Deeper Dive—How the Dish-Sinclair RSN battle played out this week

TV watching
Dish Network and Sinclair's carriage dispute over the Fox Sports RSNs extends back to July. (Pinho/Unsplash)

Dish Network and Sinclair’s carriage fight over the Fox Sports regional sports networks has been a contentious programming battle. This week things seemed to boil over.

Dish Network has not carried 21 Fox Sports RSNs since July. In the time between then and the third-quarter earnings season, Sinclair closed its $10.6 billion deal for those networks, which were divested as part of Disney’s $71.3 billion acquisition of 21st Century Fox. Sinclair bought the RSNs through a new indirect subsidiary named Diamond Sports. Sinclair also bought a stake in YES Network, the television home of the New York Yankees and other teams, and next year will launch a new RSN in partnership with the Chicago Cubs.

Sports (along with news) are the cornerstones of Sinclair’s programming strategy but the company’s RSN empire is missing a major distributor in Dish. On Wednesday during Sinclair’s earnings call, CEO Chris Ripley got to have his say on how negotiations are going with Dish.

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“We view it as a temporary issue. Either we come to a deal with Dish or their relevance in the industry will be reduced over time,” Ripley said, according to a Seeking Alpha transcript. He argued that Dish forgoing Sinclair’s RSNs is the equivalent, from a viewership perspective, of forgoing the top 10 entertainment programs combined. “So, it's really forgoing a key piece of the bundle, and that's only going to be exasperated over time as sports betting moves through the country and sparks even greater interest and engagement with our content.”

Ripley’s prognostication regarding Dish Network’s fading relevance, however, lost a bit of credibility this week when Dish had a relatively upbeat quarter in terms of video subscriber additions. The company added a net 148,000 subscribers as 214,000 new Sling TV subscribers offset a net loss of 66,000 satellite subscribers.

Dish Network Chairman Charlie Ergen didn’t jump right out and say that dropping the RSNs was a good decision for Dish in terms of operational cost savings versus subscriber losses. He did say that having the RSNs down during August and September (which are two of the highest viewing months for those networks among Dish customers) contributed to Dish losing the subscribers who most wanted the RSNs and in turn contributed to the RSNs dropping in value to Dish.

“Having said that, we’d rather have a deal. We like Sinclair. We’ve had a long-term relationship with Sinclair. We like the people there. We’d rather regional sports but, as a company, we’re not going to subsidize sports,” Ergen said.

Rich Greenfield, media analyst at Lightshed Partners, said Dish made an "incredibly smart financial decision" by not paying up to $450 million per year for the regional sports networks.

"While we are sure Dish will suffer on the gross ad front by not having the RSNs in 2020, it is very hard to imagine how dropping the RSNs was not an economically positive decision if the sub losses in the most viewed RSN month were insignificant," wrote Greenfield in a research note. "We suspect there is a price where DISH would bring the RSNs back onto DISH and even Sling, but that price is now far below prior levels as the core RSN viewers have now fled."

Ergen said he thinks that Dish’s customers will eventually get regional sports through other means, like streaming services, much the same as Dish’s customers currently have to get HBO through different means. He also said the “vast, vast, vast majority of our customers don’t watch a single second of regional sports” so it makes sense to not have the RSNs and not have to raise service prices for consumers.

“I know what’s going to happen. I’ve been through this so many times. Sinclair will start running ads saying you can’t get this hockey team on Dish but you can get it on our competitors. We’ll run an ad saying you’re paying more for our competitors because we don’t have that hockey team that you don’t watch. It’ll be more mindless stuff but that’s the way things go,” Ergen said.

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