EXCLUSIVE: Sling TV CEO Roger Lynch Looks Back On Year One, Looks Ahead To March Madness 2016

A year after its launch, the Sling TV streaming service has grown to a reported 600,000 subscribers with a simple pitch: You get 20 popular channels for $20 a month, ESPN is included, and you can watch from almost every smartphone, tablet and TV connected device.

This is a big sports week — the beginning of March Madness — but the tournament isn’t on ESPN. A whopping 46 of the games in this year’s Road to the Final Four will be on the Turner networks — TBS, TNT, and truTV — which are all available live on Sling TV. (The remaining games will be available on the CBS Sports own streaming platforms.)

We caught up this week with Sling TV CEO Roger Lynch to talk about TV sports, Sling’s first year online, and the growth of the streaming video business.

DECIDER: You are right at your one-year anniversary since you launched?

Roger Lynch: Yep, just a couple of weeks ago.

What has turned out different that you expected in terms of what programming people watch?

We always knew that sports were going to be very popular — especially having ESPN and having Turner with all the March Madness games. That was not a surprise. We have found that people come for the sports and stay for everything else that we have. AMC with Walking Dead. HGTV and Food Network are very popular channels.

For scripted programming, have you found that people come to the service watching live TV and then drift to watching things more on demand the longer they subscribe?

For channels that have a lot of on-demand programming, people will watch that as much or more than live.

The first-round March Madness games are on TBS, TNT, truTV, and CBS, and you have all of those except CBS?

Right. TBS and TNT are in our base package. TruTV is not typically a sports network — it’s in our lifestyle tier — but we worked with Turner to give our customers a free preview during the NCAA Tournament. You won’t have to subscribe to that tier to get all of the games that are on truTV.

When we talked in the fall, you didn’t have any of the big broadcast networks, and now you have ABC in a broadcast tier. Is the obstacle to getting the broadcast networks working out the deals with all of the affiliates market by market?

We can make deals with the networks for their owned-and-operated networks like we did with ABC, but the networks still have to work out their relationships with the affiliates. So we have ABC for their owned-and-operated markets, but we have not launched on any of the ABC affiliates. Dish [Sling TV’s parent company] has contracts with all of those affiliates, but there are still things that have to be worked out with the affiliates for Sling.

Right now, Sling TV is the only way outside of cable and satellite providers to get ESPN. ESPN is coming to Playstation Vue and probably to the new streaming service that AT&T is launching later this year. Will that remove a big competitive advantage that Sling has had for the last year?

Having ESPN exclusively has certainly be an advantage for us. We’ve been expecting competition and have frankly been a little bit surprised that it’s taken a while for that to happen. Our expectation is that competitors entering the market will create more awareness for the streaming segment of the market and grow it faster. We’re still in the very early stages of OTT streaming. Our expectation is that we’ll actually grow faster as other services come into the market.

AT&T was vague about the details, but it sounds like that top-tier streaming plan will be DirecTV’s top-tier satellite plan. Is that something that Sling TV, which is part of Dish Network, has been holding back from doing?

It has never been our strategy to replicate the big bundle of channels that’s available on Dish or DirecTV or on cable. We think that market is pretty well served by those companies. Our focus has been on developing bundles and packages for people who aren’t well-served by those plans. That doesn’t mean we won’t launch more channels — we will — but our plan has never been to launch every channel.

The easier thing to do from a business standpoint would have been to go to all of the programmers and say that we’re going to have all of the channels that we have on Dish and have them available in all of the same packages, but that’s not the market we’re after. The tougher thing is to get the programmers to give us more flexibility to package fewer channels.

If the programmers gave you the flexibility, would you want to be able to give customers something like a sushi menu and a pencil and tell customers to put a check beside the networks that they want?

We would also prefer to be able to give our customers more choices. If the programmers would let us sell channels individually like that, we would certainly do that. I don’t think that will happen.

If ESPN and other networks start coming out with freestanding, $10-a-month streaming apps, would that be a good thing or a bad thing for Sling?

It depends on the programmer. Programmers who have their channels in the base packages of pay-TV bundles would be taking a big risk to go a la carte. From a distributor’s standpoint, that means that it’s no longer must-have content for a base cable package. If you’re a programmer and you have a channel or a group of channels in 100 million pay-TV households, you would be making it easy for those pay-TV distributors to drop your channel because you’re making it available directly to consumers.

If more programmers launch freestanding channels, I think it will be defensive. It would be to capture the 1 percent of pay-TV subscribers who are cancelling their pay-TV service every year before they disappear forever.

I totally get that, but there’s no single network that is must-have for every single subscriber. Everyone has their own list. There’s certainly some overlap, but there’s not 100 percent overlap for every network. If one of those channels becomes available a la carte, it makes it easy for the distributor to decide that they no longer need to carry that channel. The distributor can save that license fee, and the customer can go and buy that channel directly.

That’s for channels in a basic package, but it’s a little different for someone like HBO. They’re not in the basic package and they’re not ad-supported, so the lower viewership wouldn’t affect them for ad revenue.

I’ve started wondering if there is some price sensitivity where people don’t want to pay $100 a month for cable but might pay $10 a month for the 10 cable channels and streaming services that they really want. Do you think your value proposition is as an aggregator and an interface or as a service that’s cheaper than the cost of the individual pieces?

We don’t think about it as being cheaper than the individual channels. We think about it as differentiation. The whole industry has big bundles that look a lot like each other, and that’s an opportunity for us to differentiate our service — partly because we don’t do that and partly because our business model is different. We don’t have big upfront costs to acquire a subscriber; we don’t have to spend money on trucks and satellite dishes.

Your model is a $20 plan with broad-interest channels like ESPN and CNN and $5 packages of add-ons like sports and children’s programming. Is that working?

Yes. It’s as close to a la carte as we can get. If you don’t have kids, you don’t have to pay for kids channels. If you really like sports, you can add additional sports channels. You can customize your package around the TV you want to watch.

As you add networks, where you do foresee that you’ll add them?

We want to keep the cost of our $20 package low. If we start putting more programming into that, we would be adding more cost to it. We’re very sensitive to that pricing.

What are your thoughts on Amazon Prime Video’s add-on packages of streaming networks?

I wouldn’t have any comment on that.

You’re carrying traditional cable networks but not OTT networks like Tribeca Shortlist or Hulu. Are there some of those OTT networks that you’d like to add?

You might see us do some of that. We do offer some content that isn’t traditional pay-TV programming. We have Maker Studios and Polaris+, so we’re blending traditional pay-TV with OTT services.

Does a Sling TV login get you onto the OTT apps that many of the cable networks have?

For WatchESPN yes, but not for the others. When we make deals with programmers, we try and get the content that’s available on their TV Everywhere apps. We try and have the content on Sling that you would access on that network’s own OTT app.

The NFL reserved the right in its new Thursday Night Football package with CBS and NBC to be able to contract separately with a streaming service. Would you expect to see more sports leagues making direct deals with streaming services in addition to their network contracts?

Some of them are already doing that like Major League Baseball. I think the NFL deal is mostly experimentation. It would be hard for a league to replace the revenue that they get from traditional pay-TV distribution by making it available only over the top. There may be a day in the future when that would be the case, but I think that’s a ways off.

I saw that someone was eager for Sling TV to bring out an Apple TV app that he faked some screen shots and sent them to MacRumors. Is that app coming soon?

I think you’ll see us continue to expand our device distribution throughout the year. We have not made any comment about an Apple TV app.

Scott Porch writes about the streaming-media industry for Decider. He is also a contributing writer for Signature and The Daily Beast. You can follow him on Twitter @ScottPorch.