If we’re going to reach for a sports analogy, it was kind of like Florida’s decision over the weekend to kick a field goal, down 30-0 to Oregon State with just 37 seconds left in the Las Vegas Bowl.
On Tuesday, virtual pay TV service FuboTV announced a deal to carry all 19 of Sinclair Broadcast Group's Bally Sports-branded regional sports networks in its $69.99-a-month base tier.
The agreement with a vMVPD with 1.23 million subscribers will add distribution and revenue to a heavily indebted RSN operation. With FuboTV marketing itself on the strength of its combined sports offerings, the deal is being billed as a win for both Bally Sports and FuboTV, at a time when both could certainly use one.
But it won't move the needle in a meaningful way for Bally Sports and Sinclair, which face an increasingly bleak future.
In late November, Sinclair conceded that its Bally Sports channels had lost 10% of their subscribers year over year. Cash flow was coming in at half of projections, and Sinclair’s Diamond Sports subsidiary — which manages Bally Sports — only has enough resources to service around $9 billion debt and keep the lights on through 2023.
The company would not offer any details on its incomplete Bally Sports Plus direct-to-consumer streaming play, which launched in September.
Two weeks after Sinclair's bleak Q3 earnings report, Diamond's board of directors sought to establish a little space between Bally Sports and Sinclair, installing a known sports TV presence, former NBC Sports executive David Preschlack, as CEO of the subsidiary.
The hope was that Preschlack — who has league relationships that Sinclair lacks — might entice Bally Sports' league partners, Major League Baseball, the NBA and NHL, to become active participants in the RSNs' rescue.
A league partner — or partners — could pay as much as $3 billion, and take on all the debt, to acquire the Bally Sports channels.
But a damning report from the New York Post this week suggests the leagues want no part of this rescue plan and are preparing for what they now expect will be Diamond's inevitable bankruptcy restructuring. (Sinclair has already hired advisers LionTree and Moelis & Co. to help prepare it to walk down this road.)
The leagues have hired their own advisers: MLB has enlisted investment banks Morgan Stanley and Guggenheim Partners; the NBA has retained Allen & Co., and the NHL is now seeking a banker, too, the Post reported.
The leagues expect that Sinclair creditors will reject a number of money-losing team deals in bankruptcy proceedings, such as one paying the baseball's San Diego Padres $60 million a season.
The teams will then be on their own to form new distribution partnerships. And the usual assortment of big tech companies — Apple, Amazon, Google — are expected to get into regional sports distribution for the first time.
Each is aggressively seeking expensive sports rights to prop up their various loss-leader video efforts. Google, for example, is said to be on the cusp of paying the NFL $2.5 billion a season to poach “NFL Sunday Ticket” from DirecTV.
“Right now, there is chaos. But we’ll be able to look back and say this is when a large tech company really entered the regional sports market,” an unnamed MLB team owner told the Post.
That chaos seems to apply to Bally's distribution strategy. While it will supply a much needed infusion of distribution, the FuboTV deal dramatically undermines Diamond's carriage agreement with its other live-streaming partner, DirecTV Stream, which carries the Bally Sports channels in its more premium Choice tier, set to be priced at $99.99 a month plus taxes and fees in January.
This will undoubtedly create yet another for Sinclair and Diamond to try to extinguish. DirecTV is Bally Sports only satellite TV partner, with Dish Network demurring on a renewal of the RSNs in 2021.
The news is probably more meaningful for FuboTV, which has seen its share price decline from nearly $18 a year ago to just over $2.10 on Wednesday.
After stringing together several quarters of negative customer growth and giving up on its sports-betting gambit, the vMVPD added 284,000 subscribers in Q3 and is looking to sustain a little momentum. ■
