Report: Sinclair Saddled With Almost $2B In Rights Fees

Spring is the boom time for the regional sports networks, a period that coincides with the run-up to the NBA and NHL playoffs and the rise of a new MLB season. But despite the frenzy of the sports calendar, the RSN business remains in a slump that it may not be able to power through, according to sportico.com

The pandemic is still giving the RSNs fits. Rebates to distributors won’t be paid in full until June 2022, and the advertising business, while in recovery, has yet to return to its full pre-COVID potency.

Things are tough all over for the RSNs, but perhaps no networks group is taking it on the chin quite like Sinclair’s newly rebranded Bally Sports roster. In addition to being absent from the Dish Network satellite-TV lineup as well as YouTube TV, Hulu and FuboTV, the Sinclair unit that runs the RSNs, Diamond Sports Group, this spring shelled out nearly $85 million to extend rights with MLB’s Brewers and Marlins. Last summer, the Royals came to terms on a renewal valued at $50 million per year with Diamond affiliate Bally Sports Kansas City. Other renewals, including what promises to be a pricey re-up with the NBA’s Clippers, are in the wings.

According to a recent filing with the Securities Exchange Commission, Sinclair in 2021 is on the hook for $1.82 billion in rights fees.

These headwinds are buffeting Sinclair, and the rest of the RSN sector, as the multichannel universe continues to contract. According to Nielsen data, demand for the trappings of pay-TV is swooning: In the first quarter of this year, only 66.9% of all U.S. TV homes subscribed to the traditional cable/satellite/telco bundle. That’s down from 83.9% five years ago, and while the growth of the virtual MVPDs cited above is clawing back some of those subscriber losses, those contributions largely do not extend to the RSNs.

Naturally, Sinclair was fully aware of what the RSN business was up against long before the virus shut everything down last spring—after all, it had snapped up its suite of sports channels in a virtual fire sale. Two years ago, when Disney agreed to sell the 22 sports channels it had picked up from Fox as a condition of its $73.1 billion acquisition of the company’s entertainment assets, analysts believed the RSNs would fetch as much as $20 billion on the open market. By the time Sinclair agreed to take the Fox Sports channels off Disney’s hands, they paid less than half what Wall Street had anticipated, signing a check for $9.6 billion.

➤Read More Here.