The bids are in for RSN sale
Fox Sports and NBC Sports — two of the companies that were considered the most likely bidders for all or part of the 22 Fox Sports regional sports networks being sold — did not submit bids last week when they were due.
Speculation over the past several months was that NBC Sports would pick off the RSNs in markets where it is the dominant cable operator — places like Atlanta, Detroit and Miami — and Fox Sports would look to buy back the RSNs at a discount. But the lack of bids to Allen & Co., who is handling the sale along with JPMorgan Chase & Co., threw cold water on both of those scenarios.
Mark Lazarus, NBC Broadcasting and Sports chairman, went so far as to say that Comcast is not in line to buy any of the Fox RSNs. It was notable that Comcast did not even sign a non-disclosure agreement last month that would have given it access to the bid book for the RSNs.
“The government’s not going to let us buy any more where we are heavy in cable — we’ve already been informed of that,” Lazarus said during a recent Fairfield County Sports Commission event in Stamford, Conn. “We can’t buy any of those assets that Disney is going to try to dispose of.”
Fox Sports, which continues to operate the RSNs throughout the sales process, still could put forth a bid as that process develops, but it is far from certain that Fox will engage. A deal could close as early as the first quarter of next year.
That marks an incredible turnaround from last year, when Fox Sports executives were disappointed to learn that, because of arcane tax rules, the RSNs were included as part of Disney’s $71.3 billion acquisition of 21st Century Fox’s entertainment assets. After all, the RSN group was among the most profitable part of Fox Sports’ business.
Since then, Fox has embarked on a slimmed down broadcast-centric strategy that emphasizes national deals for its “New Fox” broadcast channel, plus FS1 and FS2 cable channels.
“We really ran the regional business and the national business pretty separately,” Eric Shanks, Fox Sports president, COO and executive producer, said at a recent Bank of America conference. “On the buy side, we didn’t buy rights together.”
At deadline last week, it was difficult to determine exactly who bid for the RSNs, with everyone from Sinclair to former rap star Ice Cube showing interest over the past several weeks. The biggest question is whether the RSNs would be sold off as one big group or individually.
Importantly, the sale of Fox’s RSNs to Disney triggered a clause in YES Network’s contract that would allow the Yankees to take back ownership of the RSN. Sources said the team already has been in contact with companies interested in investing in the RSN. Sources with knowledge of those talks said all signs point to the Yankees actually taking back ownership of the RSN, which means that the country’s biggest RSN likely will not be part of the final Fox package being sold.
Interestingly, that contractual clause would have been triggered if Fox sold YES Network to one of three companies: Disney, Comcast or a company led by one of the Dolans, who operate another RSN in the New York market, MSG Network.
The level of uncertainty about how the Fox RSNs will be sold has seeped down to the team level. RSN deals are critical to a team’s business model, so not knowing who their final partner will be in that space or what the budgets will be like is unsettling, one team executive said.