Sinclair Submits Auction’s Highest Bid for Fox RSNs, Bankers Continuing to “Work the Deal”

Sinclair

Bankers at Allen & Co. received final-round bids for the 21 Fox RSNs – not named YES Network (sold separately to Yankees/Sinclair/Amazon for $3.47 billion) – from Sinclair Broadcast Group (SBGI), Liberty Media (LBTYA) and the Big3 basketball league. Fox Business reported that while SBGI submitted the auction’s highest bid – worth +/- $10 billion – they’ve yet to be declared the winner; the possibility remains that one of the other bidders could still put forth a more attractive offer as bankers continue to “work the deal.” While the Fox story suggested a decision could occur “in the coming days”, Walt Disney Company (DIS) has until mid-June; the company was given 90 days from their March 20th closing (on 21st Century Fox’s entertainment assets) to unload them.

Howie Long-Short: When Disney agreed to buy the Fox RSNs it presumed that on the open market the lot would command bids between $20 billion and $22 billion – they were valued at $20 billion based on what DIS paid – so, the house of mouse wasn’t planning on taking a +/- $6 billion loss in its efforts to comply with antitrust regulations. But with the TV bundle continuing to fray, the number of cord cutters growing and “sports leagues maintaining ownership (rather than the networks) of digital rights” many of the parties expected to submit bids (see: Comcast, Fox, Amazon) remained on the sidelines.

MLB was interested in taking control over the RSNs because they feared a private equity firm – focused solely at the bottom line – wouldn’t invest in the promotion and marketing of its small market teams, not because it wants to become a “big media house”; Octagon SVP Dan Cohen (Global Media Rights Consulting Division) said that the sale of BAMTech was a “clear indication they did not want to own and operate technology” (aside from MLB Network and MLB.tv). Ultimately the cost of acquisition got too high for the league to submit a solo bid and they opted to take a minority position alongside Liberty Media, but Cohen believes that MLB ends up in a limited partner capacity with whomever the declared winner is (with an investment post-close). “They are the content creators. If you’re going to invest $10 billion dollars amidst a rapidly changing landscape, you need to be aligned with them.”

If Cohen’s hunch is correct, Sinclair is going to be named the auction winner. While he admittedly doesn’t have any “inside information”, the company has “made it clear that the RSN business is important to them. They’ve partnered with the Cubs to launch Marquee Sports Network and they’re the lead investor in the group that has agreed to buy the YES Network. If you follow the money, it’s logical they would end up with the remaining 21 RSNs.”

MLB is riding the Liberty bid to the finish line, but Cohen says that it is Sinclair prime positioned to operate the collective of cable sports networks. “They understand the local market content business – they own a lot of local markets – and on a national level, they’ve proven to be deft negotiators; look what they’ve done with The Tennis Channel” (see: fastest growing TV network).

SBGI’s familiarity with local markets should prove beneficial, but the company is still going to need to find a way to “navigate changing consumption patterns and cord cutting” (see: AT&T lost 544K TV subs, 83K OTT subs in Q1). Dan believes the way to do that is to “retain more rights and to get creative – in collaboration with MLB and the states – to monetize the sports betting opportunity. All of these potential buyers are gambling that they’ll be able to retain viewers longer during a 9-0 blowout by serving up prop bets – and acting as the intermediary [assumes the RSNs eventually obtain the local mobile rights] to place those bets. That’s where the upside is within the RSN business.”

Fan Marino: The Big3 won’t be the winner – aside from lacking the infrastructure to operate, they lack the capital; Forbes reported their bid was “heavily leveraged – but credit Ice-Cube and Co. for “reimagining the content that could live on a regional sports network.” Aligned with stars like Snoop Dogg and Beyoncé “their plan was to make each RSN a cultural initiative across sports, music and entertainment. They were going to supplement their live sports programming with concerts and original programming – leveraging their celebrity networks to provide viewers with exclusive access and BTS action.”

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Content Marketers Using Insight on Fan Excitement to Drive Decisions

thuuz

Thuuz Sports is an AI-based metadata and content curation platform for sports content owners and distributors. Their proprietary technology generates automated highlight packages, offers intelligence to content marketers and is used to enhance broadcaster programming guides. JohnWallStreet sat down with Wayne Sieve, EVP of Thuuz Sports to discuss how simply understanding if a game was exciting, is exciting or will be exciting is valuable insight for companies like ESPN+, DirecTV, DAZN and Sling TV.

JWS: Explain how Thuuz measures fan excitement?

Wayne: We built a data science and methodology around measuring game excitement using a simple measurement scale, zero to 100 with 50 being average and 100 being off the charts exciting. As a process, we ingest enormous amounts of third party data – including play by play, social, betting, audio and video – and then we apply our own AI against the data collected. We do our own numerical modeling, predictive records and machine learning, and then perform the data analysis to measure everything from the pace of play, to the quality of the teams playing and the context of the match. We end up with what we call sports event metadata offering a snapshot of fan excitement, in real time, from the home team’s fan standpoint, the away team’s fan standpoint and the neutral fan’s point of view; think of it as something like Rotten Tomato ratings.

JWS: How does a broadcaster take Thuuz’s insight and turn it into something actionable?

Wayne: If a broadcaster knows if a game was exciting, is exciting or is expected to be exciting, they’re able to create a more personalized programming guide. In addition to the score for each fan POV, our technology machine produces 3 headlines for each of the different fan vantage points explaining why the game is rated as such. From there, the broadcaster can use push notifications to drive viewer tune-in.

Marketers can also use the metadata to determine which assets within a programming portfolio should be promoted, insight that leads to better sell-through and conversion rates.

