MLB Commissioner Rob Manfred Says Sinclair Does Not Have Enough Digital Rights For DTC Service
Baseball’s big boss isn’t exactly thrilled with Sinclair Broadcasting Group’s handling of its baseball broadcasting rights.
At the CAA World Congress of Sports event in New York City, Major League Baseball commish Rob Manfred offered his unfiltered thoughts on Sinclair Broadcasting Group and its handling of the broadcasting rights of 14 MLB teams. When asked about Sinclair’s claim that it is “close” to obtaining the necessary rights to launch its DTC RSN service, Manfred said the more accurate statement would be that Sinclair does not have enough digital rights from enough clubs in order to have a viable direct-to-consumer product.
Apparently, Sinclair also lacks the rights to sports gaming, which is a closely related field to broadcasting these days. “The other set of rights they’ve talked a lot about is gambling rights,” Manfred said, “they don’t have those either. We have been clear with Diamond [Sports Group, the Sinclair subsidiary that technically owns the Bally Sports RSNs] from the very beginning, this was not a late starting issue. We’ve been very clear with them from the beginning that we see both those sets of rights as extraordinarily valuable to baseball, and we’re not just going to throw them in to help Sinclair out.”
Manfred continued, saying, “we believe those digital rights are crucial and we want to own and control the platform on which they’re delivered, we may have partners in that process. But this idea that late in the discussions we somehow demanded an equity stake (from Sinclair), that’s just not accurate.”
Sinclair has faced an uphill battle since taking over the Fox Sports regional channels. In calendar year 2018, the RSN portfolio delivered a combined $3.8 billion in revenue across 74 million subscribers. But the pandemic wreaked havoc with live sports last year. Today, Sinclair shares are trading for half their value from their May 2019 high. Sinclair Broadcast Group reported a loss of $3.2 billion in Q3 2020, including writing off part of the value of the RSNs.
Another element of drama in the mix: MLB tried to buy the Fox RSNs in 2019.
Multiple reports have suggested that Diamond Sports Group is close to bankruptcy, likely due to lackluster subscriber and carriage numbers. “Fewer subs, it makes the business more difficult,” Manfred said. “I think that the negativity surrounding the RSNs has been increased exponentially as a result of the situation with the Sinclair (Broadcasting) subsidiary Diamond. Part of their problem is cord-cutting. The other part of their problem is there’s excessive leverage on that business.”
“If you think about what they paid for it, how much debt they have on it, I mean, you think it’s over 80%, it’s a huge number. And that leverage has produced headlines that are more negative. There are RSNs out there that aren’t thriving or growing, but they’re going to survive. Look, look, there are RSNs, YES, and NESN that have businesses that remain profitable, they’re affected by cord-cutting. But the fact of the matter is I think the negativity has been increased by the Diamond situation.”
There’s also a case of “self-inflicted wounds” here, due to Sinclair’s hardline business strategy. Sinclair is notoriously difficult to work with and has resulted in many carriers temporarily or permanently dropping their channels. Among the affected at one point or another are AT&T, Dish Network, Hulu, and YouTube TV.
Hopefully, this story has a happy ending that allows baseball fans to support their favorite teams, no matter who ultimately ends up owning the rights.