The sports media landscape as we know it could be about to undergo a massive paradigm shift. According to CNBC’s David Faber, the sale of much of 21st Century Fox’s assets to Disney for $60 billion could be announced as soon as next week, and would include the Fox Sports regional sports networks (RSNs). Previously reported incarnations of the deal had indicated that Fox Sports properties would not have been included.
You cannot overstate how enormous this is for both companies. The RSNs, which distribute about half of the local MLB, NBA, and NHL rights in America, deliver a bulk of the profit to the broader Fox Sports division of the company, and have been a major factor in enabling their continued pursuit of national rights in the NFL, MLB, and college football.
There are, of course, a ton of questions, some of which we should have answers to soon, and some could take months or years. Can this all pass regulatory muster? Does this deal include Fox’s stakes in the Big Ten Network and YES Network? How will the existing local rights line up with ESPN’s ability to deliver them on their upcoming over-the-top streaming network? Is this a mechanism for Fox Sports to re-arm with cash to bid on future live rights, or is this the first step in a multi-pronged process to sell the rest of Fox Sports to someone else? Are the Murdochs just taking their chips off the table?
Without the RSNs, is it possible that Fox Sports — the aforementioned national rights deals, plus FS1 — largely amounts to having the issues ESPN did yesterday, but without the massive subscriber fees?
Sports Business Journal’s John Ourand reported that “[Rupert] Murdoch has not been high on the RSNs for several years. Same old media story: rights fees rising at a faster rate than affiliate revenue.”
Negotiating deals with all these local teams, who want equity in the networks and ever-rising rights fees, now becomes a headache for Disney/ESPN. Nevertheless, local sports are much more at the forefront of most individual fans’ consciousness than nationally televised games, and ESPN in one fell swoop has fortified its business there in over a dozen markets.
Disclosure: The Big Lead’s editor-in-chief Jason McIntyre is an on-air personality at FS1.
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