This comes as MLBis thinking of having its own national streamer -- at least according to one report.
Doing some Monday morning quarterbacking here, one might see Sinclair’s deal to buy nearly 24 regional sports networks for $10.6 billion as not thinking enough about the future -- the business of streaming. Those networks have deals with 14 Major League baseball teams, as well as 16 NBA and 12 NHL teams.
Think about other TV companies -- national TV network groups, owned by Walt Disney, NBCUniversal, ViacomCBS, WarnerMedia. All have been quickly aggressive in starting up platforms, realizing the danger of not starting up streaming services to compete with Netflix and Amazon Prime Video.
But what exactly was Sinclair’s initial plan for its regional sports business, now under its Diamond Sports Group, branded as Bally Sports? Fuzzy at best, and that isn’t good enough. The business seems to be caught flat-footed.
Until recently, Sinclair might have thought it was sitting on a steady profit-making TV machine through traditional TV deals made with legacy TV providers -- cable, satellite, telco and now virtual.
Then reality hit.
Dish Network’s Sling TV, Hulu + Live TV, YouTube TV, and others just turned down Sinclair’s efforts to make distribution deals. Here’s a sign growth was going to be hard.
Distributors’ profit margins on tacking on regional sports networks are a no-go -- especially when considering cord-cutting consumers looking for inexpensive pay TV services. So, carrying these RSNs had little financial benefit, especially if their prospective customer wanted a cheap deal on non-sports core TV networks/platforms.
Rob Manfred, commissioner of Major League Baseball, was perhaps too frank.
Why should MLB give Sinclair certain digital rights, including baseball gambling rights to “help” out the RSN business, especially when Sinclair now has a monstrous $8 billion debt with its RSN business, Diamond Sports Group.
More to the point, one suggestion was that MLB could be a partner in Sinclair’s business. Manfred said with Sinclair’s RSN debt ratio at 80%, that would be an unwise investment move.
In that regard, is baseball looking for alternatives to Diamond Sports, like starting its own service? It would leave Diamond Sports hurting for sure -- one of its big three sports franchises going elsewhere.
It's two out in the ninth, and you’re down by four runs. Looking more broadly, here is a warning sign: Sports on live TV isn’t a given industry-wide moneymaker anymore.