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Carriage, streaming, M&A to shape RSN industry in 2020

The regional sports network market in 2020 will be shaped by continuing integration efforts, key carriage negotiations and the potential sale of some RSN properties, analysts said.

The RSN industry could also see some in-market MLB streaming experimentation in the upcoming year.

Streaming

Following the closing of its $9.6 billion RSN deal with The Walt Disney Co. in August, Sinclair Broadcast Group Inc. is now the largest operator of regional sports networks in the nation. Sinclair is in the middle of its first season presenting NHL and NBA games, while it continues to work on integration efforts around programming and a new TV Everywhere offering.

As Sinclair was preparing for its first full season with baseball — highlighted by the 2020 launch of the Chicago Cubs joint venture Marquee Sports Network — MLB owners last month voted to return unauthenticated, in-market streaming rights to the local clubs from the RSNs.

Lee Berke, president and CEO of media consultancy LHB Sports, Entertainment & Media Inc., expects the NHL and the NBA to follow MLB's lead. Berke believes much of the streaming activity will unfold over the course of the next decade, as clubs and RSNs work through existing carriage terms.

SNL ImageWrigley Field, home of the Cubs
Source: Major League Baseball

For his part, Curt Pires, president of consultancy CAP Sports, expects some soft MLB in-market streaming launches in 2020 before the practice is more widely embraced during the 2021 season. However, Tom Ricketts, executive chairman of the Cubs, said in an interview after a recent sports conference that local in-market streaming is "probably years away" as Marquee Sports Network's initial digital focus will be on TV Everywhere.

Perhaps the most interesting scenario could occur with Spectrum SportsNet LA (US), the RSN home to the Los Angeles Dodgers that is owned by the team but operated by Charter Communications Inc.

Adam Gajo, an analyst for Kagan, a media market research group within S&P Global Market Intelligence, noted that the RSN is only available to 30% of the team's TV footprint and a streaming offering would represent another opportunity to reach out to fans in the marketplace. Berke said Charter could perhaps offer a streaming service with the Dodgers games not tied to its cable packages.

As for Sinclair, President and CEO Chris Ripley has said its STIRR OTT service could become home to RSN content. Pires said that might mean contests are made accessible in local markets, where a lineup of news, area programming and the ballgames would constitute a digital version of a traditional local broadcast station.

Linear

Pointing to carriage deals Sinclair has inked with AT&T Inc.'s DIRECTV, Charter and Mediacom Communications Corp., Ricketts anticipates Marquee Sports Network will have complete distribution by the Cubs' March 26 opening day. That would mean Comcast Corp., whose NBC Sports Chicago (US) previously aired some Cubs games and counted the team as a partial owner of the RSN, would be part of that distribution roster.

Gajo said Comcast, which serves 45% of the pay TV customers in the Chicago designated market area, holds the leverage here. Meanwhile, Pires said Marquee Sports Network's debut on Comcast could be held up until a new retransmission-consent deal is reached between the two camps. Pay TV operators pay retrans fees to broadcasters in exchange for permission to carry local stations' signals. The parties' contract reportedly expires next June.

Sinclair is also looking to ink a new deal with DISH Network Corp., as the RSNs have been dark to the distributors' satellite and Sling TV subscribers since July. Although Sinclair's Ripley has expressed confidence that a deal ultimately will be reached, the broadcaster reduced its financial guidance factoring in expected fee losses from DISH.

Although there could be some pressure when the new MLB season starts, Pires believes DISH could "ride out" the disconnect as it looks to reset the RSN model by only paying fees for subscribers that actually take the service until its retransmission deal with Sinclair comes due in 2021.

Consolidation

AT&T is looking to pare down its debt by selling noncore assets. Shortly after completing its deal with Disney, Sinclair's Ripley also expressed interest in AT&T's four RSNs. Gajo said Sinclair is the front-runner, but Pires said the properties might not draw a fair price without another suitor.

Executives at NBCUniversal Media LLC indicated Comcast's programming arm did not have an interest in the RSNs that Sinclair ultimately purchased from Disney due to potential government scrutiny. But Pires pointed out that AT&T's RSN lineup is in markets where Comcast is the primary cable operator.

If it were to add to those networks, NBCU's RSN roster would still only be half of Sinclair's portfolio and might not draw regulatory opposition, Pires said.

As for other properties, analysts do not expect MSG Networks Inc., the RSN home to NBA New York Knicks and NHL Rangers, among other pro hockey teams, and Spectrum SportsNet LA and Spectrum SportsNet, which televises the NBA's Los Angeles Lakers, to be sold in 2020.