Sinclair BroadcastSBGI recently launched a free streaming service, STIRR for the U.S. audience. The ad-supported service will include local news, sports, entertainment and on-demand content.
Additionally, the service will contain original channels including "STIRR Movies, STIRR Sports and STIRR Life." Moreover, a unique channel called STIRR CITY is part of the service, featuring local programming.
The company plans to add more than 50 TV stations to the service by the end of 2019. The service can be accessed on Amazon FireTV, iOS and Android devices among others.
Sinclair Broadcast Group, Inc. Revenue (TTM)
Sports Focus to Aid Top Line
Sinclair Broadcast's decision to launch the service comes at a time when user demand for local programming like sports is strong. This is also the primary reason behind Sinclair's bid for 21st Century Fox's 22 regional sports networks (RSNs), currently valued at $25 billion, per Guggenheim Securities.
Notably, Disney DIS is forced to divest 21st Century Fox's RSNs as part of its $71.3 billion deal to purchase key Fox assets. Moreover, Fox Corporation recently confirmed that it had pulled out of the bidding race for RSNs.
Therefore, if Sinclair wins the bid, RSNs will significantly boost its sports portfolio. Moreover, demand for sports content coupled with Sinclair's huge reach in the United States is expected to attract users and advertisers alike. This will in turn boost ad dollars, thereby aiding top-line growth.
Rising Popularity of Free Streaming Services
Given the growing potential of the streaming market, media, telecom and tech industries are looking to foray into the space. Some of the upcoming streaming services include companies like Disney, Apple, AT & T and Comcast CMCSA among others.
Notably, the streaming market is expected to witness CAGR of 19.1% from 2018 to 2025 and reach $124.57 billion by 2025, per Grand View Research. Moreover, average revenue per user (ARPU) is expected to be $91.37 in the United States in 2019 and is expected to reach $98.64 by 2023, per Statista.
Comcast, like Sinclair Broadcast, plans to roll out a free streaming service at a time when the market is flooded with paid over-the-top (OTT) services. The move may help the companies expand their user base in a short time, especially when 80% viewers in the United States have cable or satellite subscriptions even in the streaming age.
Free services are also expected to have an edge over low priced skinny bundles from providers like DISH's Sling TV, and AT & T's DIRECTV NOW to name a few.
However, heavy investments in content from Netflix NFLX , the company's primary reason behind its huge subscriber base (139.26 million at the end of fourth-quarter 2018), may not bode well for free service providers. Netflix's content strength can be understood from its ability to dethrone HBO's 17-year streak to receive the highest number of Emmy 2018 nominations.
Additionally, the company won five awards at the recent Golden Globes. Moreover, Netflix's decision to use big data analysis while developing its content lineup helped it big time. These initiatives may help the streaming giant to lead the pack even in spite of the presence of free services.
Sinclair Broadcast currently carries a Zacks Rank #4 (Sell).
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