New Hope for Marquee Deal as YouTube TV Announces Temporary Extension with Sinclair

Photo of Evan Altman Evan AltmanFebruary 29, 2020

We added this as an update to a previous piece about YouTube TV cutting off negotiations with Sinclair, but it’s worthy of it’s own post in light of the potential importance to Cubs fans. Sports fans in general, really. After initially taking a hard-line stance in a series of direct tweets from their YouTube TV account, the content curator’s main account replied to an upset subscriber with news of hope.

This feels like some classic good cop/bad cop action, with YouTube leveraging current subscribers and the general public as a negotiating tactic. The disagreement is rooted in cost, of course, as the rising carriage rates and raw number of regional sports networks make it difficult for cable carriers to maintain low rates.

That’s particularly true for a streaming service like YouTube that uses low cost as a primary value prop. There isn’t a lot of wiggle room in a $50 subscription fee in the first place, let alone when you start adding in more RSNs. Even assuming a very low rate of $3 apiece, just carrying close to half of Sinclair’s slate of 23 RSN’s — 21 from FOX, plus YES and Marquee — would run more than $30. Coverage varies by region, but there are a lot more RSNs other than Sinclair’s, so the price load is significant.

That means roughly 60% of YouTubeTV’s subscription costs would be tied up in about 15% of its channel lineup, not exactly an ideal ratio. It’s even less so when you consider that YouTube’s more youthful demographics — something Crane Kenney alluded to earlier in the week — don’t necessarily dovetail with the boomer-heavy block of baseball devotees. There are obviously more sports available, but we’re keeping our attention to Marquee here.

Other than Comcast, Marquee’s successful negotiations with providers across the Midwest lend credence to claims that their carriage asks are fair. However, YouTube is working with a flatter, more compressed pricing structure and is likely requiring that Sinclair drop its carriage rates on the whole in order to onboard Marquee and/or keep the other RSNs.

“We offered YouTube TV the best terms under which their competitors carry our regional sports networks,” Sinclair spokesman Ronn Torossian told Bloomberg in an email. “Unfortunately, they alone decided to drop these channels citing ‘rising costs’ despite our offer to actually lower the fees they pay us.”

Unlike the situation with Comcast, which has the benefit of being hard-wired into scores of apartment and condo complexes throughout Chicago and boasts superior internet service, YouTube is much more of a commodity. Despite some cool features, the absence of a contractual obligation means die-hard Cubs fans are going to jump to Hulu+Live if it’s still the lone streaming service with Marquee when the season bows.

At the same time, YouTube can’t risk pissing off it’s legions of customers who don’t care a lick about sports. Adding another $5-10 to the monthly rate in order to accommodate RSNs would represent up to a 20% price increase, something YouTube is obviously reluctant to do. Nor, it seems, are there any plans to lower subscription costs, though that comes with the understanding that Sinclair channels remain a part of the programming.

This isn’t just a matter of YouTube recognizing the value in maintaining its appeal to sports fans, since Sinclair isn’t in much of a position to continue disappointing its shareholders. SBGI stock has tumbled from an all-time high of $61.18 back on May 9, 2019 — shortly after purchasing all those RSNs from Disney for over $10 billion — to a five-year low of $23.21 as of Friday’s close. Even with a global pandemic dragging the market down across the board, Sinclair’s Greg Louganis impersonation has been going on for nine months.

That might explain the labor pains with Marquee, which is still without carriage in over half of the households in the Chicago market and lacks streaming capability with its biggest existing broadcast partners. It’s only been a week since the network launched, but the inability to authenticate and stream through the Marquee app with any of AT&T’s family of providers remains a sore spot.

Those customers, along with the millions currently beholden to Comcast who are actually able to move, represent a veritable gold mine for YouTube and Hulu. If, that is, the former actually ends up getting Marquee. The extension with Sinclair certainly increases the possibility of a deal getting done, though we don’t know anything about how long it will last or whether Marquee is part of those negotiations.

It’s probably fair to say the new network is included, unless the Cubs and their business partners have opted instead to negotiate carriage separately. In addition to being foolish, such a strategy would fly in the face of the initial claims that carriage deals would fall under Sinclair’s purview as the broadcast experts.

More on this as it develops, but you can let YouTube TV know that you want it to carry Marquee by clicking here.

Photo of Evan Altman Evan AltmanFebruary 29, 2020
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