The Sinclair/YouTube TV Reveal

Sinclair’s RSN unit upset the Yankees by leaving them out of a YouTube TV deal. In hindsight, it wasn’t surprising.

The best twists are the ones nobody sees coming, yet are obvious in hindsight. It is an old movie axiom with many examples. Nobody expected Luke to be Darth Vader’s son. Then it made sense that Darth wanted him alive.

Today’s announcement of long-term YouTube TV carriage for Sinclair RSNs (regional sports networks) provoked surprise for the Worldwide Reader. Not because a deal happened, but because Los Angeles and New York were left out. Fox Sports West and Fox Sports Prime are majority-owned by Sinclair. YES (home of the Yankees and basketball’s Nets) is partially-owned. None of the three will be carried by YouTube TV in the near future. Never before had an RSN owner allowed a Pay-TV provider (cable, satellite, streaming packages) to carry some of its channels, but not all.

Before today, prevailing #sportsbiz wisdom was that RSN owners were married to all-or-nothing carriage deals. RSN financial health was greater, so it was thought, when RSN owners were able to prevent Pay-TV providers from picking and choosing which channels to offer.

The situation in baseball’s AL Central division provides a prime example of the theoretical need for RSN owners to stick with all-or-nothing carriage.

The Minnesota Twins garner the highest local TV ratings in Minneapolis during the summer months, year after year. The team made the Playoffs last season, and is expected to contend again.

The Detroit Tigers have seen local TV ratings plummet since as the team has struggled. The team is “rebuilding”, and expectations for a contending season are minute.

From a Pay-TV provider’s perspective, the Twins’ RSN (Fox Sports North) is a must-have, while the Tigers’ (Fox Sports Detroit) may not be. Sinclair, owner of both FS North and FS Detroit, surely would not want DirecTV, or any other Pay-TV provider, to drop the Tigers and keep the Twins, just because one is down and the other is up.

YouTube TV was not allowed to cherry-pick Sinclair’s RSNs team-by-team. The ultimate deal was to exclude the United States’ two gorilla markets, only.

Like the Keyser Soze reveal, excluding New York and Los Angeles RSNs makes sense in hindsight. For YouTube TV, the deal always made sense; Pay-TV providers would love to pick and choose which RSNs they carry. For Sinclair, the deal was a necessary sacrifice to keep their RSN business solvent. They need carriage fees and they need eyeballs to offer advertisers.

YouTube TV may have only 2 million subscribers today, but it is the clear leader in streaming Pay-TV. Playstation Vue has been shuttered, AT&T Now is hemorrhaging subscribers, Sling is mostly a Dish alternative and Hulu is mostly known as an on-demand service. People seem to like the YouTube TV interface, the service is reliable and the $50/month price is reasonable.

Sinclair’s RSN unit decided that YouTube TV wasn’t worth losing, even if it meant upsetting the Yankees.

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