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NBA, NHL streaming rights news coming soon, Sinclair CEO says

Sinclair Broadcast Group Inc. President and Chris Ripley is confident the company will be able to secure NBA and NHL rights to help launch its direct-to-consumer sports service next year.

Ripley said the company is engaged in active and ongoing discussions with the pro basketball and hockey circuits, telling investors at conferences on Nov. 30 and Dec. 1 that he expects some news around those negotiations shortly.

Such deals — coupled with rights Sinclair and Diamond Sports Group LLC , the wholly owned subsidiary that operates its Bally Sports regional sports networks — would add to the pacts Sinclair has struck with four MLB teams. Together, these rights would form the cornerstones of a DTC service that Ripley continues to expect will launch during the first half of 2022.

Sinclair/Diamond's path toward a DTC sports service came into question in October when MLB Commissioner Rob Manfred said at a sports conference that the company had not secured the necessary streaming rights from the circuit's clubs to launch a local streaming vehicle.

Sinclair, which in addition to being the nation's largest owner of RSNs and second-largest TV station operator, declined to provide further comment. Neither the NBA nor NHL responded to inquiries about the status or tenor of the negotiations referenced by Ripley.

Wells Fargo analyst Steven Cahall wrote in a note following Sinclair's presentation that the combination of NHL and NBA clubs along with the MLB team rights it currently holds are "believed to be enough scale to launch a DTC product." The remaining MLB teams, he wrote, "would likely get renewed in the master agreement."

Sinclair has yet to disclose which MLB teams it holds the DTC rights to. However, since purchasing 21 RSNs in August 2019, the broadcaster has scored extensions with baseball's Kansas City Royals, Milwaukee Brewers, Miami Marlins and more recently with the Detroit Tigers.

It also bowed Marquee Sports Network (US), a joint venture with the Chicago Cubs, in February 2020, and holds a 20% stake in YES Network (US), the RSN home of the New York Yankees. This past season, 21 Bronx Bombers ballgames were streamed by Inc., which counts a 15% position in YES. Prime Video subscribers within the Yankees' home-team footprint — encompassing New York state, Connecticut, northeast Pennsylvania, and north and central New Jersey — were able to watch the games for free.

Cahall suggested Sinclair is seeking $500 million to $600 million in funding to launch its DTC sport service. On Dec. 1, he wrote that a good portion of the cash costs for launching a DTC offering are already captured in existing rights.

Sinclair anticipates that Diamond could eventually generate about $2 billion in annual revenue from the DTC service, including advertising, garnering upward of 4.4 million customers from the ranks of current RSN-bundled patrons, non-RSN subscribers and cord-cutters.

MLB's Manfred has questioned whether the company had enough rights for a local sports streaming service. Subsequent reports indicated that MLB, perhaps in conjunction with the NHL and NBA, is planning its own local DTC service that could throw out its first pitch in 2023, to complement its out-of-market service.

Asked about the then-expected and now-implemented MLB lockout, Ripley told investors that he didn’t have "any insight into the labor negotiations, but if the season is delayed, we won't have key tentpole products to support both our linear channels and any new DTC. That definitely could have an impact on the start."

The 2022 MLB season is slated to begin on March 31.