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Scripps Sports Sees Broadcast TV as Local Sports Savior

Scripps Sports Sees Broadcast TV as Local Sports Savior

Major League Baseball commissioner Rob Manfred said reach, or the lack thereof, is “the single biggest problem” associated with the troubled regional sports network model. “You have people who want to watch games, but because they have cut the cord or because their distributor is no longer carrying the RSN” cannot.

For perspective, Reds games air in just 46% of households in Cincinnati with a TV. That percentage will get even smaller in the years ahead as the pay-TV universe continues to shrink.

Having the ability to reach just a fraction of the potential fan base could have long-term repercussions. “If nobody is finding and sampling you, you’re not developing a new audience,” Brian Lawlor (president, Scripps Sports) said.

The suppressed audience size also prevents rights owners from maximizing the value of their commercial assets in the short term. “Ticketing, merchandise, [sponsorships] and sports betting all go up [if] more people are engaged with your product,” Lawlor said.

The E.W. Scripps Company (NASDAQ: SSP) has taken note of the growing troubles with pro sports’ reliance on regional sports networks and believes it has a viable alternative to the cable channels–in certain markets. The company owns 61 local TV stations across 41 U.S. markets. “The time is absolutely right for broadcast to come in and be the savior” for teams looking to expand local reach, Lawlor said.

SSP recently announced the formation of Scripps Sports to let rights owners know “that Scripps is in the game,” Lawlor said. However, the company is not new to sports. It has Monday Night Football rights in some of its markets and Thursday Night football rights in many of them. It also has the exclusive rights to Big Sky Conference games across Montana, Idaho, Northern Arizona and California.

The evolving media landscape has seemingly created an opportunity for over-the-air (OTA) broadcasters, like Scripps, to expand their rights portfolios. “There’s going to be a lot of shakeout [and] broadcast is going to be a piece of that new model,” Manfred predicted.

SSP is not going to pursue local team rights in all of its markets. “A lot of our stations are ABC, NBC, CBS or FOX [affiliates] and we’re only able to preempt the network a couple hours a year,” Lawlor said.

However, in select markets where it owns an over-the-air tower and a second full powered broadcast channel, such as Detroit, Scripps Sports believes it can present a compelling case to a rights owner. “We could go to the Pistons or Red Wings and say, you only reach 50% of the total population being on Bally’s Detroit. You can do a deal with us and reach 100% the population,” Lawlor said.

Miami and Phoenix are among SSP’s other markets that meet the prerequisites.

A second channel ensures SSP has the flexibility needed to carry a full slate of NBA, NHL or MLB games.

The problem with making the transition from a regional sports network to broadcast is that the team may have to take a serious haircut on guaranteed rights fees. Lawlor discussed resetting the business’ economics and introducing a partnership focused model.

But Lawlor argues teams are going to take a step back regardless when their existing local rights deals expire, so they might as well make the transition to broadcast. “The next round of bidding on the RSNs is not going to bring the same value to the teams. It can’t. They’ve lost [a large portion] of their audience since their last deal started,” he said.

Former Brooklyn Sports & Entertainment CEO John Abbamondi is not so sure. While some vMPVDs have been able to grow via inexpensive skinny bundles sans RSNs, as that growth slows he believes they will begin to focus on acquiring more premium content. “Premium live sports content is becoming as critical for driving growth among digital aggregators as it has been for traditional cable and satellite operators, and the fact that YouTube is paying more than DirectTV did for Sunday Ticket is the latest evidence for that," he said.

Manfred believes local rights will be shared between over-the-air broadcast, cable channels and digital distributors in the future. “You’re not going to have the kind of 145-game exclusivity that you had in the past,” he said.

In fact, “You may have a lot of side by side,” Manfred said. Simulcasting games will give rights owners the broadest reach and help to limit the financial commitment required for any one broadcast partner.

SSP does not have a digital solution. However, Lawlor said the company is “really interested in working with [rights owners] to either develop our own bottom of the funnel solution, a direct-to-consumer that compliments, or partner with some of the players in the streaming space.”

Scripps Sports intends to “get aggressive talking to teams that are on RSNs and show them that there is a business model that makes a lot of sense” on broadcast. However, Lawlor explained the newly formed division has a separate strategy to attract league-level rights to a national network it owns called ION. ION is the fifth highest-rated broadcast network in America.

Like NBC, CBS, ABC and FOX, ION is nationally programmed and carried by local affiliates. What makes ION unique is that SSP owns those affiliates and is able to control distribution on them.

That means Scripps Sports can offer a sports league the opportunity to broadcast one game nationally or program each individual market across the country locally or regionally (think: what CBS and FOX do with the NFL on Sunday afternoons). “We can then take the footprint, roll it up, give it a national rating and sell that,” Lawlor said.

There are no plans to convert ION into a 24-hour sports network. So, expect Scripps Sports to be selective in the league rights it pursues.

NFL rights are tied up for the next eleven years and SSP is not inclined to spend billions of dollars a year on a package anyway. “But for some of the others [leagues] that are coming up, NBA, MLB, we could probably be in the conversation for some sort of configuration,” Lawlor said.

NWSL, WNBA and NHL rights were also mentioned as potentially making sense for the company when they become available.