Digital Advertising Under Fire From All Sides, Sinclair’s Bally Sports RSNs Headed For Bankruptcy Court

1. Digital Advertising Under Fire From All Sides

It’s been a tough week for the digital advertising world. 

First the DOJ announced that it was filing an antitrust lawsuit against Google for its monopolistic domination of the ad tech market which has the stated goal of forcing Google to sell off its ad tech products.

It’s the culmination of a series of lawsuits against big tech companies that are based on never-tried-before legal theories in an attempt to reign in the tech giants, most of which have little to no competition.

With Google, the DOJ is operating on the easy-for-voters-to-understand theory that Google forced brands to pay more for advertising while publishers made less money, all of which served to drive up costs for consumers.

Now all this went down during the big IAB Summit on San Marco Island, Florida this week, a summit which was sponsored by both Google and Meta (among others, but still…)

So it was not surprising that IAB president David Cohen delivered a speech that pilloried the DOJ, “privacy extremists” (his words) and Apple, who, Cohen claimed, exemplified “the cynicism and hypocrisy that underpins the prevailing extremist view.”

Wait… Apple?

Why It Matters

So Apple does not play by the other big tech players rules. It does not let them use third-party cookies to collect data from iPhone users, making all that mobile data relatively worthless while more or less obliterating the underpinnings of the digital ad industry.

Apple also, as Brian Morrissey pointed out, is not a member of the IAB, so there’s that too.

But back to privacy for a minute.

It sounds like something you should care about. Big evil companies are tracking you all over the internet and it seems like everyone has a story about talking about winter boots to a friend and then seeing ads for winter boots show up in their Facebook feed a few hours later. 

The reality though, is that people treat it like dieting. They know they should be eating healthier, but when there's a big box of Double Stuff Oreos on the table, it’s easier to just figure they’ll start caring tomorrow. 

In that vein, one of the more interesting things we discovered when researching our latest report, FASTs Are The New Cable, Part 2: Advertising, there was a somewhat pervasive feeling that GDPR’s main accomplishment was ensuring that every website had an annoying pop-up asking them about cookies that pretty much everyone just clicked “okay” on without ever delving into the details. 

So there’s that, only when you tell people how companies like Google make money by tracking their data, especially when you get to the part about being able to get access to credit card data, it starts to all seem rather creepy and dark.

But that’s not even the real problem. 

This is: Google has been drinking their own Kool-Aid all these years and has not done much in the way of brand building. The bulk of their advertising has been transactional.

Whereas Apple is the king of the image advertising from its iconic packaging to its ads celebrating the joys of music, all the way back to the famous 1984 Super Bowl commercial.

And the beauty of image ads is that when people like your brand they are willing to forgive you for a whole host of transgressions. 

Something Southwest Airlines can attest to. 

So while Apple’s “we don’t do third party cookies” thing is in many ways a self-serving stance, consumers don’t care. 

If Apple does it, it must be good. And the converse: if Google or Facebook do it, it must be bad.

And you know what else consumers do?

Vote.

So that all those politicians on both sides of the aisle get that being against Google is a very popular position to take whereas being against Apple is not.

Which is why Google is being sued by the DOJ and Apple is being hailed as the people’s hero and champion of privacy rights.

What You Need To Do About It

If you are a brand and you are getting to be of a certain size and you are not running any sort of image campaign… Danger Will Robinson!

Think about Southwest. Think about how quickly last month’s meltdown would have put an unpopular airline out of business. Think about how much money not being an unpopular airline saved them. And then— even though there are no actual metrics you can cite as to the campaign’s effectiveness— hire a really good creative ad agency and just do it. (Pun very much intended.)

If you are Google, well, you’re pretty much fucked right now. Hire as many lawyers as possible to delay the DOJ’s case, keep all that AI stuff you’re doing on the QT and hope that this will all blow over.

That, and start running a whole bunch of image advertising. People generally like your products, Gmail and Google Docs in particular. Make them feel good about liking them. 

Software is one place Apple keeps dropping the ball—ever try to create a bulleted list on Pages? So double down on that and become. if not exactly human. less inhuman.

If you’re the television industry, this would be a really good time to claw back even more money from display. You’ve got better data, and you’ve got something even more important: emotion. The emotional connection a good TV commercial can establish with consumers is way more valuable than a click.

Just ask Apple.

2. Sinclair’s Bally Sports RSNs Headed For Bankruptcy Court

In a move that did not seem to surprise anyone at this point, Diamond, the group that owns Sinclair’s Bally Sports RSN venture is heading to bankruptcy court.

Smart money is that they will not close down, but rather, restructure in a way that lets them make some creditors somewhat unhappy and others very unhappy.

Big losers in the restructuring deals will be the teams themselves, as the new deals will likely net them smaller piles of money.

For those of you who have not been following the saga, the issue isn’t Bally Sports streaming apps as a business per se, it’s that the audience for RSNs has been shrinking as cord-cutting has been rising and so servicing the $10 billion debt Sinclair took on when they purchased those RSNs from Fox in 2019 is a veritable albatross around their necks.

Bankruptcy or not though, the RSNs are facing a bumpy road ahead.

Why It Matters

Creating streaming apps for pro sports teams is a very popular idea and the main thing that has been holding them back has been the tangled web of rights issues between the leagues, the individual teams and the various networks and broadcasters themselves.

Witness the whole brouhaha (I love that word) that arose back in 2021 when MLB Commissioner Rob Manfredi said that Sinclair did not actually have rights to put MLB games on their app. (He eventually relented.)

So it’s not been an easy road and there is a lingering feeling among the leagues that creating streaming apps is something they should be doing themselves rather than outsourcing it in return for billions of dollars.

The thought being they can make even more billions owning it themselves. 

A thought process I attribute to the unexpected success of MLBAM, but I digress...

The fact remains that the audience for major league sports on TV skews older (50+ for every sport save basketball which is still 40+) and they need to do something to get all those younger fans on board.

There’s also the notion that one of the key reasons people hang on to their OG TV subscriptions is that it’s the only way they can watch their favorite teams and that the successful launch of reasonably priced streaming apps will hasten their departure.

So there’s that too.

It’s likely that Diamond will come out of the bankruptcy okay—there’s a chance they may need to sell the rights to some of those games back to the leagues, at which point all bets are off, and Redditors, a notoriously cranky lot, seem to have some issues with dropped signals that they will have to solve too. 

Plus the whole lag thing (streaming broadcasts lagging 60 seconds or more behind both cable and the live game), but that’s something the entire industry needs to solve, not just Bally.

What You Need To Do About It

If you are Sinclair, chin up. This is a bump and you will likely lose money in the short term, but if done correctly, streaming RSN apps can be quite successful. And by “done correctly” I mean you will need to take advantage of the digital nature of the apps and introduce unique features while also creating a community among your subscribers and figuring out how to keep them around during the off-season.

So quite a checklist.

If you are one of the leagues, running your own RSN network might not be as easy as it sounds and you’ll need to hire the right people and give them lots of leeway to make it happen. If you do that, it can be quite lucrative and you can keep all of your rights in-house and not have to share any of the profit. 

But it’s a big “if.”

If you’re anyone involved in the RSN business, remember that games are long, scores and play-by-play accounts are readily available online and that there are a lot of games each season.

Plan accordingly.