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Volume 26 No. 25
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Fox Does Not Intend To Buy RSNs Back From Disney

Fox officially pulled out of the running to buy back its RSNs from Disney, saying in an SEC filing that it “does not intend to bid” for any of the 22 channels that Disney is trying to sell. “Fox confirms that it does not intend to bid for any of the Fox regional sports networks that Disney (or any entity operating on its behalf) may sell as required by the consent decree with the U.S. Department of Justice,” the filing said. Fox has been seen as the most likely bidder for the RSN group, but sources cite several reasons that the Rupert Murdoch-owned company is staying out of the bidding process. First, without its 21st Century Fox entertainment assets, the new Fox is more focused on high growth businesses, and Fox execs see the RSN business as a slow-growth one, at best. Plus, Fox execs have been scared away, in part, by the sales process. They believe that Disney has overexposed the RSNs over the past several months by allowing too many entities to see the sales book -- including teams that negotiate rights deals and distributors that negotiate carriage deals, sources said. That means that many of the entities on the other side of the negotiating table will know the margins -- exactly to the dollar -- on the RSN deals in a way that they did not before, sources said. That will make negotiations tougher and increases the likelihood of slower growth than Fox had previously seen with the RSNs.

BLOW TO THE SALE PROCESS: The move to stay out of the bidding process represents another blow to the sales process, from which Disney is hoping to get around $20B. NBC and Charter, two companies that own several RSNs, have said that they will not bid on the RSNs. Sources said Sinclair has made a bid to buy all the RSNs, but it is not clear how high its bid goes. Big3 co-Founder Ice Cube has expressed interest in buying the RSNs and is considered by some as a credible bidder. Additionally, a handful of private equity firms, including Apollo Global Management and Blackstone Group, have showed interest. The second round of bidding is due by the end of the month, sources said. Regulators have said that Disney must sell the 22 RSNs within 90 days of the closing of its $71.3B acquisition of 21st Century Fox’ entertainment assets.

YANKS IN DRIVER'S SEAT FOR YES? A big question revolves around what happens to YES Network. The Yankees are considering buying back the RSN, and the team has been talking with Amazon, Sinclair and Gerry Cardinale’s RedBird Capital Investment firm about a possible deal. Yankees execs are said to be comfortable with Fox as the owner of its RSN. Now that Fox is out, it makes it more likely that the Yankees will buy back YES Network, sources said.