The 19 regional sports networks (RSNs) owned by Sinclair
The 19 RSNs (which account for about half of the RSNs nationwide), televise over 4,500 live sporting events each year including games from 16 National Basketball Association teams, 14 Major League Baseball teams and 12 National Hockey League teams. Some RSNs carry WNBA, MLS and local college games among other live games. These live games are, by far and away, the most watched programs on these networks. When there are no live games, RSN’s provide sports coverage of regional interest such as replays of games, sports radio simulcasts, stats, commentary and interviews. Of late, sports wagering information has been added to their programming schedule.
Legalized gambling of live sporting events has been growing, since a 2018 Supreme Court decision. The 6-3 SCOTUS decision allowed for states to legalize sports betting and overturned a 1992 federal law. Since then, 25 states and the District of Columbia have legal sports betting, including Louisiana, Maryland and South Dakota where voters approved a ballot measure last November. In addition, according to the American Gaming Association, there are 17 states that have either an active or pre-filed legislation to legalize sports betting.
Sportsbooks, a place where persons can make a bet, have been growing in popularity as sports wagering expands across the U.S. MGM Resorts International projects by 2025, the U.S. sports betting market to reach $13.5 billion with 38 states having legalized it.
Besides Sinclair, there are a number of other media companies now active in sports betting. For example, there are branded sportsbooks from Fox (called Fox Bet), FuboTV, Yahoo Sports and Barstool Sports. William Hill is the official sportsbook sponsor of CBS
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DraftKings Inc. has acquired Vegas Sports Information Network, in a deal estimated to be valued at around $100 million. Launched in 2017. VSiN is a multi-platform broadcast and content company providing up to 18 hours of sports betting news, analysis, and data each day. Audacy (formerly Entercom) is co-producing an audio betting show with FanDuel. More recently, Audacy announced a multiyear agreement with BetMGM, naming the sports betting and gaming platform as a preferred sports betting partner. Audacy owns and operates 39 all-sports radio stations nationwide.
As part of Bally’s rebranding, the RSNs will have an interactive streaming app. In February 2021, Sinclair CEO Chris Ripley said the app will include free-to-play contests, rewards, and the ability to engage and interact with other fans. At an earnings report call, Ripley said, “The idea is to make watching sports similar to playing a video game.” (There are studies that point out sports betters tend to be male, single and under the age of 35.) Ripley said the interactive app has the approval of their MLB, NBA and NHL partners.
The gamification of sports comes at a time when younger viewers are continuing to show less interest in watching live sports. A recent survey from The Maru Group found sports fans age 18-to-34 prefer to watch highlights of games rather than full games. According to the survey, 58% of these young adults would rather watch highlights of MLB games and 54% favor NBA highlights. Furthermore, the survey found 48% of 35-to-49 fans prefer MLB highlights and 47% favor NBA highlights. It is hoped that an interactive component will keep younger viewers more engaged with live sports.
Sinclair, owns 186 broadcast television stations across 87 markets, acquired the Fox RSNs in 2019. The RSNs were one of the assets in Disney’s
Several companies including John Malone’s Liberty Media
Among the reasons cited for the lower than anticipated interest in the acquisition of the RSNs include, cord cutting, the high subscriber fees and RSNs being blacked out by MVPDs and virtual MVPDs.
Cord cutting: Cord cutting is continuing. According to Kagan, in calendar 2020, nearly 7.2 million U.S. households dropped their cable subscription from their traditional MVPD (cable, satellite or telco) provider. By the end of 2020, Kagan estimated only 57% of U.S. households subscribed to a traditional MVPD service. The lowest household penetration figure in over three decades. When vMVPDs are included (i.e., Hulu + Live TV, Sling TV, YouTube TV), the household penetration increases to about two-thirds of U.S. homes.
eMarketer forecasts that by 2024, fewer than 50% of U.S. households will have a pay-TV service as streaming video grows in popularity. Live sports on RSNs are one of the few “appointment television” options left, with 90% of local games viewed live. In addition, live local games on RSNs are often cited as a primary reason more pay-TV subscribers have not cut the cord.
Subscriber Fees: For decades, subscriber fees have been a reliable and growing revenue source for RSNs. ESPN has the highest subscriber fee of any network, Kagan forecasts their monthly fees to reach $11.08 in 2022. The subscriber fees for RSNs are next, led by YES Network ($7.23), Bally Sports Detroit ($6.93) and Spectrum Sportsnet LA ($6.54). Kagan also reports nine additional RSNs will have monthly subscriber fees above $5.00 in 2022. By comparison, on average, the monthly fees for each broadcast station will be $2.93.
On average, sports account for about $20 of a monthly cable bill. With increased costs a primary reason cited to cancel pay-TV subscriptions, it has been difficult for RSNs to increase fees. Kagan reports collectively RSN subscriber fees nearly doubled from 2009 to 2019 totaling $6.1 billion. Kagan forecasts much slower growth in the years ahead reaching $6.6 billion by 2023.
Channel Blackouts: Because of the high subscriber fees, RSNs have often times been dropped by vMVPDs whose skinny bundles and lower monthly rates have been their unique selling proposition. As a result, vMVPDs have either increased their monthly subscriber rates, put RSNs on a more expensive tier or dropped RSNs from their programming lineup entirely. In recent months Hulu, YouTube TV, Sling TV, DISH (owner of Sling TV) and FuboTV have all both dropped the Sinclair RSNs from their network offerings. Moreover, through the years there have been numerous other blackouts involving RSNs with traditional MVPDs. The most notable impasse was Spectrum SportsNet LA whose Dodger games were not shown on MVPDs covering over half the Los Angeles TV market for six years before reaching an agreement in 2020.
Disney is not only the media company that was underwhelmed when putting their RSNs up for sale. To reduce debt, AT&T
What drives ratings and high subscriber fees continues to be live sports. On a given night a primetime game featuring a hometown team, can attract audiences and ad rates similar to local broadcast stations. RSNs have an impressive list of product categories including automotive, beverages, QSRs, insurance, telecommunications, entertainment, finance, apparel, retail and tech to name a few.
In 2020 with the pandemic cancelling hundreds of live games, estimated ad revenue for the RSNs dropped below $1 billion. In the immediate years ahead, with cord cutting and some live games potentially migrating online, ad revenue is expected to remain below $1 billion. RSNs are hopeful that as legal gambling grows, casinos and sportsbooks will become a competitive product category and ramp up their marketing budgets. MediaRadar reports since mid-June 2020, sports betting marketers have increased their year-over-year ad spend by 82%, led by FanDuel, Bet365 and DraftKings.
Yet another recent example of the growing relationship between legalized betting and sports, was the recent announcement that Caesar’s Entertainment is closing in on the naming rights to the New Orleans Superdome. Under the proposed agreement, Caesar’s would pay $10 million a year for the next 20 years. Since October 2011, Mercedes Benz had the naming rights of the Superdome. The 2022 NCAA Men’s Basketball Final Four and the 2024 Super Bowl will be played in the Superdome.