Amazon is bidding on the 22 RSNs Disney obtained when it bought 21st Century Fox. Here are three reasons the channels would be a major coup for the online retailer.
The Department of Justice approved Disney’s purchase of 21st Century Fox provided it sold off the 22 regional sports networks (RSNs) owned by the studio. Fox was widely rumored to be interested in buying those channels back. However, there are a lot of other companies interested. CNBC reports that Amazon is among a group of companies – including Tegna and Sinclair Broadcasting Group – that have submitted bids for the 22 stations including the New York-based YES network.
Why is the e-commerce giant bidding on traditional television channels? Amazon likely will make the channels available through Amazon Prime Video and could opt to make them exclusively available there. Here are three reasons Jeff Bezos, Amazon’s CEO, is interested in the channels and why Prime exclusivity could be on the cards.
Another reason to be a prime member
With Amazon, every strategic move has its root in the company’s core retail business. Simply put, exclusive content like the RSNs will attract new subscribers to Amazon Prime. Consider what happened in the UK with the ex-hosts of the popular show Top Gear. Amazon reportedly paid $250 million to lure the Top Gear team to make three seasons of The Grand Tour. Reuters estimates the first season attracted 1.5 million new Amazon Prime members in the UK.
Keeping Prime membership growing is critical to Amazon since members spend over twice as much with Amazon as non-members.
Gives it a shot at TV ad dollars
There are a lot of Internet companies eyeing the $70+ billion TV ad business. Amazon is one of them. The company is rumored to be working on an ad-supported video service in conjunction with its IMDB subsidiary. However, it will take a while to establish the service and develop a substantial audience for it.
The 22 RSNs come with a built-in audience that is very likely to follow the channels if they move to online delivery. The Yes Network garnered an average 4.34 household rating for Sunday games during the 2018 season. Some peaked at 4.69 and 405,000 viewers.
Moreover, if Amazon opts to continue to deliver the RSNs through pay TV providers, it can sell the ad inventory through its Amazon Video Ads program.
Helps Amazon toward becoming the number 1 online TV portal
Not only does Amazon want to cement and extend its position as the number 1 online retailer, but also it wants to be the number 1 online TV portal. Reselling SVOD services through the Channels program is the first step on that journey. Adding the RSNs to Prime takes the next step.
Until now, Amazon has only been able to secure odds-and-ends from premium leagues like the NFL and EPL. The RSNs would give it a permanent sports home with live games and commentary for 22 regional markets. With them, Amazon immediately becomes one of the first places the many viewers that rely on them turn when they want to watch TV.
Being the first-place people go when they want to watch TV brings huge advantages. For example, when a user wants to rent or buy a recent movie, the sale is liable to go Amazon because the user will use Fire TV to search for the movie. It also supports just about all of Amazon’s other strategic goals.
Winning the RSNs is by no means the last step on the journey to becoming the dominant TV portal online. However, Amazon is used to playing the long game and the RSNs take it one big step in the right direction.
Why it matters
Amazon is bidding on the 22 RSNs Disney acquired when it bought 21st Century Fox.
Owning the channels has many benefits for the retail giant.
It also takes it one step closer to dominating the online TV market.