SBGI Sinclair Inc

Acquisition of 21 networks for more than $10 billion is part of deal with Fox

By Joe Flint 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 3, 2019).

TV-station giant Sinclair Broadcast Group Inc. has struck a deal valued at more than $10 billion to acquire 21 regional sports networks from Walt Disney Co., according to people familiar with the matter.

The agreement is expected to be announced as early as Friday, the people said.

For Sinclair, which already is the nation's biggest owner of local television stations, the acquisition would instantly make it a force in cable programming. Among the properties it is acquiring are sports channels in Los Angeles and Detroit.

Disney acquired the sports networks as part of its purchase of entertainment assets of 21st Century Fox and agreed to sell them to pave the way for government approval of the deal.

"Sinclair got a great deal and should be able to cut costs and leverage the RSN's and their stations together effectively" with distributors and advertisers, said Patrick Crakes, a sports media consultant.

Sinclair Broadcast has separately partnered with the New York Yankees to acquire the YES Network, another of the networks once controlled by Fox, in a deal valued at $3.45 billion, people close to that deal said. That sale, which hasn't been finalized, also includes Amazon.com Inc. as a partner.

The price tag for the regional sports networks is less than some industry observers initially anticipated.

When Disney began preparing to sell the networks, the price tag likely bidders and industry analysts forecast was between $16 billion and $20 billion.

Regional sports networks carry popular local sports, primarily basketball and baseball. They typically are among the most expensive channels for distributors and customers. As more pay-TV customers have cut the cord, regional sports networks have suffered the same audience erosion as the rest of the television business. Younger viewers, in particular, now seek out sports content online, where highlights are ubiquitous.

Pay-TV distributors also have become more willing to drop regional sports networks rather than pay high prices to carry them.

In Los Angeles, AT&T Inc. has never carried the Los Angeles Dodgers baseball network that was launched several years ago.

Comcast Corp. didn't carry the YES Network for all of the 2016 season because of a fight over rates.

Still, Sinclair sees value in local sports programming as it seeks to increase its content holdings.

The company already owns the Tennis Channel and is launching its own regional sports channel in Chicago in partnership with the Chicago Cubs.

For Sinclair, the deal represents a big win after its efforts to buy Tribune Media Co. last year were thwarted by the Federal Communications Commission.

Fox Business reported last month that Sinclair and Disney had a "handshake agreement" for the networks that had yet to be finalized.

Other suitors for the regional sports networks included Liberty Media Corp. and Big 3 Basketball LLC, whose management includes entertainment executive Jeff Kwatinetz and rapper and actor Ice Cube.

Write to Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

May 03, 2019 02:47 ET (06:47 GMT)

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