Specialist
C-level executive at Texas Rangers Baseball Club
Agenda
- Operating environment for Major League Baseball teams and Sinclair's (NASDAQ: SBGI) RSNs (regional sports networks) – downstream implications of viewership declines for sports rights
- Local and national rights dynamics – linear and digital
- Assessment of whether OTT (over-the-top) product would be additive to teams and leagues
- Outlook for 2021 and beyond – evolving role of Amazon (NASDAQ: AMZN) in sports and replicability of the YES (Yankee Entertainment and Sports) Network
Questions
1.
Could you give an overview of the major trends or drivers that you think will have the most impact on the US and global sports markets’ long-term evolution? How do those impact TV rights?
2.
How significant is the pushback on inflation for live sport rights? You alluded to cord-cutting and a secularly challenged pay-TV environment, while there are trends in ratings and sport viewership with some ageing demographics. How do you expect those aspects to influence how partners value rights?
3.
To what extent do you expect digital rights to be discussed and included across all sports, considering the renewals you referenced? We discussed baseball, but the Super Bowl is at its lowest viewership since 2008, and the NFL [National Football League] is perhaps tied to the pay-TV model the most. Do you find digital rights will be as prevalent for the NFL, for example, in these renewals vs subsequent ones?
4.
I appreciate the Nickelodeon call out in terms of catering to younger viewers, albeit Nickelodeon may be trumped as the trademarked kids destination by the likes of Netflix, TikTok, Disney and Youtube at this stage. Can you expand on what conflicts of interest might exist for teams and leagues as they seek to expand their audiences and cater more to younger viewers? Do these things align with RSNs’ [regional sports networks’] main goals or at least opportunity costs when thinking about the subscriber revenues that come from MVPDs [multichannel video programming distributors]? To what extent could alternative partners trend towards the MLB [Major League Baseball] and other leagues and teams to accomplish their long-term ambitions?
5.
You mentioned the MLB can contribute to OTT [over-the-top] distribution model growth. What would OTT products offer MLB and its teams? It seems like selling out every single game will still be the primary goal because OTT viewers are less likely to attend in person, so revenue streams such as concessions and merchandise would be lost. Does OTT cannibalise the in-stadium aspects of the business model or at least lead to less loyal or lower LTV-type [lifetime value] sports fans on average?
6.
How viable would a standalone D2C streaming app be for sports? It seems like demand for cable packages could be significantly higher than that of the à la carte subscriber base because sports sits on the basic tiers of pay TV packages. Also, do per sub fees that exist in the linear model lead RSNs to potentially price a D2C app that is prohibitively expensive for the consumer? How should we assess those challenges?
7.
How do you anticipate the OTT platforms’ ability to price a state of Texas or an MLB league product? What about in more extreme circumstances, such as a one-team product such as YES [Yankee Entertainment and Sports] Network for example? ESPN’s USD 8-10 retransmission fees are slightly higher than those of RSNs, but ad-supported streaming apps are USD 5 per month and Disney is USD 8 per month. How might that affect per-subscriber pricing for sports content on a streaming app?
8.
I appreciate the point that big tech partners that have plenty of capital and are more able and willing to take an early loss, particularly relevant to more balance-sheet-constrained linear incumbents. What scale of rights would you think big tech partners are looking for? Would taking one team exclusive be enough to drive material stickiness, or do you expect them to think bigger? Will they aim to take over entire leagues? Will they consider national vs local rights?
9.
To what extent could carriage issues around linear TV be materially detrimental for traditional partners and their subscriber bases? Consider Dish coming back or vMVPDs [virtual multichannel video programming distributors] sustainably carrying sports. How could that impact their approach to rights keeping in mind the ESPN and MLB renewed at a lower level? Could they push increasingly for digital rights? How would a team or league assess them vs a provider that is more entrenched in OTT distribution? Do you expect concessions if digital rights are difficult to win?
