Update 03/05: New deal agreed, but not for all channels.
YouTube TV recently confirmed it is dropping Fox RSNs due to the inability to strike a deal with Sinclair Broadcast Group. While this is not the first time a live TV streaming service has made this exact announcement, YouTube TV’s one feels a little different.
Although the impact is being felt by a lot of people this time, again, it is not the first time this many have been on the end of this exact announcement. What is likely adding to the impact on this particular occasion is how the overall Fox RSNs picture is suddenly a lot clearer than it ever was before. YouTube TV’s announcement adds to a growing timeline that is now starting to offer a very clear understanding of how the journey here has evolved.
The beginning of the end
In 2019 the Walt Disney Co. acquired 21st Century Fox in a deal which set everything in motion. That’s not only the issues surrounding Fox RSNs, but also Disney+, and a reshaping of how content is accessed in general. Essentially, this purchase was one of the few (along with AT&T buying Time Warner) that absolutely changed everything.
As past of the deal, Disney acquired all of the Fox RSNs that are now causing so many problems for so many Americans. While Disney kick-started the current problem by selling all those RSNs to Sinclair, this was not Disney’s decision. The United States Department of Justice ensured that the only way the Disney/Fox deal could complete is if Disney agreed to sell off 22 regional sports networks. The reasoning suggested by the Justice Department was antitrust-based, citing that Disney selling on these RSNs would (ironically) “ensure that sports programming competition is preserved.”
Due to the deal, Disney had no option but to sell the rights to the RSNs in question, as it was a regulatory requirement for the wider Fox deal to be completed. With The DoJ caveat announced in June 2018 and the acquisition completed in March 2019, Disney was under pressure for this to happen sooner rather than later, resulting in the rights going up for public auction.
Adding to the irony of all this, the DoJ who set in motion the sale – as a means to curb antitrust issues emerging from the acquisition – rejected a suggestion by the American Cable Association that unless there is some sort of independent oversight, any deal could result in another, equally antitrust-worthy issue developing.
The middle of the end
In May of last year it became abundantly clear that Sinclair was set to take over the Fox RSNs rights and at the time the deal was thought to be in the region of around $10 billion. By August the deal closed with a $9.6 billion fee agreed. In return, Sinclair was picking up 21 Fox RSNs, as well as Fox College Sports. A separate deal was made for the sale of YES Network.
Although the DoJ rejected and advised ignoring the ACA’s suggestion for independent oversight, on the very day it was confirmed that Sinclair had won the auction, the ACA released an announcement opposing the Sinclair acquisition. The reason according to the ACA, “the transaction would allow Sinclair to raise prices to millions of consumers.”
While many right now will be looking to attribute blame to Sinclair, Fox, Disney, or the DoJ, the ACA deserves absolute recognition for anticipating what was to happen. Not only did the ACA praise the DoJ’s original decision to enforce Disney to spin-off the RSNs to avoid antitrust issues that might lead to an impact on customers, but it looked to intervene in between the sales to ensure the buyer did not create another antitrust issue, and then when a buyer was selected, made clear this was the wrong decision. The ACA’s suggestion should have been taken more seriously.
The end of the end
Without a doubt the moment Sinclair tried to exert its authority was the end of the end. Besides the Fox RSNs, Sinclair owns the rights to many local stations across the country and arguably this is why the “Group” decided to invest in the Fox RSNs in the first place. Essentially, the company expected to use these, along with its other local stations, to ensure when carriage deals were renegotiated, it could leverage some to secure deals for all.
Sinclair will view this differently, but the companies involved have made it abundantly clear that the devil is in the detail. For example, Sinclair says it offered YouTube TV cheaper rates for Fox RSNs than YouTube TV was being paid before. In fact, in statements made to both The Verge and The Streamable, Sinclair made the same argument, going as far as to suggest YouTube TV subscribers should demand a refund as they are now paying more for less.
It is probably true that Sinclair said to YouTube something along the lines of ‘we’ll reduce the price of Fox RSNs for you’ but that was probably accompanied along with something like ‘as long as you take (and pay for) these channels as well.’ The end result being, Fox RSNs cost less but the overall cost to YouTube TV (or any other live TV service) is higher for the package. Increased costs which almost certainly would have resulted in price rises for subscribers.
