After striking out on acquiring Tribune Media, Sinclair has turned its attention to local sports and over-the-top (OTT) television as it suffers the same linear decline plaguing the TV industry.
In May, Sinclair bought 21 regional sports networks (RSN) from Disney for $9.6bn. And in a separate deal in March, Sinclair bought equity in the Yes Network along with Amazon and the New York Yankees, another RSN Disney had to offload when it acquired 21st Century Fox.
Now, according to Bloomberg, Sinclair is considering dropping another $1bn on four RSNs AT&T is looking to offload.
At the same time, Sinclair is building out Stirr, it’s owned-and-operated OTT platform it launched in January.
In its most recent earnings presentation, Sinclair pointed at both sports and streaming as major growth areas.
While vMVPDs are buoying subscriber growth for one of America’s largest local TV broadcasters, Sinclair might have trouble merging its ambitions in sports and OTT.
“OTT is not ready for live sports just yet,” said the executive. “The infrastructure both from a software perspective as well as fiber – there is not enough fiber in the ground to carry the full audience of folks that watch live TV.”
A spokesperon from Sinclair said it’s too early to talk live sports on Stirr since its RSN acquisition still needs regulatory approval. But as FierceVideo reported, live games may make their way to Stirr on an authenticated basis.
“That’s something that won’t likely be turned on in the near-term… but it’s absolutely on the product plan,” Sinclair chief executive officer Chris Ripley said in a recent earnings call.
As senior vice-president of global media and properties at Wasserman Media Group Tag Garson pointed out, Sinclair in the time being will likely use its new sports assets the way it operates the Tennis Channel, which it acquired in early 2016.
“They will do exactly what they did with the Tennis Channel,” said Garson, “which is to utilize their local retransmission deals with the operators to drive subscribership to the RSN, while at the same time they can pollinate content with their local stations [and] drive advertising revenue.”
The broadcaster exec said Sinclair’s likely RSN strategy should be a short-term win, but the company may face challenges down the line.
“Near-term, I think it was a smart bet. Long-term, I think they may have some real challenges as those RSN rights come up for renegotiation,” said the executive. “That looks good for the next four-to-five years. After that, they may run into some serious headwinds, and they may have an asset that's actually doing to start costing them money.”
What this means for advertisers
Stirr has a library of on-demand content, but its focus is around local, live programming – especially news – through Stirr Cities.
Stirr general manager Adam Ware told The Drum that about half of users come to the platform to watch their Stirr City channel, a digital-linear offering that streams content from regions where Sinclair has affiliates.
Stirr City viewership spikes align with when local new programs air in the morning and evening, according to Ware. On average, he said, users spend just over an hour a day on Stirr.
Ware said local content is Stirr’s “front door”, what drives people to the platform. Sinclair has recently introduced its OTT ad reporting platform to help local advertisers hoping to make their way through that door.
The company released Compulse360, a daily OTT ad reporting solution to complement its ad platform CompulseOTT.
Sinclair is partnering with Comscore to integrate its Campaign Ratings into Compulse360. Through the partnership, Sinclair’s Compulse360 is promising to report real-time efficiency reports to help advertisers maximize their campaigns.
While CompulseOTT was originally built to offer advertisers 15 and 30-second ads on third-party OTT platforms, Ware said that the offering is starting to expand on Stirr.
“When Stirr launched, its [inventory] got thrown into the [CompulseOTT] mix advertisers were already talking about. From there, it's started to expand a little bit, meaning they're going beyond talking about 30-second commercials.
Ware said that there’s a “lack of shelf space for longer programming” on linear TV, so advertisers are turning to Stirr for deeper integrations.