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State of the Screens

Will Local Streaming Be A Game-changer for Sports Broadcasts?

By July 8, 2021No Comments


Big news: Sinclair/Bally Sports is launching a direct-to-consumer (DTC) version of their regional sports network (RSN) offering in 2022.

Why this matters: Local sports is a key draw for the pay-TV bundle. This provides consumers with a way to access these events without paying $100+ per month.

Flashback #1: Bally’s Bets Big on Sports Networks

Flashback #2: Sinclair Buys Regional Sports Networks From Disney in $10.6 Billion Deal

Big Question #1: What does Sinclair project for subscribers?

Quick answer: 4.4M subscribers by 2027.

Source of projected subscribers (% of total) according to Sinclair Broadcast Group:
1) Non-pay-TV – 1.7M (39%)
2) Current pay-TV without RSN – 1.4M (32%)
3) Current pay-TV with RSN – 1.3M (30%)

 

Big question #2: How much will the service cost?

Quick answer: Estimates range from $19 – $40 per month.

Quote from Chris Ripley – CEO @ Sinclair Broadcast Group:
“We believe that ultimately, the incremental revenues from direct-to-consumer will likely more than offset the loss of revenue from churn of subscribers of traditional distributor platforms. And much like the authenticated viewers who currently subscribe to the RSNs, the direct-to-consumer viewer will benefit from the upgrades that we are making to the digital viewing experience including increased functionality of playback and recording capabilities, enhanced news and statistics, new programming developed in conjunction with Bally’s and elements of gamification, including watch and Bet via Bally Bet.”

Big question #3: What are pay-TV subscribers currently paying for RSNs?

Average revenue per subscriber (YoY growth) for RSNs according to S&P Market Intelligence:
1) 2015 – $2.50 (↑ 14%)
2) 2016 – $2.60 (↑ 4%)
3) 2017 – $2.90 (↑ 12%)
4) 2018 – $3.10 (↑ 7%)
5) 2019 – $3.30 (↑ 6%)
6) 2020P – $2.60 (↓ 21%)
7) 2021P – $3.70 (↑ 42%)
8) 2022P – $4.00 (↑ 8%)
9) 2023P – $4.30 (↑ 8%)
10) 2024P – $4.50 (↑ 5%)

Big question #4: What is a possible revenue split between subscriptions and advertising?

Quick answer: 50%/50%

Quick math on Bally Sports DTC business model:
1) 4.4M subscribers by 2027
2) $2B in total revenue ($1B from ads + $1B from subscriptions)
3) $227 in annual revenue per subscriber
4) $19/month in subscription fees
5) ≈ $30 CPM for advertising
6) 12 minutes/hour of ads
7) 631 ad spots per month
8) 26 hours of viewing per month generates $1B in ads from 4.4M subscribers

More #1: Sinclair Venture Steps Nearer to Unbundled, DTC Local Sports Content

More #2: Sinclair’s stand-alone app would be a welcome step forward that RSNs have needed to make

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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