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Byron Allen Joins As Partner In New Sinclair Purchase Of Disney-Regional Sports Networks

Comedy News

Disney has finalized its deal to sell 21 Fox regional sports networks to Sinclair Broadcast Group in a transaction valued at $10.6 billion. Byron Allen, the entrepreneur behind Entertainment Studios, has teamed with Sinclair as an equity partner in the newly formed Diamond Holding Group.

The agreement covers outlets serving major markets around the country. The RSNs have local rights to 42 professional teams, including 14 Major League Baseball teams, NBA teams and 12 NHL teams. Last year, the 21 channels delivered $3.8 billion in revenue across 74 million subscribers.

“This is a very exciting transaction for Sinclair to be able to acquire highly complementary assets,” said Chris Ripley, president- CEO of Sinclair. “While consumer viewing habits have shifted, the tradition of watching live sports and news remains ingrained in our culture. As one of the largest local news producers in the country and an experienced producer of sports content, we are ideally positioned to transfer our skills to deliver and expand our focus on greater premium sports programming.”

The deal, which still requires regulatory approval, promises to vault Baltimore-based Sinclair to a new level of activity on the cable side. The company has been steadily building up its sports assets which at present include the Marquee Sports Network venture with the Chicago Cubs, the Tennis Channel, Stadium, Ring of Honor Wrestling and high school sports programming that airs on its 170-plus TV stations.

For Disney, the sale fulfills a commitment made last year to the Justice Department to divest the Fox RSNs in exchange for receiving approval of the $71.3 billion purchase of 21st Century Fox, which closed in March. The pricetag Sinclair is paying for 21 of Fox’s 22 RSNs is believed to be less than the channels were valued in the larger Disney-21st Century Fox deal. But Disney had a 90-day deadline to divest the channels. It began the sale process last fall but the final list of bidders was short.

Disney is believed to still be finalizing the terms of the sale of its majority interest in the YES Network, which carries New York Yankee games in the team’s hometown market, to the team (which already owns the remaining stake) and Sinclair. Amazon is said to also be a partner in the YES transaction.

“We are pleased to have reached this agreement with Sinclair for the sale of these 21 RSNs, subject to the conditions of the consent decree with the U.S. Department of Justice,” said Christine McCarthy, Disney’s senior exec VP and CFO.

Allen will become an “equity and content partner” in the Diamond Holdings venture. Allen has also expanded his cable holdings in recent years from the niche outlets launched by Entertainment Studios to include the Weather Channel. Sinclair said Diamond Holdings will be given a $1.4 billion cash influx for operations from a combination of cash on hand and Sinclair debt that the company said was already “fully committed.” An undisclosed source of private equity will add $1 billion to the purchase price with the remaining $8.2 billion coming from debt taken on by Diamond Holdings.

Sinclair is adding to its considerable debt load in taking on the RSNs. But given the circumstances that Disney faced, Sinclair likely calculated that it was a chance to grab the channels at a bargain price.

“This acquisition is an extraordinary opportunity to diversify Sinclair’s content sources and revenue streams with high-quality assets that are driving live viewing,” Ripley said.
“We also see this as an opportunity to realize cross-promotional collaboration, and synergistic benefits related to programming and production.”

Sinclair’s reputation for driving hard bargains with MVPDs on retransmission consent deals for its TV stations has made the company a pariah in the cable industry. ACA Connects, the trade organization for small cable operators, was quick to voice its opposition to the sale on Friday.

“If approved, the transaction would allow Sinclair to raise prices to millions of consumers, including those served by ACA Connects members,” the org stated. “Big 4 broadcast network programming and RSN programming are both critical for ACA Connects members. By jointly negotiating these assets when they serve the same market, Sinclair can raise prices to cable operators for both offerings.”

Sinclair’s pact with Disney for the RSNs comes nearly two years to the day that Sinclair reached a deal to buy Tribune Media. But that transaction was scuttled by regulatory opposition and concerns that Tribune’s 42 stations, many of them in large markets, would give Sinclair too much sway over dozens of local TV markets.

The RSNs set to change hands are: Fox Sports Arizona, Fox Sports Detroit, Fox Sports Florida, Fox Sports Sun, Fox Sports North, Fox Sports Wisconsin, Fox Sports Ohio, SportsTime Ohio, Fox Sports South, Fox Sports Carolina, Fox Sports Tennessee, Fox Sports Southeast, Fox Sports Southwest, Fox Sports Oklahoma, Fox Sports New Orleans, Fox Sports Midwest, Fox Sports Kansas City, Fox Sports Indiana, Fox Sports San Diego, Fox Sports West and Los Angeles’ Prime Ticket.

Source: Variety

 

 

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