Sinclair Broadcast Group CEO Chris Ripley said that the company’s planned direct-to-consumer app won’t cannibalize cable and satellite subscribers to the company’s regional sports networks.
Sinclair has said it plans to launch a DTC in the first half of 2022.
“There's no question. Video consumption habits have and are continuing to change with people opting to consume content outside of traditional linear channels. So, we need to be able to provide them with content, however, and wherever they want to receive it,” Ripley said during Sinclair’s second-quarter earnings call Wednesday morning. “Having said that, we believe that demand for sports content within the traditional cable, and satellite bundle will continue to be strong as is evidenced by the rating strength of local sports.“
Ripley also confirmed that Sinclair’s retransmission deal with Dish expires Aug. 15. Sinclair is expected to use retransmission to get Dish to resume carriage of Sinclair’s RSNs.
Ripley said that consumers will continue to want to watch games on linear RSNs, and that those RSNs will continue to be attractive to cable and satellite providers and to streaming distributors, which get the RSNs at a wholesale price that allows them to provide the consumer with a good value.
Ripley said that Sinclair did not expect its DTC product to appeal to everyone. But he said that if just 5% of the homes its RSNs reach, that would represent 4.4 million households.
“While the subscription revenues alone would be meaningful, we would expect the total revenue to be around double that level due to the advertising and other monetization opportunities.”
The DTC product is expected to have the most appeal to younger consumers who are more likely to be cord cutters or cord nevers. Those consumers want more interactive, personalized and community driven experiences.
Those consumers want to engage and talk to other fans, participate in contests and promotions and participate in legalized sports betting.
“Watching the entire game is less important than being entertained by the experiences built around the games,” Ripley said.
Sinclair expects to be able to generate incremental revenue for many of those experiences, above and beyond the subscription fee for the DTC app.
Asked about potential consolidation in the local sports business, Ripley said Sinclair intends to be a leader in direct to consumer sports.
Ripley said Sinclair continues to engage with the advisors of various stakeholder groups on financing and exchange offers for the debut of Diamond Sports, the Sinclair unit that owns the RSNs.
