Welcome to the first installment of a new weekly insights column on StreamTV Insider from streaming industry analyst Dan Rayburn, where he puts facts and figures to the latest news you need to know about. Join the discussion on LinkedIn and check back each week as he unpacks key industry happenings.
Here’s what Rayburn is tracking for the week of January 8, 2024: Fubo restructures debt; YES Network and MSG Networks launch joint streaming service; Sports viewing on Pay TV still dominates total hours consumed.
Fubo restructures debt as interest rates jump from 1.5% during the pandemic to as high as 15% today, limiting growth across the industry in 2024.
Fubo has reduced its debt by $28.3 million and extended a meaningful portion of its debt maturities out to 2029, from 2026, after closing a privately negotiated exchange with Mudrick Capital Management. Mudrick, which were holders of the Company's existing 3.25% Convertible Senior Notes due 2026, will exchange $205,835,000 principal amount of the 2026 Notes for $177,506,000 in aggregate principal amount of the Company's new convertible senior secured notes due 2029. Fubo will pay 7.5% interest on the new notes if paid in cash and 10% interest if paid in kind. The new interest rate only applies to the new notes. The notes not exchanged are still tied to the 3.25% interest rate.
Fubo's strategy is to pay a higher interest rate on its debt in exchange for pushing the debut out by three years, giving it more flexibility as it works towards its 2025 profitability goal. Fubo got a reasonable rate at 7.5%, as we’ve seen some company's interest rates on debt exchange as high as 15%. Join the discussion on LinkedIn here.
Multiple companies have restructured their debt recently, with Edgio announcing last month they raised $66 million in financing from current investor Lynrock Lake Master Fund LP, who's also exchanging 95% of its existing unsecured 3.5% convertible notes due 2025 for 3.5%/16% PIK (payment in kind) secured convertible notes due 2027. This gives Edgio more working capital, puts its balance sheet in a stronger financial position, and allows it to focus on executing its strategic plan of getting to EBIDTA positive by Q4.
Key takeaway: Many companies raised money with interest rates averaging 1.5% during the pandemic, only to see interest rates jump to an average of 13-15% today. Due to the high rates and a lack of access to capital, growth will be hard to come by in 2024, especially for vendors. Balance sheets will show an improvement year-over-year due to cost-cutting and layoffs but not as a result of revenue growth. For many, total revenue growth in 2023 was flat year-over-year.
According to their data, the number of active investors in US VC, which PitchBook defined as making two or more deals, plummeted by 38% in the first three quarters of 2023 compared to the same period last year. That translates to 2,725 fewer firms making deals.
In the new year, the vendor and customer's mantra will continue to do more with less and spend money wisely. Join the discussion on LinkedIn here.
The YES Network and MSG Networks have launched a joint venture called GAME (Gotham Advanced Media and Entertainment) to help other teams and leagues tackle their streaming services.
The 50/50 joint venture will allow teams to leverage MSG and YES's experience in utilizing the combined technical and operational expertise each company has garnered from the launch and operation of the YES App and MSG+. The website for the new entity is https://gothamadvanced.com
Key takeaway: This is good news for streaming vendors since most of the YES and MSG streaming video stack is built and supplied by third-party companies for encoding, distribution, analytics and app development.
Max Sports add-on free for a few more months
Warner Bros. Discovery says their Sports Add-On to Max, a $10 option that was to roll out in February, "will continue to be made available to Max subscribers on us for a few more months as we finalize some tech integrations that will ensure a more seamless customer experience with our platform partners."
The Bleacher Report (B/R) Sports add-on includes live events from MLB, NHL, NBA, NCAA Men’s March Madness, U.S. Soccer events and select live international sports events. All live games airing on a Warner Bros. Discovery linear network (TNT, TBS and truTV) are available on Max through the B/R Sports add-on.
At the end of Q3 2023, Warner Bros. Discovery lost 700,000 DTC subscribers and ended the quarter with 95.1 million subscribers globally. DTC revenue was $2.43 billion, up 5% YoY, with adjusted positive EBITDA of $111M. The company repaid $2.4 billion of debt during the quarter and has $45.3 billion in gross debt.
Key takeaway: This is a smart approach by Warner Bros. Discovery, taking time with the integration, setting proper customer expectations, and ensuring that it works as expected when they roll it out. They can forgo a few extra months of revenue for a better user experience.
