If you already know what Tubi or Xumo (not zumba) are, you can probably stop reading this as you likely have a firm grasp on recent developments in the broadcast world and how those might impact college sports. I wrote a piece for Athletic Director U. in February, but three months down the road it is worth revisiting this dynamic space, and what the latest innovations might mean for college athletic administrators.
Cord-Cutting Is Still Happening
I was struck by this quick blurb at Fast Company on May 3, just a few weeks ago. Traditional multichannel video programming distributors (MVPDs) are losing 12,000 subscribers a day. Yep, cord-cutting is still happening.
Writing for Bloomberg a few days later on May 6, prominent writer Joe Nocera opined, “cord-cutting is inevitably going to impinge on the ability of the TV networks to pay ever-higher prices for professional and big-time college sports. I don’t deny that sports, especially football, has become more important than ever to the legacy networks.”
He is right, of course, about the importance of live sports, and football in particular, and his belief about cord-cutting impinging on legacy TV networks’ desire to pay increasing rights fees for sports is clearly in line with those who believe in the media rights bubble. So, nothing to see here, right? Wrong.
Traditional scripted shows on broadcast television regularly draw ratings in the low 1.0s. As we know, consumers have flocked to the likes of Netflix, Hulu, Amazon Prime, and HBO for entertainment. A chart in the Wall Street Journal on May 12 shows the precipitous decline of nonsports viewership on the Big 4 broadcast networks. The live, unscripted drama of sports is the ONLY programming which can consistently deliver large audiences. NBC dominated the first Saturday of May thanks to a 10.9 rating for the Kentucky Derby followed by a 3.2 rating for an NHL playoff game. Live sports is crucial to networks, particularly broadcast networks, and why I still think the SEC is set for a huge payday from CBS. Understanding that is fundamental to understanding the Sinclair purchase of regional sports networks.
Sinclair Buys RSNs – So What?
In the wake of Sinclair’s purchase of 21 Fox regional sports networks for considerably less than initially speculated, coupled with the latest cord-cutting numbers, it would be easy to write another piece for this space suggesting the sky is falling for traditional MVPDs and the cable bundle. Nocera even suggested in his piece that the RSN fire sale may represent the inflection point at which the rights bubble burst.
But to write that type of piece would be lazy. The reality is the sky is already on the ground (as data from the Fast Company piece intimates), so instead of focusing about how cord cutting impacts sports rights and college sports in particular, let’s consider the ramifications of Sinclair’s purchase. According to data from Matt Sarznyiak’s College Sports Media Blog, 16 ACC and 10 Big 12 football games aired on at least one regional sports network now owned by Sinclair Broadcasting in Fall 2018. Most were available on several regional networks, such as Fox Sports Southwest, Fox Sports Oklahoma, etc. Many of these games were Tier 2 or Tier 3 games with 38 percent occurring during the first three weeks of the season.
While these packages of games were not rivalry games or big-time match-ups, they still represent coveted Power 5 football conference inventory. The ACC games will likely be absorbed by the new ACC Network and/or the ESPN+ app, much like SEC games on the SEC Network. The Big 12 games are a little more interesting. Assuming Fox does not syndicate the coverage of those games, we could see them land on FS2 or any of the other Fox-owned cable networks.
So how can Sinclair-owned RSNs highlight more college sports? The most likely beneficiaries are the Patriot League, Mountain West and West Coast Conference, all of whom have rights deals with Stadium, a OTT network partially owned by Sinclair and also available via Smart TV app and, in certain DMAs, an over-the-air signal. In fact, it would not surprise me to see the Stadium brand replace the Fox name on the RSNs – a sentiment Robert Seidman also expressed in his @SportsTVRatings podcast on May 12.
Ben Strauss spent time last month in the Washington Post exploring Stadium’s desire to be the nation’s largest sports network without relying on the dying cable bundle. In that article, Strauss quotes Stadium CEO Jason Coyle, “Our end goal is to be the most widely distributed and available sports network in America, far surpassing the 85 million in cable. Everyone is going behind a paywall; we’re going the exact opposite direction.” Rebranding the RSNs with the Stadium name will go a long way to achieving that, and, most importantly, Sinclair does NOT need MVPDs to help them do that.
vMVPDs and Sports
The corporation which just purchased 21 RSNs, Sinclair, already has an established over-the-air (OTA) distribution system which does not involve the cable bundle. Recall the chart from the Wall Street Journal linked above which shows non-sports viewing on OTA networks plummeting. So while MVPDs are hemorrhaging subscribers, Sinclair is moving in the opposite direction, poised to expand its footprint thanks to ATSC 3.0, which will allow OTA broadcast stations the ability to create as many as 25 digital sub-channels. In a sense, Sinclair could become its own MVPD.
We know about the growth about virtual MVPDs (vMVPDs) such as Hulu, Playstation Vue, and YouTube TV. But should you care about STIRR, Pluto and Xumo? The short answer is, yes, because changing technology could further alter the video programming delivery system.
