Sinclair signs agreement with Disney's regional sports networks, Byron Allen and his new partner – Variety

Disney has finalized the sale of 21 Fox regional broadcast networks to Sinclair Broadcast Group as part of a $ 10.6 billion transaction. Byron Allen, the Entertainment Studios entrepreneur, has partnered with Sinclair as a partner of the new Diamond Holding Group.

The agreement covers outlets serving the main markets of the country. RSNs have local rights to 42 professional teams, including 14 major baseball teams, NBA teams and 12 NHL teams. Last year, the 21 channels generated revenues of $ 3.8 billion from 74 million subscribers.

"It's a very exciting transaction for Sinclair to be able to acquire very complementary badets," said Chris Ripley, president and CEO of Sinclair. "While consumer buying habits have changed, the tradition of watching sports and live news remains embedded in our culture. As one of the country's leading local news producers and an experienced producer of sports content, we are ideally placed to transfer our skills to offer and extend our attention to superior sports programming. "

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The agreement, which still requires regulatory approval, promises to give Sinclair, based in Baltimore, a new level of activity on the cable side. The company has continued to strengthen its sporting strengths, including the Marquee Sports Network company with the Chicago Cubs, the Tennis TV channel, the stadium, the Ring of Honor Wrestling and sports programming for high schools. broadcast on more than 170 television stations.

For Disney, the sale respects last year's commitment to the Department of Justice to divest Fox's RSNs in exchange for the approval of 21st Century Fox's purchase of $ 71.3 billion dollars, concluded in March. According to estimates, Sinclair pays for 21 of Fox's 22 RSNs, which is lower than the channels badessed in the broader agreement between Disney and 21st Century Fox. But Disney had 90 days to break the chains. The sales process began last fall, but the final list of bidders was short.

It is believed that Disney is still finalizing the terms of the sale of its majority stake in the YES network, which carries the New York Yankees' games to the local team's market, to the team (which already holds the remaining participation) and Sinclair. Amazon would also be a partner in the YES transaction.

"We are pleased to have reached this agreement with Sinclair for the sale of these 21 RSNs, subject to the conditions set out in the consent decree of the US Department of Justice," said Christine McCarthy, Executive Vice President and Chief Financial Officer. of Disney.

Allen will become a "Capital and Content Partner" in the Diamond Holdings Project. Allen has also expanded its cable portfolio in recent years from niche outlets launched by Entertainment Studios to include Weather Channel. Sinclair said Diamond Holdings would receive a $ 1.4 billion cash flow from Sinclair's combination of cash and debt, which the company said was already "fully committed". An unrevealed source of private equity will add $ 1 billion to the purchase price. the remaining $ 8.2 billion comes from the debt contracted by Diamond Holdings.

Sinclair adds to his considerable debt by taking over the RSNs. But given the circumstances in which Disney was confronted, Sinclair probably calculated that it was a chance to grab the chains at a great price.

"This acquisition is an extraordinary opportunity to diversify Sinclair's content sources and revenue streams with high-quality badets generating live visualization," said Ripley.
"We also see an opportunity to achieve cross-promotional collaboration and synergistic benefits in programming and production."

Sinclair's reputation for negotiating with the MVPDs on retransmission agreements with their television stations has made the company an outcast in the cable industry. ACA Connects, the professional organization of small cable companies, was quick to voice its opposition to the sale on Friday.

"If approved, the deal would allow Sinclair to raise prices from millions of consumers, including those served by ACA Connects members," the organization said. "Big 4 network programming and RSN programming are both essential for ACA Connect members. By jointly trading these badets when serving the same market, Sinclair can increase the prices of the cable companies for both offers. "

Sinclair's deal with Disney for RSN comes almost two years after the day Sinclair reached an agreement to purchase Tribune Media. However, this transaction was overruled by opposition from regulators and the fact that the 42 Tribune stations, many of which are in large markets, would leave too much power for Sinclair in dozens of markets. local television.

The RSNs that are going to change hands are: Fox Sports Arizona, Fox Sports Detroit, Fox Sports Florida, Fox Sports Sun, Fox Sports North, Fox Sports Wisconsin, Fox Sports Ohio, SportsTime Ohio, Fox Sports South, Fox Sports Carolina, Fox Sports Tennessee, Fox Sports Southeast, Fox Sports Southwest, Fox Sports Oklahoma, Fox Sports New Orleans, Fox Sports Midwest, Fox Sports Kansas City, Fox Sports Indiana, Fox Sports San Diego, Fox Sports West and Prime Ticket Los Angeles.