YouTube TV-Sinclair fight proves regional sports need a la carte model: analyst

MLB baseball
YouTube TV is dropping the Fox Sports regional sports networks on Feb. 29. (slgckgc/Flickr)

YouTube TV said beginning Feb. 29 it will no longer carry Sinclair’s regional sports networks. It’s the most recent example of RSN pricing no longer aligning with TV distribution strategies.

YouTube TV on Thursday broke the news on Twitter, much to the dismay of sports fans subscribing to the service.

Indeed, many other MVPDs and virtual MVPDs have also dropped RSNs – not just Sinclair’s – from the menu. Lightshed analyst Rich Greenfield created a recent timeline of RSN disputes: Comcast, Dish and DirecTV dropped Altitude Sports in August, but DirecTV brought it back in October; fuboTV dropped Sinclair’s RSNs in January; and Comcast recently said it likely won’t carry Sinclair’s Marquee Sports (the TV home for the Chicago Cubs) or renew its Sinclair RSN agreement that comes due in September.

RELATED: Sinclair’s Chicago Cubs RSN slides into Hulu, but no Comcast deal yet

It’s a changing reality that is cutting the financial heart out of Sinclair’s RSN business. Lightshed said that when the company last year acquired the Fox RSNs from Disney, they were making $1.4 billion in EBITDA each year. Now that figure is down to $840 million and will likely drop to $715 million after YouTube TV pulls the plug.

Greenfield said the current RSN economic model – which essentially forces pay TV subscribers to subsidize the cost of the channels, even if they don’t watch them – does not work anymore for distributors.

“If we are nearing the point of game over for the regional sports network business model, with more and more distributors dropping the channels, the real question is what happens next?” Greenfield asked, pointing toward the a la carte model used in the U.K. as a logical model.

“Unfortunately… this change will lead to far lower revenues for the RSNs, meaning they will need the teams (leagues) to figure out how to reduce payments from the RSNs to the teams (a painful process for each team/league). In turn, leagues will need to figure out new ways to generate revenues from their content – likely extracting more revenue from digital partners,” Greenfield wrote in a research note.

Suggested Articles

TiVo and Xperi have finalized their merger and created a new media technology and IP licensing company.

WWE Network, the WWE’s subscription streaming service, launched a free version of its service that will include access to new shows.

Virtual MVPD fuboTV is going live with its first gaming console app this week when it launches on Xbox One devices.