Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Q2 2023 Earnings Call Transcript - Page 4 of 5 - InvestingChannel

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Q2 2023 Earnings Call Transcript

David Karnovsky: Just one for Chris or Rob. You noted the lack of programming exclusivity could cause the network in terms of reverse retransmission you could argue, however, that same lack of exclusivity, especially on the sports side, they impact stations as they go to negotiate against the MVPDs. So I’m kind of wondering how you’re thinking about that as you head into your subscriber cycle.

Chris Ripley: Yes. So at the end of the day, there really isn’t a service offering from the MVPDs in terms of video if they don’t have key components of the programming offering, which includes our channels. So while it’s true what I said that there are other ways to get this content, and it’s been that way for several years now for many programming types, the MVPDs, if they want to have a video service need to have our channels. And then that’s what really underlines our ability to continue to get a healthy share of what is charged to the ultimate consumer. And the exclusivity portion of the equation has really sort of left the building over the last 5 years, as I mentioned. And — but I still — and we still see good pricing power with the MVPDs because it is a product-based to want to offer.

Rob Weisbord: And I would say it’s the distinctive serving our communities and our relative value to the communities when we’re reporting our content, and that’s why it’s the state — and that’s why I started off my silico with the fact that we are going to be relevant on all platforms. But when you have relevance on the digital platforms, it drives eyeballs right back to our linear broadcast station. And so — when you look at the award-winning journalism that we do and then other broadcasters do it as well, that’s the reason why people really tune in. And when I referenced that one day, study by TBB just shows you how much local broadcast dwarfs all the other types of channels that are out there in the universe.

David Karnovsky: And then the [indiscernible] as deal, I just want to see if there’s any incremental detail you could provide on that, maybe how it’s structured, how you best plan to monetize it. I think Rob, maybe mentioned earlier you thought that could be something that could support you on the distribution side?

Chris Ripley: Certainly. So we’re not going to get into too much detail because it is a confidential arrangement, but it will be on CaaS [ph] which is our independent station there in Salt Lake, which just happened to be the home of the Jazz before the Jazz moved their games on to then DIRECTV RSN now Discovery & Warner. And — it is a deal where we’re in true partnership with the team. That was important to us that as we do better as the games do better, everyone does better. And we’re already seeing nice impact on that station. So for instance, we haven’t seen the NBA season start. But because of this partnership, we — we got the developmentally the Geli games on KAS and their ratings basically quite ruple what was — what they were when they were on the Discovery Warner RSN and was a big lift from what previous programming we had on that station.

So — we’re very pleased with the way that deal ended up working out. And we think that partnership is going to is going to deliver both for the team in terms of maximum reach and an engagement and then deliver for us financially.

Operator: And the next question is coming from Benjamin Soff from Deutsche Bank.

Benjamin Soff: I guess just sort of following up on the sports topic, like would you anticipate that the volume of these deals with teams moving from the RSNs to broadcast to pick up over time and just kind of how you think about that? And then I have a follow-up after that.

Chris Ripley: Sure. So look, I don’t know what will happen in the future. We’re certainly seeing — some of the teams that are without a home, like the Discovery Warner, RSNs, they are sort of that Jazz was one of them. They’re looking for other options. There’s a big push from owners to go for more reach — and there’s no better reach vehicle than free over-the-air broadcast. And the NFL is a great example of a league that has massively benefited from being on free over-the-air broadcast. And I think the rest of the we see that and realize that, that’s been a great outcome for the NFL. And looking forward, I think the right answer is that some portion of games for every major sports should have a home on free over-the-air broadcast to keep exposure maximized and keep fan interest maximized.

That doesn’t mean it will all move, but it does mean that I think for any owners that want to ensure a healthy future free over-the-air broadcast should be a major component of their strategy.

Benjamin Soff: Okay. Makes sense. And then just on the note of not negotiating with Diamond and the next round of renewals. Does that mean that the management fee will go away kind of as you go through those deals?

Chris Ripley: Yes. Look, I can’t get into the details on something like that. We are still getting paid on a deferred basis for the services that we provide, but I can’t comment beyond that.

Operator: And the next question is coming from Courtney Bahlman [Barclays]

Courtney Bahlman: Hi. Can you guys give a little bit of color on how we should think about the incremental economic benefit stemming from your continued deployment of ATSC 3.0 next-gen TV I know you guys have rolled it out to a meaningful part of your footprint and expect to make more progress. But how does that translate economically into results moving forward? And what — how do we quantify that? What should we expect?

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