Sinclair Gives Update on Direct-To-Consumer Plans and Carriage Dispute with Hulu & YouTube TV

Last year, Sinclair’s President and CEO Chris Ripley revealed that the company will be launching a new app to replace Fox Sports Go. The new offer would “have much more functionality and activity and be much more engaging” for our consumers Ripley stated.

Now, during the 23rd Annual Needham Growth Conference, Sinclair’s executive vice president and CFO, Lucy A. Rutishauser, revealed a few more details about their direct-to-consumer plans and their on-going disputes with Hulu and YouTube TV.

“We are in the process of developing a world-class sports app, to replace the Fox Sports Go App…we expect to launch our app this Spring. The viewing experience will be significantly better, it will enhanced, personalized, interactive, it will have new features, new capabilities, new content around sports, sports betting, the super fan…free to play (betting), rewards, community-based, gamification, stats.”

While the company is targeting to have these in there, Rutishauser says they will occur over time. “The best way to think about our direct-to-consumer piece, it’s a complementary and additive offering for the viewer.”

While Sinclair’s CEO Ripley has said in the past that the app will first support TV Everywhere, before expanding to an OTT option – Rutishauser didn’t expand on that.

She did give some insight into their carriage disputes with over the RSNs on streamers. Recently, YouTube TV, Hulu Live TV, and fuboTV opted not to carry the channels. In 2019, both Dish Network and Sling TV dropped the channels from their service. Currently, the channels are only available on the AT&T TV “Choice” Plan ($84.99).

When asked about why they just don’t allow the skinny bundles to tier the channels, Rutishauser said, “every MVPD discussion whether it’s traditional or virtual is its own negotiation. These are all highly highly negotiated contracts. And then…there could be MFNs (most favored nations) within, the other side may have MFNs to negotiate within.”

She says the drop of them came at bad timing. “It’s kind of unfortunate that YouTube and Hulu drop the RSNs at time when those contracts were coming up and we didn’t have any sports. Normally, you go for MLB into NHL into NBA and you’d have this continuity of local sports. That didn’t happen this fall because of COVID and as a result there weren’t any sports on in the fourth quarter until the NBA started up in the last week of December. ”

Right now, it does not appear like either side is ready to budge. “It remains seen on the virtual side what takes place there and now that NBA is back on and NHL started just yesterday…we have to see the demand it drives to those systems to get RSNs back on – or to see if subscribers migrate to a system where they can watch their local teams,” said Rutishauser.

Sinclair pointed to them as a cause for a “decline in distribution revenue,” as well as “elevated levels of subscriber erosion” in their Q3 earnings report. The company expects cord-cutting and the loss of YouTube TV and Hulu to lead to a 10% decline in subscriber revenue.

Last year, Sinclair Broadcast Group surprised sports fans when they announced they signed a deal with Bally’s Corporation which will see Bally Sports become the new name of Fox Sports RSNs in the Spring. The 10-year deal, which is for a reported $85 million, will also see the companies partner on bringing sports betting to their telecasts.

Rutishauser also gave insight on how the partnership is beneficial to Sinclair, Bally as well as the RSNs involved.

“Bally brings a recognized brand. They bring sports betting technology and market access footprint. The partnership is really focused on creating unrivaled sports gamification content on a national scale. That will create synergistic value for both companies because our assets will drive value for them and drive users to their platforms,” she explained.

“And then their tech stack integrations, database, marketing integrations will benefit our assets and drive viewership on our side. The RSNs the receive further values in numerous ways from the partnership. That includes naming rights—RSNs will be rebranded from the FOX name. They also get a guaranteed percentage of Bally’s ad-spend and they’ll benefit from new sports betting content that we’ll develop in conjunction with Bally.”