In advance of the soft launch of its direct-to-consumer service, Diamond Sports Group on Wednesday took the wraps off its pricing plan and brand strategy while introducing a new board of managers chaired by former Fox Sports president and COO Randy Freer.
Speaking to investors during the company’s first-quarter earnings call, Sinclair Broadcasting Group CEO Chris Ripley revealed that the new Bally Sports DTC platform will carry the inevitable “+” suffix and be available to subscribers at a rate of $188.99 per year, or for a monthly fee of $19.99. The latter figure is consistent with the $20.25 rate suggested by Sinclair’s previous 8-K filing with the U.S. Securities and Exchange Commission.
For comparison shoppers, the monthly Bally Sports+ service looks to be considerably more expensive than the other active DTC products on the market. For example, a month-to-month ESPN+ subscription runs $6.99, or about one-third as much, while the kitchen-sink Disney bundle (ESPN+, Disney+, Hulu) goes for $13.99.
The Bally Sports+ fee places the new service squarely between the ad-supported ($14.99/month) and commercial-free ($28.99) versions of the out-of-market NBA TV/League Pass package. That said, comparisons to the NBA’s legacy on-demand offering are of the apples-to-hand-grenades variety, as League Pass doesn’t allow for streaming live games in one’s local market, while the Bally Sports+ proposition is specifically designed to serve the needs of the hometown cord-cutter.
By Ripley’s reckoning, the DTC pricing scheme is expected to realize a monthly ARPU of $18.50 per sub. At present, the Bally Sports RSNs are available to stream solely via the $89.99 DirecTV Stream service. Since Sinclair closed its $9.6 billion acquisition in August 2019, the RSNs have been dropped by the likes of Hulu, YouTube TV and fuboTV.
The soft launch is set to take place by the end of June, before giving way to a comprehensive fall marketing push. “The initial launch will enable the validation of the quality and reliability of the product prior to the full DTC rollout of the Bally Sports RSNs planned for September,” Ripley said. In the early stages, Bally Sports+ will offer a viewing experience similar to what fans now see on the TV Everywhere platform, but the vanilla presentation will take on considerably more flavor as the service matures.
“In the months after launch, we expect to roll out an enhanced DTC product incorporating additional functionality, content and features, with incremental ways to monetize the viewer through a more personalized, interactive experience,” Ripley said. In other words, there will be a number of “gamification” elements baked into the live sports telecasts. (Investors are less than shocked—shocked!—to discover that gambling is going around here, what with the whole “Bally Sports” thing and all.)
Ripley said he believes that the recent Netflix meltdown and the market’s subsequent (and long-overdue) rethink of the streaming landscape should only work in the company’s favor. “In terms of pricing, I expect…when consumers compare what we’re offering versus some of these SVOD services—which are likely to go up, in light of the current environment—that relative equation will be better,” Ripley said, before adding that competitive costs should stabilize as streamers “get more rational about their own marketing spend.”
Having secured the rights to livestream games in the local territories of its 16 NBA and 12 NHL franchises, Diamond continues to undergo a piecemeal renewal of distribution deals with its 14 MLB clubs. Thus far, five MLB teams (Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers, Tampa Bay Rays) have hashed out streaming deals with the Bally Sports RSNs, but there remains a good deal of work to be done on the rights front. Ripley said his team is “having constructive dialogues” with the rest of the MLB stable, but no internal deadline has been set for locking in similar deals with the likes of the Atlanta Braves, Los Angeles Angels and St. Louis Cardinals.
“Given the status of where we are in our lunch, there isn’t really a huge timing rush on that,” Ripley said. Diamond is also working to smooth over its relations with MLB as a whole, looking for ways to heal what amounts to a rift between itself and commissioner Rob Manfred.
As was required by the terms Sinclair’s recent restructuring of its debt, which pivoted on the advance of a new $635 million loan, the Diamond Sports subsidiary has been deconsolidated from the core broadcast unit. As such, the performance of the RSNs will no longer be chronicled in Sinclair’s financial statements, although Ripley emphasized that Sinclair continues to own the local sports channels. Going forward, Diamond’s earnings will be issued under separate cover, and the unit will hold its own standalone investor calls.
In keeping with the restructuring, Diamond has put together a board of managers that features a Murderers’ Row of sports and streaming execs. Randy Freer, late of Hulu and Fox sports, will serve as chairman of the team, which also includes erstwhile NFL COO Maryann Turcke and Bob Whitsitt, a 30-year operations executive with the NBA and NFL. Also suiting up is David Preschlack, who most recently put in five years as the president of NBC Sports’ RSNs group. Ripley rounds out the picture as the fifth member of the Diamond Sports board.
Ripley said the $635 million loan and Sinclair’s concomitant deferral of management fees will “allow Diamond to be self-funding for the next several years,” while enabling the launch and ramp-up of the Bally Sports+ product.
During the first three months of 2022, Diamond Sports generated $709 million in overall media revenue, down 8% from the year-ago haul of $768 million. Carriage fees added up to $630 million on the quarter, down 10% versus $698 million, while advertising sales were up 14% to $74 million. Distribution dollars consistently account for about 90% of Diamond’s total revenue.
According to Sinclair exec VP and CFO Lucy Rutishauser, Diamond’s debt now stands at $8.6 billion. The unit’s full-year revenue projection for 2022 is between $2.88 billion and $2.9 billion.
