Walt Disney Co said on Friday it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair Broadcast Group Inc for US$9.6 billion, a deal that clears the way for its purchase of Twenty-First Century Fox Inc's film and television assets.

[BENGALURU] Walt Disney Co said on Friday it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair Broadcast Group Inc for US$9.6 billion, a deal that clears the way for its purchase of Twenty-First Century Fox Inc's film and television assets.

The deal will help Sinclair, the largest US broadcast station owner, add channels such as Fox Sports Detroit and Fox Sports Florida to its existing sports business that includes Marquee Sports Network and Ring of Honor Wrestling.

Shares of Sinclair, whose bid for Tribune Media Co collapsed last year following opposition from the Federal Communications Commission, were trading up 14.6 per cent at US$51.50 in after-hours trading.

Friday's deal excludes the New York Yankees team's regional sports network, Yes.

Sinclair plans to make the acquisition through a newly formed indirect subsidiary called Diamond Sports Group LLC.

The company said Byron Allen, CEO of Entertainment Studios, will serve as an equity and content partner in a newly formed indirect wholly-owned unit of Sinclair and an indirect parent of Diamond.

Disney, which closed the acquisition of Fox's film and television assets in March, had agreed to sell the networks as part of an agreement with the US Department of Justice (DoJ).

"The news could bring some closure to Disney's pending obligations regarding the consent decree, while the company continues to take steps to fortify ESPN amid a paradigm shift to direct-to-consumer offerings," CFRA analyst Tuna Amobi wrote after the Wall Street Journal first reported about the impending deal.

The assets are valued at US$10.6 billion, including minority equity interests.

The regional sports networks portfolio delivered a combined US$3.8 billion in revenue across 74 million subscribers in 2018, the companies said.

"The transaction is expected to be highly accretive to free cash flow and brings consolidated net leverage to 4.7x and 5.1x through the preferred financing," said Sinclair chief executive officer Chris Ripley.

Diamond or Disney may end the deal if it is not completed by February 2020, according to a filing.

Completion of the deal is subject to customary closing conditions, including the approval of the US DoJ.

Guggenheim Securities LLC, Deutsche Bank Securities Inc, RBC Capital Markets, Pursuit Advisors and Moelis & Co are Sinclair's financial advisers. </s> (Bloomberg) -- Sinclair Broadcast Group Inc. agreed to buy the Fox regional sports networks from Walt Disney Co., turning the local-TV company into a powerhouse in cable-sports broadcasting, the Wall Street Journal reported.

The deal is valued at more than $10 billion, the Journal said, citing unidentified people familiar with the matter. An agreement could be announced as early as Friday, the newspaper said.

Disney and Sinclair didn’t immediately respond to requests for comment.

For Disney, the transaction would fulfill a key condition for its already-completed acquisition of 21st Century Fox Inc.’s entertainment assets. Bidders for the sports networks included John Malone’s Liberty Media Corp., which teamed up with Major League Baseball, and Ice Cube’s Big3 U.S. basketball league. The entertainer lined up Will Smith, Serena Williams and Snoop Dogg as content partners for his unsuccessful bid.

Disney agreed to sell the properties to get clearance for its $71 billion Fox takeover, a transaction that closed earlier this year. Regulators were concerned that the company would have too much control over sports television if it owned both ESPN and the regional broadcasters. Disney had to sell the networks within 90 days of the Fox deal’s completion in mid-March.

The New York Yankees decided to buy back their network from the group, removing a crown jewel that’s valued at about $4 billion. And several deep-pocketed potential suitors, including Comcast Corp., Discovery Inc. and the new Fox Corp. itself, bowed out of contention for the remaining networks.

That hurt Disney’s ability to command top dollar. Analysts originally estimated that the collection could fetch $20 billion to $22 billion, but bids for the 21 properties -- not counting the Yankees’ channel -- were considerably lower.

Disney’s bankers suggested spinning off the networks to shareholders, rather than selling them. But the company remained committed to the auction.

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net;Anousha Sakoui in Los Angeles at asakoui@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III </s> Sinclair Broadcast Group Inc. agreed to buy 21 Fox regional sports networks from Walt Disney Co. for US$9.6 billion, turning the local-TV company into a cable-sports powerhouse.

Sinclair will acquire the business via a new subsidiary called Diamond Sports Group, the company said on Friday. Byron Allen, who founded Entertainment Studios and owns the Weather Channel, is investing in the business and will help supply content.

Disney agreed to sell the networks as part of its already-completed acquisition of 21st Century Fox Inc.’s entertainment assets. Bidders for the sports networks included John Malone’s Liberty Media Corp., which teamed up with Major League Baseball, and Ice Cube’s Big3 U.S. basketball league. The entertainer lined up Will Smith, Serena Williams and Snoop Dogg as content partners for his unsuccessful bid.

