually owned stations, and everything in between.

That makes it hard to cobble together an offering that includes every local station in a market, which is what it seems, at least anecdotally, a decent number of consumers are holding out for. They want at least two or three local broadcast options before they feel comfortable enough cutting the cord. 

The FASTs seem to be the best home for local news. Not only do they allow for advertising, but their programming in many ways mirrors the programming found on local broadcasters outside of prime time.

They’re also free, which is very important when it comes to news, at least from a moral and social POV.

Amazon’s play is perhaps the most interesting in that it is attached to the Fire TV app itself and not IMDbTV, Amazon’s FAST. 

I suspect that we will see more plays like this from the various OEMs as part of their FAST offerings. The pitch to local news stations is pretty strong—millions of households with this well-known name brand TV will have access to your local news right out of the box—and since the major OEMs all have their own ad sales teams and measurement, there’s a path to monetization as well. (Check out our TVREV Special Report on the Emerging Smart TV Ecosystem for more details.) 

What You Need To Do About It

If you're a local broadcaster or local broadcast group, you should be looking at how to strike a deal with As Many FASTs As Possible. You don’t need to have a new broadcast Every Hour on the Hour, but creating an ad-supported streaming presence now just makes sense, given that is where most of your audience is headed.

If you’re a FAST, you’ll want to get local news up and running right away. With so many FASTs out there, it’s hard to get consumers to tell one from the next, and if you have the local news they want to watch, that may be all it takes to create stickiness. I’d put this one ahead of developing your own content, though that’s a smart move too.

If you're in the local news industry, you’re going to want to figure out what the format is for a 24-hour local news station. Do you just rerun the latest half hour show every 30 minutes, do you try and expand it to an hour, or do you pick up human interest stories from a third party and try and make the original part longer while dropping weather forecasts in at regular intervals. My guess is that trial and error is going to be the solution here.