EW Scripps CEO Adam Symson
Source: EW Scripps
Local TV station owners incl Sinclair, DRY and EW Scripps All saw their valuations plummet the week after Disney, Discovery by Warner Bros and Fox has announced a new sports partnership that will launch this fall.
Sinclair fell 12% on Wednesday, TEGNA fell 7.2% and Scripps plunged 24% as investors weighed the importance of a new, slimmer cable bundle of sports networks that will include ESPN, TNT and Fox but leave out CBS and NBC. Sinclair rallied, rising 7% on Thursday, but TEGNA and Scripps were little changed.
But Wall Street’s reaction is overblown, according to EW Scripps CEO Adam Symson.
First, investors seem to be pricing in that local ABC and Fox affiliates would not be part of the new leaner package, Symson told CNBC in an interview. They will be included, he said, citing assurances he’s been given in conversations with Disney executives. Scripps owns 18 ABC stations, in markets including Phoenix, Detroit, Cleveland and Tampa, and 4 Fox stations.
“Partners will be compensated for their transportation,” Simpson said.
The joint venture will work with all local broadcast partners in a similar way to other digital multichannel bundles, such as YouTube TV and Hulu with Live TV, according to a person familiar with the matter, who asked not to be identified because the discussions are private. .
This means consumers of the new package will be able to get their local news and sports from ABC and Fox.
A spokesman for the joint venture declined to comment.
Partial buffet
Yet, Paramount Globalof CBS and ComcastNBC’s NBC is not part of the new package, potentially putting those broadcasters’ affiliates at risk.
But only if the package takes off. Which, according to Symson, is impossible without these channels. Scripps has 9 CBS stations and 11 NBC stations.
“Wall Street acted like it was a product of a sea change,” Symson said. “I’m not disputing the opportunity or the idea that there’s value here. But take March Madness. You’ll only have access to TBS and TNT, but not CBS. It’s not the efficient package that Wall Street makes it out to be.”
While an executive associated with the joint venture told CNBC privately that it would be “a monster,” Symson disagreed with that assumption because, in his view, fans would not be satisfied with a partial bid.
“People don’t want to go to a buffet where half the steam trays are missing,” Symson said.
FuboTV, another sports-focused network bundle, has it has yet to reach 2 million subscribers — and offers more sports than the new package is likely to.
A smaller package priced at $40 or $50 a month probably won’t have a large audience either, Symson said.
“If you’re a sports fan today and need access to all the live TV broadcasts of your favorite sports, you’re better off keeping your pay TV package as is,” he said. “It calls into question the value of the consumer proposition.”
Even if Disney and Warner Bros. Discovery is able to supplement subscriber additions by bundling the new service with existing streaming services Disney+, Hulu and Max, he noted, adding that the service should be viewed by investors as supportive of broadcast stations.
“If network affiliates like Scripps are going to be compensated for porting on this platform like we are on other platforms, that’s potentially additive,” Symson said. “It’s just another product among products that are already the same thing.”
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