JWS: Thuuz introduced a highlight machine for the 2018 World Cup enabling users to create their own SportsCenter; the teams, games, players and duration were all customizable. Is this the future of how sports fans will get their highlights?

Wayne: I think it’s a very compelling direction that a lot of content owners should think about going. We’re getting to a point where people are demanding (or certainly are more compelled by) having a personalized experience, especially the younger audience. The days of simply programming what you think audiences are going to like and saying, here it is and that’s all you get, are coming to an end. If you enable a viewer to create their own programming, to have them involved and engaged with the content creation process, then they’re more interested, they’re more engaged and they will interact for longer periods of time. Customizable highlights provide a phenomenal product experience for fans and I think that’s where the market is going and should be going.

JWS: From a consumer standpoint, Thuuz’s most valuable feature is the ability to “catch up to live.” Explain why it’s a “game changer” for programmers in their efforts to engage the fan?

Wayne: Let’s say you stumble across a football game and it’s 28-28 in the middle of the third quarter and are wondering how it got to this point. Our technology enables the viewer to curate and view personalized game highlights in real-time, so they can watch the balance of the game unfold live; a feature that had not previously existed. I think offering a game summary is quite important as a next step in the evolution of how to engage with the fan, because unless you started at the beginning of the game, you don’t know how you got there. I think you’re going to see widespread adoption as the technology becomes more refined.

Howie Long-Short: Thuuz, a privately held entity, has raised $10.7 million over 2 rounds of funding. You can play the company via Liberty Global (LBTYK), who led their $4.2 million Series A round in ’12 or through ITOCHU Technology Ventures; the VC arm of Itochu Corporation. Itochu is among the largest Japanese general trading companies (#215 on ’17 Fortune Global 500 list), with an expertise in textiles, metals/minerals, food, machinery, energy/chemicals and ICT/general products/real estate; the company trades over the counter under the symbol ITOCY.

Fan Marino: Thuuz’s World Cup highlight machine remains active on the Fox Sports website. Select your favorite teams, players, matches and play types (i.e. goals, saves) and enjoy your personal highlight film.

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Thuuz Sports Metadata Algorithm Ranks Most Exciting Teams, Games in ’18 World Cup

thuuz

Thuuz Sports, an automated short form sports video production company and metadata service, in collaboration with IBM and Fox Sports measured the excitement levels of all teams/games throughout the World Cup; using the insights gained to create customizable highlights in real time. The proprietary algorithm determined that Spain (scored 93.5), runner-up Croatia (91) and Belgium (91) were the most exciting teams to participate in the 2018 World Cup (France finished 7th); game pace, team parity, play novelty, momentum shifts, social buzz and historical context of all matchups throughout the tournament were all considered. The Croatia-Russia match received a perfect score of 100, making it the tournament’s most exciting matchup. You’ve heard the term, ‘the excitement was palpable’; as CEO Warren Packard says, “we can now verify it.”

Howie Long-Short: Thuuz, a privately held entity, has raised $10.7 million over 2 rounds of funding. You can play the company via Liberty Global (LBTYK), who led their $4.2 million Series A round in ’12 or through ITOCHU Technology Ventures; the VC arm of Itochu Corporation. Itochu is among the largest Japanese general trading companies (#215 on ’17 Fortune Global 500 list), with an expertise in textiles, metals/minerals, food, machinery, energy/chemicals and ICT/general products/real estate; the company trades over the counter under the symbol ITOCY.

Fan Marino: France finished 7th despite winning the tournament, because overall suspense/surprise throughout all team matches carries the most weight in the algorithm. That’s logical. You’d be hard pressed to find anyone who says the Warriors run to the NBA Championship was more exciting than the Eagles run to the Super Bowl. Expectations, or the lack thereof, matter.

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Most Followed Sports Media Brand on Social Media Adds DevinSuperTramp

Whistle4

Whistle Sports has signed Devin Graham, better known as DevinSuperTramp, to create branded original content (including some longer-form) for the post-millennial sports network. The Whistle Sports Network (WSN), which produces, curates and distributes sports-related content (across social, digital and TV) for a youth audience, will add Graham to its talented network (500+) of creators (think: Dude Perfect, Nitro Circus). The extreme sports film-maker with a reputation for producing viral content for some of the world’s biggest brands (see: Ford, Intel), will bring a loyal following to the “most-followed (170 million subs/followers) sports media brand on social media”; 9 million followers across various social platforms, including 4.9 million YouTube channel subscribers. Content delivered by WSN generates +/- 2 million views per month.

Howie Long-Short: Whistle Sports remains privately held, but the company has raised $80.5 million to date; with much of the capital coming from publicly traded companies. iHeartMedia, Inc. (OTC: IHRTQ) participated in the company’s seed round, Sky (SKYAY) and Liberty Global (LBTYA) invested in their $28 million Series B round, and both Tegna, Inc. (TGNA, formerly Gannett) and NBC Sports Ventures (CMCSA, led round) invested in the company’s most raise; a $27.5 million Series C round in January 2017.

Fan Marino: Whistle Sports and DevinSuperTramp previously collaborated on a Super Bowl commercial for Pepsi and Papa John’s Pizza, a project called “The World’s Longest Touchdown Catch.” In the viral video (2.6 million views), Joe Montana throws a spiral out of an airplane cruising 14,000’ over California. A team of skydivers jump out after the loose ball, battling for it as they free-fall towards the earth’s surface. I won’t spoil who comes down with “The Catch”, but you can watch the video (and find out who grabs it), here.

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