By Jonathan Copping, Lawyer, Stone King, London, UK
American telecommunications conglomerate, Sinclair Broadcast Group (Sinclair) has agreed to purchase 21 sports networks from Disney in a deal worth US$10.6 billion.
The deal will fulfil one of the key conditions for Disney’s acquisition of the entertainment assets of 21st Century Fox Inc (Fox) for US$71 billion.
The regulators were concerned that Disney would own too much sports television in the US if it retained ownership of both ESPN and the 21 sports networks. As such, the regulators required that Disney sell the networks within 90 days of completing the acquisition of Fox.
In a blow to Disney, New York Yankees decided to buy back its own network from the group, hampering the potential sale price. The New York Yankees network is valued at roughly US$4billion and is being jointly purchased by the New York Yankees with Amazon.
Including the New York Yankees’ network, it was anticipated that the Disney would receive in the region of $22 billion, so it is likely to be highly disappointing to Disney that it is going to receive less – slightly more than half the anticipated amount.
The purchase of the 21 Disney sports regional networks by Sinclair is believed to have been financed by borrowing $8.2 billion, although the acquisition is believed to have been completed by a subsidiary of Sinclair, meaning that the debt would remain off the Sinclair balance sheet.
The Sinclair acquisition will strengthen its position in the regional television networks’ market. At present, Sinclair owns nearly 200 regional television networks and, last year, made a bid to buy Tribune Media for $3.9 billion with a view to potentially challenging Fox News in the same market.
Traditionally, Sinclair has been known as a broadcaster; however, with the purchase of the sports networks, Sinclair can now tap into the pay for sports television market and follows its 2016 acquisition of the Tennis Channel for $350 million.
This all goes to confirm the well-known saying that ‘Sport and TV are a marriage made in Heaven!’
Jonathan Copping may be contacted by e-mail at ‘JonathanCopping@stoneking.co.uk’