The transaction allowed Disney to get antitrust approval for its US$71 billion Fox takeover, a transaction that closed earlier this year. Regulators were concerned that the company would have too much control over sports television if it owned both ESPN and the regional broadcasters. Disney had to sell the networks within 90 days of the Fox deal’s completion in mid-March.

The New York Yankees decided to buy back their network from the group, removing a crown jewel that’s valued at about US$4 billion. And several deep-pocketed potential suitors, including Comcast Corp., Discovery Inc. and the new Fox Corp. itself, bowed out of contention for the remaining networks.

That hurt Disney’s ability to command top dollar. Analysts originally estimated that the collection could fetch US$20 billion to US$22 billion, but bids for the 21 properties -- not counting the Yankees’ channel -- were considerably lower.

Disney’s bankers suggested spinning off the networks to shareholders, rather than selling them. But the company remained committed to the auction.

Sinclair has been one of the broadcast industry’s most acquisitive companies for years, but this marks a new direction. It previously focused more on collecting local-TV stations, becoming the dominant company in that area.

More recently, its rivals have grown more formidable. Nexstar Media Group Inc. agreed to buy Tribune Media Co. for about US$4.1 billion in December, vaulting it past Sinclair as the largest owner of TV stations in the U.S.

The Fox sports networks give Sinclair a major foothold in cable TV, and the kind of live programming that appeals to advertisers. The channels serve cities such as Los Angeles, Atlanta and Detroit, with games from major pro leagues.

Sinclair already owns some other sports assets, including the Tennis Channel and the Ring of Honor wrestling circuit. </s> (Reuters) - Sinclair Broadcast Group Inc, the largest U.S. broadcast station owner, has reached a deal valued at more than $10 billion to buy 21 regional sports networks from Walt Disney Co, the Wall Street Journal reported on Thursday.

The deal, which would include sports channels in Los Angeles and Detroit, is expected to be announced as early as Friday, the newspaper said, citing people familiar with the matter.

Disney and Sinclair were not immediately available for comment.

Disney acquired the sports networks as part of its $71 billion acquisition of Twenty-First Century Fox Inc’s film and television assets.

The company agreed to sell the networks after the U.S. Justice Department said Disney, which owns cable sports network ESPN, must divest the Fox networks that provide sports programming for regional and local markets.

Disney closed the acquisition of Fox’s film and television assets in March, nearly a year after it won a bidding war against cable company Comcast Corp .

The potential deal for Disney’s sports networks would come after Tribune Media Co terminated the sale of 42 TV stations in 33 markets to Sinclair last year.

Other suitors for Disney’s channels included Liberty Media Corp and Big 3 Basketball LLC, whose management includes Jeff Kwatinetz and rapper and actor Ice Cube, according to the Wall Street Journal. </s> Sinclair Broadcast Group’s reported deal to buy regional sports networks from Walt Disney Co. for $10 billion would give the Hunt Valley broadcaster steady revenue and fit well with its moves into sports programming, a stock analyst said in a report Friday.

The deal has not been announced yet, though it’s the subject of a story in the Wall Street Journal that reported Thursday that the long rumored deal had been finalized, citing unnamed sources.

Late last month, Fox Business had reported that Sinclair was poised to buy the group of 21 Fox regional sports networks after emerging as the front-runner in an auction.

Tuna Amobi, equity analyst at CRFA Research, maintained a “strong buy” rating on both Sinclair’s and Disney’s stock after the reports.

“With regional footprints that traverse several major U.S. markets, the [sports networks] had been expected to fetch a much higher valuation, after a seemingly competitive months-long auction that attracted several other potential bidders,” Amobi said Friday. “We think the [networks] could provide another complementary backdrop for [Sinclair’s] recent forays into sports programming,” through both traditional and online channels.

Regional sports networks, which show local sports such as basketball and baseball, have been losing viewers as more pay-TV customers cut the cord, Amobi noted.

Still, “we see a relatively steady dual revenue stream (subscription and advertising) that could bode well for Sinclair's long-term return on investment,” he wrote.

Sinclair officials could not be reached for comment Friday.

The nation’s largest owner of local television stations also owns professional wrestling’s Ring of Honor and acquired the Tennis Channel in 2016. The broadcaster said in January it will launch a regional sports network with the Chicago Cubs.

Disney, which acquired 21st Century Fox’s entertainment business for $71 billion in March, needs to spin off the sports networks as a condition of securing U.S. antitrust approval for that deal. Disney had agreed to sell the sports networks within 90 days because it owns ESPN. (Fox is keeping Fox News, Fox Business, Fox Sports and the Fox TV network.) The networks include channels in Los Angeles and Detroit.

For Disney, which has been taking steps to strengthen ESPN, such a deal would bring closure to pending obligations under the consent decree for the Fox entertainment deal, the analyst said.

