Sinclair bet big on its sports future when it purchased the FOX regional sports networks that the Walt Disney Company was forced to by the Justice Department to divest. Sinclair followed up those acquisitions by launching Marquee in conjunction with the Chicago Cubs. Turns out, those bets have gone bust, at least in the short term.
With no live sports for the last four months, there has been a lot of speculation on the rebates leagues and teams will owe broadcast partners. Many contracts stipulate that refunds are owed in the event a specific number of live games are not played. Given that those RSNs own the TV rights to more than 40 professional teams across the NHL, NBA, and Major League Baseball, it is safe to assume a lot of that rebate money is heading Sinclair’s way.
Broadcasting & Cable spoke to Wells Fargo’s Steve Cahill about the financial implications for Sinclair. Cahill doesn’t think that the broadcasting conglomerate will get back an overwhelming amount of money.
“Cahall figures that Diamond pays about $1.9 billion in sports rights, 62% of those going to baseball teams. Diamond will get no money back from the NHL teams, minimal money from the NBA teams and a good chunk from baseball teams, which are playing just 60 games in this shortened season, fewer than the 142 games they promised to MVPDs.”
His estimation is that Sinclair and Diamond (the company’s sports subsidiary) will get back somewhere in the neighborhood of $693 million. That is nothing to scoff at, but Cahill doesn’t believe it will cover the refund it will owe cable providers.
“According to Cahall, only the largest distributors get rebates from Diamond’s networks, which will deliver about 64% of the games they contracted for, resulting in an $823 million rebate to the MVPDs.”
That would put Sinclair about $130 million in the red for 2020.
It’s hard to guess how these moves will effect the average sports fan. $823 million is a large number, but when it is divided amongst every cable subscriber that receives a Sinclair RSN, all of which have different carriage fees for cable and satellite companies, it is hard to imagine the average subscriber gets more than a $5 – $10 rebate.