I recently interviewed Avi Saxena, CTO and Tyler Whitworth, CPO at Warner Bros. Discovery, on my podcast, discussing how they approach the user experience when it comes to their apps, latency, adding live sports and news to the platform, device support, 4K, advertising, personalization, and how they measure QoE. You can listen to the podcast here.
For all the talk of live sports streaming, pay TV still dominates the percentage of total viewership when it comes to sports.
Here’s a rundown of some recent sports events with numbers directly from the broadcast network or streaming service:
- NBC Sports said the Thanksgiving stream of the 49ers-Seahawks NFL game delivered the most-streamed primetime NFL Thanksgiving game ever, registering an Average Minute Audience of 1.6 million viewers across Peacock, NBC Sports Digital, and NFL Digital Properties. This was up 34% from last year's 1.2 million AMA. The streaming AMA number comprised 5.9% of the total viewership of 26.9 million viewers, including pay TV viewing.
- Based on Nielsen custom fast nationals data, NBC Sports says their Peacock-exclusive NFL game on Saturday, December 13th, averaged 7.2 million viewers across Peacock, NBC stations in Los Angeles and Buffalo, and NFL+. Note that the number is digital and TV viewership combined. Adding "out-of-home viewership,” the game peaked at 8.3 million viewers.
While NBC Sports has previously broken out their NFL game viewership with a digital-only number across "Peacock, NBC Sports Digital platforms, and NFL Digital platforms," they didn't provide any digital-only number for this NFL game since it wasn't broadcast nationally and wasn't on any NBC Sports digital platforms. NBC Sports declined to give any Peacock-only viewership numbers.
For reference, this year's largest non-exclusive NBC Sports NFL game had an AMA of 2.3 million viewers across Peacock, NBC Sports Digital platforms, and NFL Digital platforms.
- NBC Sports said the Thanksgiving stream of the 49ers-Seahawks NFL game delivered the most-streamed primetime NFL Thanksgiving game ever, registering an Average Minute Audience of 1.6 million viewers across Peacock, NBC Sports Digital, and NFL Digital Properties. This was up 34% from last year's 1.2 million AMA. The streaming AMA number comprised 5.9% of the total viewership of 26.9 million viewers, including pay TV viewing. Does not include numbers from vMVPDs.
Key takeaway: In The US, based on the data released to the industry so far, the most significant percentage of sports viewership still takes place on pay TV, compared to sports viewing across streaming services. That said, there is a lot of data we don’t have in the market that has never been released. To date, the NFL has not said how many subscribers they have to NFL+, YouTube has not disclosed how many subscribers they have to NFL Sunday Ticket, and Disney has never broken out viewership data for ESPN+. Some of the data from Nielsen and others do not define a “viewer” or provide details on average viewing times, which is also a problem.
Other news highlights:
- The NCAA and ESPN announced that 40 NCAA championships, including women's basketball, volleyball, baseball, and softball, will be on ESPN networks for the next eight years in a $920 million deal.
- This Spring, Roku will launch their new Pro Series TV in 55", 65", and 75" sizes featuring a 4K QLED display with Mini-LED local dimming. (that's QLED, not OLED) Exact pricing was not announced, but Roku said they would retail for under $1,500.
- Edgio has announced Todd Hinders as their new CEO, immediately taking over for Bob Lyons. Todd was previously Edgio's CRO since May of last year. Todd will join Edgio's board with three recently announced new board members.
- ESPN has published a year-in-review post with viewership numbers, but they don't break out streaming viewership from TV viewership. We have no indication of what streaming viewership looks like across ESPN's digital properties since they give out one number for all events across ABC, ESPN, ESPN2, and ESPN+ combined.
Looking for a new job in the streaming media industry? Join in here for a free live Zoom Q&A to get insights, resources and learn about best practices for getting hired.
Dan Rayburn is an analyst in the streaming media industry, with regular TV appearances on CNBC, Bloomberg TV, and Schwab Network amongst others. He is conference Chairman for the NAB Show Streaming Summit in Las Vegas each year, and his streamingmediablog.com website is one of the most widely read sites for broadcasters, content owners, OTT providers, Wall Street money managers, and industry executives. He also has a podcast at danrayburnpodcast.com. He can be reached at [email protected]
Dan Rayburn’s Streaming Analysis & Insights is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.