Sinclair owns STIRR, a free streaming service offering multiple channels including BUZZR, Cheddar, the Tennis Channel, and, of course, Stadium. It functions exactly like a vMVPD, except it does not charge a subscriber fee. You can download the app to your smartphone right now and watch news, sports, and entertainment. STIRR is similar to Pluto.tv, the leading free streaming vMVPD with “over 10 million users” tuning in each month to watch news, entertainment, and sports, including Stadium, Fox Sports programming, and a channel devoted to the Big Sky Conference. Xumo is another player in the space, already carrying the ACC Digital Network, Stadium, and FS1. Multichannel News reported in February that Sinclair was “kicking the tires” on purchasing Xumo.
STIRR, Pluto and Xumo have several things in common. They are ad-supported, they require the internet, and they come pre-loaded as apps on many smart TVs. Today’s consumers can purchase a new smart TV at their local electronics store, plug it in at home, hook it up to the internet and immediately stream content. Add a digital antenna, some Netflix, Hulu or Amazon Prime subscriptions, and never need a cable box or satellite dish.
In addition, the corporate owners of those vMVPDs are media companies. Pluto was purchased by Viacom, a major content-owner, while Xumo is now owned by Meredith, which like Sinclair, owns several local broadcast networks.
While more like a Netflix rival than an vMVPD, Tubi is a free, ad-supported, streaming service which offers movies, TV shows, and documentaries across multiple devices. Tubi, thus far, is still owned by private entities, but if company growth continues, it would not be surprising to see it acquired by a media company. The competition in the space continues to grow.
Colonial Goes vMVPD
Yet another free streaming vMVPD of sorts, FloSports.tv, announced on May 6 it had signed a four-year rights deal to be the primary media partner of the Colonial Athletic Association, increasing its position in the market. FloSports already holds rights to WCHA for women’s ice hockey, the Freedom Bowl, and some Big Ten rights among other college properties. It lines up channels by sport such as “FloHoops” and “FloHockey”. Consumers can purchase individual monthly plans and cancel at anytime.
I asked Ray Katz, co-founder and COO at Collegiate Sports Management Group, who helped negotiate the CAA deal why this was a good fit. Katz felt the flexibility afforded the conference will have “conferences lining up to join the CAA.”
That flexibility includes member schools retaining rights to local linear exposure and maintaining relationship with LAX Sports Network for coverage of men’s and women’s lacrosse. The deal also allows for the CAA to develop shoulder programming creating a year-round network, FloCAA, similar to SECN or BTN without the headache of negotiating carriage deals.
Katz, also an adjunct faculty member in the Columbia University sport business program, believes the CAA deal is just the beginning of growth in this vMVPD space. “For a half-dozen or more conferences, Flo is a viable option,” Katz said, stressing the idea that 98 percent of current college sports rights cover only 15 percent of college athletes. “We think that advertisers selling insurance, banking, and other goods will notice there is no difference in customers who went to Ohio State, Ohio University, and Ohio Wesleyan.”
While neither Stadium nor FloSports has purchased anything close to Tier 1 rights from a Power 5 conference or school, opinion leaders in the space think it is only a matter of time before one of the big properties gambles on a non-traditional form of distribution. Former IMG and NASCAR executive George Pyne recently told YahooFinance’s Daniel Roberts, “It’s going to happen, it’s just a matter of time… While the money is still more in old media, the reality has got to take you to new media.”
Other analysis of the Sinclair and FloSports deals also suggest this is a tipping point. Holly Wetzel speculated for Awful Announcing on May 8, Sinclair appears positioned to either a) leverage carriage deals for the RSNs on traditional MVPDs by bundling retransmission fees for its OTA networks, or b) striking out on its own to bypass the traditional MVPD altogether. Writing for the always insightful TV[R]EV on May 9, John Cassillo noted “Nearly every major college conference has rights deals coming up by 2024. Pro sports leagues will find themselves ready to renew deals near that year as well. The environment they’ll negotiate in won’t be the one they entered into the previous (and lucrative) deals in. How much they’re split off between linear and streaming could also dictate a lot of financial success for teams going forward — especially as these schools and franchises are largely tethered to broadcast rights to make most of their money for a given year.”
None of this conversation as included reference to the so-called FANG companies, at least one of which (Amazon) Katz sees as the biggest potential disruptor with its ability to package merchandise, ticketing, and betting opportunities with broadcasts.
In other words, look out, big media. This is a sentiment shared by many, including the Wall Street Journal’s Elizabeth Winkler who wrote at the end of April that time is running out on traditional media companies, speculating that “When 21st Century Fox sold off its film and TV studios, it bet that a smaller Fox, stripped down to news and sports, would be more competitive in the new media world.”
News and sports? That is exactly what Sinclair CEO Christopher Ripley told the Los Angeles Times’ Meg James when describing the “transformational” deal. “It’s part of a strategic move to focus on news and sports — the two pillars of live viewing — in the local communities that we serve.”
Will a new-look Sinclair, which already had a strong foothold in local news but now can emphasize local and national sports as well, be the one to finally change the way consumers obtain their live news and sports? Other than expressing excitement at the acquisition and regurgitating corporate talking points about wanting to the be the nation’s largest sports network, the executives at Sinclair and Stadium have said very little so far about how a post-Fox RSN world will look.
We can expect, however, continued innovation and shifting strategies in this dynamic industry. College athletic administrators from Power 5 to FCS to Division III need to be well-versed in this changing environment.