Again, the devil is in the detail and even in the last few days some of those details have once again come to light. Take this recent tweet from Dish as an example. Here, Dish is all but confirming Sinclair expects Dish to pay for channels that subscribers don’t, won’t or can’t watch.
To be fair, this is not something only Sinclair does, but any company in a position of channel power looks to exert. Not that long ago Viacom was accused of attempting the same with AT&T TV NOW (DIRECTV NOW at the time) which led to immense pressure on AT&T to strike a deal. A good amount of that pressure came from Viacom’s social media influence which suggested AT&T was somewhat, solely the ‘bad guy’ in this situation. However, it wasn’t.
To be clear, AT&T has acted badly and especially towards its grandfathered DIRECTV NOW customers, and those it now deems as low-value, all of which has led to the service encountering heavy subscriber losses over the past year. However, in this instance, it appears that Viacom wanted AT&T to carry all of its channels, even though subscribers only wanted some of those channels. Due to this discrepancy, AT&T was only willing to pay for those channels customers watched, and therein is where the issue between AT&T and Viacom arose from.
Eventually a deal was done between the two but all of the Viacom channels did not return to AT&T TV NOW, suggesting it was Viacom that backed down on its pay-for-all-or-get-none stance. ‘Backed down’ is probably the wrong phrase to use as ensuring customers could retain access to the channels they want, without having to pay for channels they don’t want was the right move, not a weak one.
While it might seem like we’ve gone off on a tangent here, we haven’t. The AT&T/Viacom situation is directly applicable to the Fox RSNs issue which brings us right up to now. Unless Sinclair is willing to de-bundle Fox RSNs from whatever else it is trying to package them with during renegotiation deals, it seems highly unlikely that Sling TV, Dish, fuboTV, or YouTube TV is going to strike a deal. Furthermore, these services are right to hold off, as just like the ACA predicted, any deal will likely lead to price increases for the consumer.
Are AT&T and Hulu next?
When you have so many companies (that are usually laser-focused on undercutting each other to gain subscriber share) all singing from the same hymn sheet, then the common denominator is not hard to spot.
Unless Sinclair has some major change of heart anytime soon then it seems highly likely that AT&T and Hulu will also lose access to the same Fox RSNs whenever their current agreed terms come to an end.
While it is theoretically possible that Hulu (via Disney) has some obscure (and previously agreed) extended terms baked into the original RSNs deal with Sinclair, AT&T is a slightly different story.
AT&T won’t do a deal with anyone that doesn’t directly benefit itself. For reference, that now includes subscribers. However, it has already done a multi-year deal with Sinclair that is likely to include the Fox RSNs. That deal is also understand to have included Marquee Sports Network as well – which is why AT&T has now added the channel to its video services.
Mid-way through 2019, an AT&T and Sinclair dispute took place. At the time, Sinclair issued a statement placing the blame on AT&T, suggesting that it was using its market position as a leverage to avoid paying “fair market carriage licenses” with 136 television stations on the line. Looking back, with fubo, Sling, and YouTube all backing away from a deal recently with Sinclair, the question has to be raised of how fair those market prices are that Sinclair keeps asking for?
While the nature of a “multi-year” deal would seem to suggest that Fox RSNs are safe on AT&T’s services for the foreseeable future, if any renegotiation takes place, before or when the terms end, the suggestion AT&T will somehow now give in to demands that fubo, Sling and YouTube haven’t, is unlikely. AT&T has mastered the art of hardball, and that’s not going to change anytime, or for anyone. Arguably the same is true for Disney. If there is no preset arrangement in place, then it seems unlikely Hulu will retain access to Fox RSNs after its current deal ends.
AT&T and Disney and not small fish in the streaming sea, nor are they big fish in a small pond. Both companies are behemoths after their recent acquisitions, and in many ways, they are now the seas, the oceans, and all the ponds in between. Neither company is likely to bend over backwards to accommodate Sinclair going forward – even if it would give them bragging rights for switching.
Especially considering both companies now have their eye on much bigger ventures and service expansions.
Leave a Reply