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Sinclair CEO eyes political, sports betting ad opportunities for RSNs

Sinclair Broadcast Group Inc. expects to raise the bar on political advertising opportunities for its new portfolio of regional sports networks.

Sinclair President and CEO Chris Ripley, speaking at an industry conference on Sept. 17, said the company’s stations will register a significant amount of political advertising during the 2020 presidential cycle. Historically, the RSNs have only received a "pittance" from the category, he said, but that does not make sense from an audience standpoint, in terms of both size and engagement levels.

"In some markets, when you've got a hot race, you actually run out of inventory in those markets," he said. "So to the extent that we have a sister RSN in those hot markets, we will flow excess demand over to that RSN."

Sinclair is now the nation’s largest operator of RSNs, following the closing of its deal for 21 FOX-owned properties from The Walt Disney Co. last month. Disney sold the RSNs in order to gain U.S. Department of Justice approval for its purchase of most 21st Century Fox Inc. assets. Sinclair also has a joint venture with Major League Baseball’s Chicago Cubs that will result in another RSN debuting in February 2020, and has an equity stake in YES Network (US), which airs games and related programming for MLB’s New York Yankees and the National Basketball Association’s Brooklyn Nets.

Ripley said sports betting advertising will be the other near-term driver for the RSN business. Most estimates, he said, see this market yielding between $1 billion and $2 billion in category ad sales upon maturity. RSNs will be the beneficiary with sports betting companies who will look to reach players via pre-, post- and in-game inventory. He said sports book operators would waste money and impressions on national ads as they would reach states that do not have legalized gambling.

"You want to be able to advertise on a state-by-state basis, which sets up perfectly for the RSNs and actually for broadcast, as well," he said.

Since the U.S. Supreme Court struck down a law in May 2018 that had limited sports betting to Nevada, the practice is now taking place in various forms — including at sports books and casinos and via mobile applications — in another dozen states, with others preparing launches.

Sports betting will also lead to other potential revenue streams, according to Ripley.

"Whether it's for money or free-to-play, we believe that gamification of the overall watching experience is going to be a huge mega trend going forward and not only making it a more entertaining experience for our viewers, but also unlocking additional revenue streams for the media and the providers and the teams to participate in," he said.

Another opportunity will stem from rebooting FOX Sports GO, the app enabling authenticated video subscribers to watch games on other devices. He said the current offering is not a "best-in-class experience," and there is more to be done there. Sinclair will draw from its experiences with Tennis Channel (US)' Tennis Channel Plus hybrid streaming service, and STIRR, its ad-supported streaming offering that features local and national content. This will lead to additional ad revenues from targeting capabilities.

Ripley said the subscription video on demand marketplace is the next frontier of distribution in the RSN space, and Sinclair will get "a bit of a preview of that with our partnership on YES and Amazon.com Inc. " Sinclair and Amazon now own 20% and 15% of YES, respectively.

During a recent press conference announcing the ownership restructuring of YES, Yankees president Randy Levine said changes are coming that will enable MLB teams to sell their local digital rights, which are currently held by the clubs' attendant RSNs. That could open the door for Amazon Prime Video, which is poised to stream the National Football League's "Thursday Night Football" package for a third consecutive season, to enter the local sports streaming arena.

Turning to carriage, Ripley said Sinclair is engaged in ongoing negotiations with DISH Network Corp. and is optimistic the RSNs will be reinstated on the satellite TV provider and its Sling TV streaming service.

The RSNs have been dark on those platforms since late July.