Sinclair Broadcast Group CEO and President Christopher Ripley
(image courtesy of Sinclair Broadcast Group)Sinclair Broadcast Group plans to use programming from 21 Fox regional sports networks the company is acquiring to bolster offerings on its recently launched STIRR streaming-video service, executives said Wednesday during Sinclair's quarterly earnings announcement.
"In terms of how this fits within our broader sports footprint, from the RSNs, we see programming, non-game programming, being used on STIRR," said Sinclair CEO and President Chris Ripley, in answer to an analyst question.
That could be good news for fans without cable subscriptions in areas such as Los Angeles, Milwaukee, Florida, and Ohio, where some of the biggest of the networks operate. It also could be a big viewership boost for STIRR, the free online news and entertainment video service that launched in January. Ripley said STIRR is "doing great in terms of awareness and downloads. We're very pleased with progress so far in terms of expectations."
Sinclair separately has announced a partnership with the Chicago Cubs to launch the Marquee Sports Network in spring 2020, and is a partner with the New York Yankees and Amazon on the $3.5 billion purchase of New York's YES Network. Sinclair executives did not speak to whether programming from the New York and Chicago networks, in two of the country's four biggest markets, would be on STIRR too.
The RSN deal, announced over the weekend, is the biggest transaction in Sinclair's history. It sent shares soaring 30 percent to more than $58 when markets opened Monday. Shares peaked above $64 during early trading Tuesday and Wednesday before closing Wednesday at just under $61. Shares are up 131 percent since the start of the year.
News about the acquisition and programming plans overshadowed the company's earnings, which at 25 cents a share missed consensus market estimates by 34 percent, adjusted for non-recurring items. The company actually beat consensus expectations on quarterly revenues by 1.9 percent, with $722.1 million. The company also declared a 20-cent per-share quarterly dividend, payable nest month to shareholders of record on May 31..
Company executives said they expect the RSN deal to close in the third quarter, and to spend the following year to 18 months reducing debt. The company has suspended a share-buyback program to focus on closing the deal.
The bigger news, however is the arrival of big-league sports content on STIRR, which features Sinclair stations' homegrown programming alongside partners such as Cheddar, MGM's Comet, Jukin Media's Fail Army and Cinedigm's Dove Channel. Sinclair's other sports holdings include the Tennis Channel, the Stadium network, and Ring of Honor Wrestling, as well as extensive local station coverage of high school sports.
Ripley said the company expects to eventually add about 100 partner channels to the service by year's end, but that ingesting all the partner content into its systems has proved a major "choke point" the company is trying to solve.
Ripley held out the possibility that some game telecasts from the RSNs might also find their way onto STIRR, though he cautioned that decision is off in the future. For now, STIRR remains ad-supported and freely available, so it can build viewership and drive advertising operations. That could change eventually.
"The technology does provide the ability for pay walls to subscription-based programming," Ripley said. "It's something that probably won’t be turned on in the near term because we’re trying to build a user base, but it’s absolutely on the product plan. On an authenticated basis, we might populate games (onto STIRR) as well, but that’s to be determined."
The $10.6 billion acquisition is not just the biggest in the company's history, it's also a huge turnaround in fortunes after a rough 2018. Government regulators blocked Sinclair's plan to buy Tribune Media on market-concentration grounds. Rival broadcast group Nexstar subsequently offered a much higher price to buy Tribune and appears likely to close the deal, vaulting it past Sinclair to become the country's biggest station group owner.
Ripley took time on Wednesday's call to thank U.S. Department of Justice administrators for organizing a recent industry forum that looked at redefining those market-concentration rules to include both pay-TV providers and online services as competitors in the market for "TV" audiences. Ripley previously has called the current broadcast-only rules "antiquated."
Adding sports programming has been a big priority for Ripley and Sinclair, not least because of potential opportunities to pair sports programming with legalized gambling. New Jersey and a handful of other states already have legalized sports betting, and numerous other states are considering it.
Ripley has spoken repeatedly of the opportunities to leverage the company's programming and new technologies, especially the new ATSC 3.0 broadcast capabilities rolling out this year and next, to power new kinds of bet-along sports viewing. During the earnings call, Ripley said the company and its partners anticipate rolling out ATSC 3.0 broadcast capabilities to all its stations in Top 30 markets by year end.
