Adam Symson, CEO of EW Scripps
Source: EW Scripps
Local television station owners, including Sinclair, TEÑA and E.W. Scripps Everyone saw their ratings drop this week after disney, Warner Bros. Discovery and Fox announced a new sports joint venture that will launch this fall.
Sinclair fell 12% Wednesday, TEGNA fell 7.2% and Scripps plunged 24% as investors weighed the meaning of a new, slimmer cable package of sports networks that will include ESPN, TNT and Fox but leave out CBS and NBC. Sinclair rebounded with a 7% rise on Thursday, but TEGNA and Scripps were little changed.
But Wall Street's reaction is overblown, according to Adam Symson, CEO of EW Scripps.
For one thing, investors appear to be pricing in that local ABC and Fox affiliates would not be part of the new, slimmer package, Symson told CNBC in an interview. They will be included, he said, citing assurances he has been given in conversations with Disney executives. Scripps owns 18 ABC stations, in markets such as Phoenix, Detroit, Cleveland and Tampa, and 4 Fox stations.
“Affiliates will be compensated for getting carried away,” Symson said.
The joint venture will work collaboratively with all local broadcast affiliate partners similar to other multichannel digital packages, such as YouTube TV and Hulu with Live TV, according to a person familiar with the matter, who asked not to be identified discussing discussions. They are private.
This means consumers on the new package will be able to receive local news and sports from ABC and Fox.
A spokesman for the joint venture declined to comment.
A partial buffet
Still, Paramount GlobalCBS and Comcast's NBC are not part of the new package, potentially putting those broadcast stations' affiliates at risk.
But only if the package takes off. Which, according to Symson, is unlikely without those channels. Scripps has 9 CBS and 11 NBC stations.
“Wall Street acted as if this were a game changer,” Symson said. “I don't disagree with the opportunity or the idea that there is value here. But let's take March Madness. You'll only have access to TBS and TNT, but not CBS. It's not the efficient package that Wall Street is making it out to be.”
While an executive associated with the joint venture privately told CNBC that it will be “a monster,” Symson disagreed with that premise because, in his opinion, sports fans will not be satisfied with a partial offer.
“People don't want to go to a buffet where half the steam trays are missing,” Symson says.
FuboTV, another sports-focused network package, has yet to reach 2 million subscribers and offers more sports than the new package likely offers.
A smaller package priced at $40 or $50 a month probably won't have a large audience either, Symson said.
“If you are a sports fan today and need access to all the live broadcasts of your favorite sports, you are better off keeping the pay TV package as is,” he said. “It calls into question the value of the consumer proposition.”
Even if Disney and Warner Bros. Discovery manage to boost subscriber addition by bundling the new service with existing streaming services Disney+, Hulu and Max, he said investors should consider the service supporting streaming stations.
“Whether network affiliates like Scripps will be compensated for carriage on this platform like we are on other platforms, it is potentially additive,” Symson said. “It's just another product among products that are already the same.”
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