Disney will sell regional Fox sports networks in Sinclair for $ 9.6 billion

(Reuters) – Walt Disney (NYSE: Co) announced Friday that it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair Broadcast Group Inc. for $ 9.6 billion, an agreement that paves the way for its acquisition of the film and Twenty-First Century Fox TV's television trumps.

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

Sinclair shares, whose bid for Tribune Media Co collapsed last year following opposition from the Federal Communications Commission, rose 14.6% to $ 51.50 after the offices.

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

Sinclair plans to proceed with the acquisition through its new indirect subsidiary, Diamond Sports Group LLC.

The company said Byron Allen, CEO of Entertainment Studios, would be equity and content partner in a new indirect unit owned 100% by Sinclair and an indirect parent company Diamond.

Disney, which finalized 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.

"The news could put an end to Disney's pending obligations regarding the consent decree, as the company continues to take steps to strengthen ESPN as part of a paradigm shift towards a direct offer to consumers" , writes Tuna Amobi, CFRA analyst, after the Wall Street Journal reported about the impending agreement.

Assets are valued at $ 10.6 billion, including minority interests.

The regional sports network portfolio generated combined revenues of $ 3.8 billion from 74 million subscribers in 2018, the two companies announced.

"The transaction is expected to have a highly accretive effect on free cash flow and bring consolidated net leverage to 4.7 and 5.1 times thanks to preferred financing," said Chris Ripley, CEO of Sinclair.

Diamond or Disney may end the transaction if they are not completed by February 2020, according to a ranking.

The closing of the transaction is subject to customary closing conditions, including the approval of the US DoJ.

Guggenheim Securities LLC, German Bank (DE 🙂 Securities Inc., RBC Capital Markets, Pursuit Advisors and Moelis & Co are Sinclair's financial advisors.