Sinclair’s RSN Streaming Service Is a Gamble, but a Necessary One

Sinclair RSNs
Cheyne Gateley/VIP

Sinclair Broadcast Group recently unveiled ambitious plans for a direct-to-consumer local regional sports network (RSN) streaming service.

The company has to roll the dice. The $9.6 billion spent on acquiring Fox Sports’ RSNs from Disney in August 2019 looks to have been a vast overpayment given the company wrote down the RSNs by $4.23 billion in November 2020. The inflated price may be compounded by the RSNs owing $1.82 billion in rights fees to teams, according to Sportico.

What Sinclair is proposing is a service that feeds fan interest all year long, provided they are fans of both one of the 16 MLB teams and either one of the 17 NBA or 12 NHL teams for which the RSNs currently have media rights.

VIP+ reached out to a Sinclair PR representative to clarify whether a subscriber would have access to just teams in the local footprint or all teams across the RSN footprint, but we have yet to hear back.

Just like regular cable and out-of-market packages, local games will be subject to blackouts, but the offer is pretty expansive, with over half of the MLB and NBA included and just over a third of the NHL.

Sinclair’s proposition isn’t unique. The leagues themselves offer packages to fans for either the entire league or a specific team. Sinclair’s hope is there will be enough who watch MLB and NBA or NHL and see the cost savings in using its (more limited) coverage.

VIP+ turned to data analysts Maru Group to assess overall interest in these specialized sports offerings. Per its findings, around 1 in 10 U.S. adults say they subscribe to at least one of MLB Extra Innings, NHL Center Ice or NBA League Pass. Bearing in mind that these packages include access to all teams, unlike Sinclair’s proposed product, this suggests there should be a target market of several million adults for Sinclair to target.

Given that YouTube has been broadcasting free MLB games this season, VIP+ also reached out to social video analytics firm Tubular Labs to quantify viewership. With MLB a core part of Sinclair’s offering and cord-cutters being part of the desired market for the new service, the viewership of the YouTube games is a good proxy for general interest in streaming baseball.

The average audience for the 11 games measured is 1.1 million. This should give Sinclair some heart, as while not all viewers would subscribe, this at least demonstrates there is interest in streaming MLB games even as the sport skews older than other leagues.

In the SEC filings, Sinclair detailed where it envisions the service being in five years’ time. And it is somewhat ambitious, particularly with the 1.4 million cable subscribers who don’t currently have an RSN who somehow will be persuaded to spend close to $20 per month to subscribe to something they currently could pay for but don’t.

One positive is the inclusion of America’s most popular baseball team, the New York Yankees, but here, too, there may be issues. Amazon is a minority owner of Yankees RSN YES, as is Sinclair, and has an arrangement to stream 21 Yankees games on Prime Video.

Given Sinclair’s involvement in upcoming new broadcast signal standard ATSC 3.0, this may allow for alternative distribution for the RSN service. As well as allowing for 4K broadcast over the air and addressable ads for distributors, ATSC 3.0 also allows for subscription channels to be sent via over-the-air signals, which would be a boost for Sinclair to meet its goals.

Still, it will be tough to meet these RSN goals. In a period where most streaming services, sports or shows, come in below $10, a $20 price tag will cause some sticker shock. But Sinclair has to try: The alternative is to allow the RSN purchase to become an albatross hanging around the company’s neck.