It is one of the more compelling lingering questions in Disney’s $71.3 billion acquisition of 21st Century Fox’s entertainment assets: Who will get Fox’s 22 regional sports networks?
When the U.S. Department of Justice granted provisional approval of the deal in June, it also gave the condition that Disney must sell off the Fox RSNs within 90 days of the deal closing. Disney accepted the condition.
And on Disney’s Q3 2018 earnings call on Tuesday, CEO Bob Iger said that Disney won’t have any trouble finding a buyer for the sports channels.
In response to an analyst’s question about the RSNs, Iger said: “The RSNs will be sold, and the process of selling them is actually already beginning. Conversations are starting, interest is being expressed. And it’s likely that we’ll negotiate a deal to sell them but the deal will not be fully executed or close until after the overall deal for 21st Century Fox closes.”
Iger also said that Disney “assumed the responsibility of divestiture” back in December 2017 when it first made an offer to Fox, “if the regulatory process demanded that we do that.” There was never a possibility Fox would keep the networks or buy them back.
Fox’s 22 regional sports networks are spread across the country, concentrated in the Midwest, and include channels like Fox Sports Kansas City, Fox Sports Oklahoma, SportsTime Ohio, and Fox Sports Midwest. They have the rights to 44 pro teams across MLB, NBA, and NHL (though no NFL).
Guggenheim Securities has valued the RSN portfolio at $25 billion.
The best-known of the portfolio is YES Network, a joint venture of Fox and the New York Yankees. Experts believe it is quite possible that YES goes a different route than the rest of the RSNs.
So, who might be expressing the “interest” Iger claims Disney is getting?
Here are some possibilities: Comcast (the RSNs might be a consolation prize after losing the bidding war for Fox’s assets); Discovery Communications (which just acquired Scripps Networks); AT&T (which is about to be flush with TV content if its acquisition of Time Warner goes through); Verizon (parent company of Yahoo Finance); or Charter Communications (former boardmember John Malone told the Wall Street Journal in June that Charter is interested in RSNs).
An online-only player like Amazon or Google could make a play (Amazon Prime and YouTube TV are both buying up sports streaming rights). Or a private equity group could buy the portfolio.
Sports media watchers will be waiting with bated breath. If Iger is to be believed, selling off the RSNs as soon as Disney officially acquires them won’t be a challenge.