Sinclair’s local sports segment took a major hit in the third quarter after live sports were disrupted by the pandemic and key distributors dropping the channels.
The local sports segment – which consists primarily of the 21 Fox regional sports networks that the company acquired from Disney, along with Marquee Sports Network and a 20% equity interest in the YES Network – took an estimated $4.2 billion impairment loss during the quarter. Sinclair partly attributed the loss to YouTube TV and Hulu + Live TV recently dropping the Fox RSNs. The company said that together those distribution agreements represented approximately 10% of the local sports gross distribution revenue for the month of September.
Sinclair also blamed “elevated levels of subscriber erosion influenced by numerous factors including fragmentation of content distribution platforms, shifting consumer behaviors due to the current economic environment, the COVID-19 pandemic and related uncertainties.”
Despite consolidated revenues rising 37% during the quarter, the impairment dragged down profits and left Sinclair with a net loss of $3.2 billion versus net loss of $60 million in the prior year period.
“COVID-19 has also exacerbated subscriber churn which has impacted results; however, Sinclair has numerous initiatives that are expected to be drivers of growth in the years ahead,” said Sinclair CEO Chris Ripley, who added that his company is working on a new sports app for the beginning of the baseball season in the spring of 2021.
At the end of September, YouTube TV announced it would drop the Fox RSNs beginning Oct. 1.
“This was a difficult decision made after months of negotiations. We hope we can bring FOX RSNs back in the future. We thank you for your membership as we work to make YouTube TV the best streaming experience. You will receive an email today if you are impacted by this change,” the company tweeted.
Weeks later, Hulu also dropped the Fox RSNs along with Marquee and YES Network.