Fox Business had reported that other bidders in the auction for Disney’s sports networks included Liberty Media, led by cable magnate John Malone, and the Big3 Basketball league led by businessman and hip-hop legend Ice Cube. Major League Baseball is reportedly partnered with Liberty Media on its bid. And Ice Cube recently announced via Twitter that Magic Johnson joined his bid.

The Wall Street Journal also reported that Sinclair has a separate partnership with the New York Yankees to buy the YES Network, the team’s New York sports channel, from Fox for $3.45 billion. </s> Sinclair Broadcast Group said Friday it agreed to buy 21 regional sports television networks from Walt Disney Co. in a deal worth $10.6 billion.

The regional sports networks were part the assets of Rupert Murdoch's 21st Century Fox sold to Disney in a blockbuster $71 billion deal completed earlier this year.

Disney was required to sell off the sports broadcasters under an agreement with US antitrust regulators.

The sports operations include local rights to 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams. It had some $3.8 billion in revenue and 74 million subscribers in 2018.

Sinclair will merge the operations with its existing sports businesses including the Marquee Sports Network and Tennis Channel.

"This is a very exciting transaction for Sinclair to be able to acquire highly complementary assets," said Chris Ripley, Sinclair's president and chief executive.

"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 Fox deal ramped up Disney's operations in film and television and cemented its role as the leading Hollywood studio. It left Murdoch with a slimmed-down "new Fox" that includes the US broadcast network and Fox News Channel.

The largest US local television operator, Sinclair owns or providers services to some 191 stations. </s> Sinclair Broadcast Group said Friday that it had agreed to acquire 21 regional sports networks from Walt Disney Company in a deal worth $10.6 billion, giving the largest operator of local television stations in the United States a foothold in the cable industry with the rights to broadcast games of dozens of professional teams.

Disney was forced to sell the networks to receive antitrust approval for its $71.3 billion acquisition of most of Rupert Murdoch’s 21st Century Fox in a deal that closed in March. The Justice Department required the sale of the networks, which were part of Fox, because Disney, through its ownership of ESPN, already dominates the market for televised sports.

One of the 22 sports properties that Disney was required to sell, the YES Network, is being acquired by the New York Yankees and the e-commerce giant Amazon for about $3.5 billion, according to people familiar with the transaction. Sinclair also has a stake in that deal.

Disney is getting less for the sports networks than some analysts had expected. Last year, Guggenheim Securities estimated that, including the YES Network, the channels had a value of $22 billion. Regional sports networks have lost value in recent years as fewer people pay for television. </s> Disney has reached a deal to sell 21 Fox regional sports networks to Sinclair Broadcast Group for about $10 billion, according to a report by the Wall Street Journal.

The deal is expected to be unveiled on Friday, per the Journal. Reps for Disney and Sinclair did not immediately respond to requests for comment.

Disney has reached a separate agreement with the New York Yankees to sell its majority interest in the YES network, which carries Yankee games in the team’s hometown market, for about $3.5 billion. The team already owns the remainder of the channel. Amazon is a partner with Sinclair and the team in that transaction, according to industry sources.

Disney has been under pressure to find a buyer for the sports cablers that it inherited as part of its $71.3 billion purchase of 21st Century Fox. The sale of the channels was a condition of the Justice Department’s approval of the Fox transaction.

The initial forecasts for the RSN sale values the entire group including YES at $19 billion-$20 billion. But the limited number of players in the auction underscored the concerns about the pay-TV market and the value of channels dependent on licensing high-priced sports programming from local teams.

Sinclair’s muscle in local TV markets as the owner of about 170 TV stations nationwide makes it well suited to extract value from the RSNs by using its leverage for carriage deals with MVPDs. </s> Sinclair is buying 21 regional sports networks from Disney in a $10 billion deal that marks the final major detail of Disney’s massive Fox purchase, according to The Wall Street Journal.

It’s the latest move for Sinclair in regional programming, which is an area that the company already has vast control over. (The Federal Communications Commission actually blocked a merger between Sinclair and the Tribune Media Company last year due to concerns about Sinclair’s reach.)

The 21 sports networks in question were part of Disney’s purchase of Fox and its assets in the blockbuster deal that closed earlier this year. But because of Disney’s already heavy presence in sports (mostly through ESPN and its various networks), Disney was required by regulators to divest those regional sports networks in order to get approval for the deal to go through.

Now that the deal is worked out, everything seems to have been wrapped up nicely for Disney’s purchase of Fox. All that’s left is to see how these changes will impact the rest of the entertainment industry, and those effects may take years to fully be seen.
Sinclair Broadcast Group buys Fox Sports Networks (FSN) from The Walt Disney Company for $10.6 billion. Disney was ordered by the U.S. Justice Department to sell FSN as part of its purchase of 21st Century Fox last year due antitrust concerns over its ownership of ESPN Inc.