Fox Won't Bid to Reacquire Its Regional Sports Networks From Disney
12 January 2019 - 10:51AM
Dow Jones News
By Joe Flint and Miriam Gottfried
Walt Disney Co. lost a potential suitor for the 22 regional
sports networks it is selling as part of its purchase of the
majority of 21st Century Fox Inc. media assets, which could
complicate an already complex sale process.
Fox Corp., the company that will remain after the Disney deal
closes, won't make a bid to reacquire the sports networks,
according to a 21st Century Fox regulatory filing Friday. Disney,
the parent of sports-TV juggernaut ESPN, is required by the Justice
Department to sell the regional channels in return for approval of
the 21st Century Fox acquisition.
Given that Fox Corp.'s leadership has often said live sports
would play a large part in the new entity, industry analysts
anticipated the company would eventually make a play for the
networks.
Inside Fox, though, there was a growing sentiment that regional
sports networks -- a once-powerful business -- will face many
challenges in the era of cord-cutting and streaming services, an
executive at the company said.
The official withdrawal of Fox from the sales process could
actually encourage other potential buyers to become more
aggressive, some people familiar with the matter said.
Disney has up to six months from the close of the 21st Century
Fox deal -- which has yet to happen -- to unload the regional
sports networks. Final bids are expected by the end of the month, a
person close to the process said.
Guggenheim Securities valued the regional networks at $25
billion, but some potential bidders and industry observers say
these regional channels are more likely to fetch between $16
billion and $20 billion, depending on how they are packaged and
sold.
Among the channels being sold is the Yankee Entertainment and
Sports Network LLC, the New York City outlet that primarily carries
Yankee baseball and is considered the most valuable of the
properties. The Yankees own 20% of YES and have rights to acquire
the remaining 80%. Disney is seeking a valuation of between $5
billion and $6 billion for YES, people familiar with the matter
said.
The Yankees have held talks with Sinclair Broadcast Group and
Amazon.com Inc. about partnering on a bid for the channel, people
close to the situation said.
Sinclair is interested in buying the other 21 networks, a person
with knowledge of the company's thinking said. Sinclair is also in
talks to partner with the Chicago Cubs on a sports channel
there.
Private-equity firms have also expressed interest in the
networks. Blackstone Group LP has been discussing a potential bid
with Sinclair, and Apollo Global Management LLC has reached out to
Bob Bowman, who formerly ran Major League Baseball's digital-media
business, for advice on the industry. Mr. Bowman led MLB Advanced
Media for 17 years, building it into a powerhouse digital platform,
before being forced out in 2017 for inappropriate workplace
behavior, The Wall Street Journal reported.
Major League Baseball is interested in the channels as well, the
organization's Commissioner Rob Manfred said.
The removal of Fox makes it more likely that there won't be a
single buyer for all the networks.
"It does increase the possibility that these will be sold off
piecemeal, " said one consultant working with a suitor.
Write to Joe Flint at joe.flint@wsj.com and Miriam Gottfried at
Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
January 11, 2019 18:36 ET (23:36 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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