BALTIMORE and BURBANK, Cailf.,
May 3, 2019 /PRNewswire/
-- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) ("Sinclair"
or the "Company") and The Walt Disney Company (NYSE: DIS)
("Disney") today announced that they have entered into a definitive
agreement under which Sinclair will acquire the equity interests in
21 Regional Sports Networks (the "RSNs") and Fox College Sports, which were acquired by Disney
in its acquisition of Twenty-First Century Fox, Inc. ("21st Century
Fox"). The transaction ascribes a total enterprise value to the
RSNs equal to $10.6 billion,
reflecting a purchase price of $9.6
billion, after adjusting for minority equity
interests. Completion of the transaction is subject to
customary closing conditions, including the approval of the U.S.
Department of Justice.
The RSN portfolio, which excludes the YES Network, is the
largest collection of RSNs in the marketplace today, with an
extensive footprint that includes exclusive local rights to 42
professional teams consisting of 14 Major League Baseball (MLB)
teams, 16 National Basketball Association (NBA) teams, and 12
National Hockey League (NHL) teams. In calendar year 2018, the RSN
portfolio delivered a combined $3.8
billion in revenue across 74 million
subscribers.
The RSNs will be acquired via a newly formed indirect
wholly-owned subsidiary of Sinclair, Diamond Sports Group LLC
("Diamond"). Byron Allen has
agreed to become an equity and content partner in a newly formed
indirect wholly-owned subsidiary of Sinclair and an indirect parent
of Diamond ("RSN Holding Company"). Mr. Allen, who bought The
Weather Channel in 2018, is the Founder, Chairman, and Chief
Executive Officer of Entertainment Studios, a global media, content
and technology company.
Sinclair's existing sports business consists of Marquee Sports
Network (a recently announced joint venture with the iconic Chicago
Cubs), Tennis Channel and Tennis Media Company (dedicated to live
tennis events and tennis lifestyle), Stadium (a joint venture
focused on college sports and professional highlights), Ring of
Honor Wrestling (professional wrestling), and robust high school
sports programming (with Friday Night Rivals and Thursday Night
Lights).
"This is a very exciting transaction for Sinclair to be able to
acquire highly complementary assets," commented Chris Ripley, President and CEO of Sinclair.
"While consumer viewing habits have shifted, the tradition of
watching live sports and news remains ingrained in our culture. As
one of the largest local news producers in the country and an
experienced producer of sports content, we are ideally positioned
to transfer our skills to deliver and expand our focus on greater
premium sports programming."
Mr. Ripley continued, "The transaction
is expected to be highly accretive to free cash flow and brings
consolidated net leverage to 4.7x and 5.1x through the preferred
financing. This acquisition is an extraordinary opportunity
to diversify Sinclair's content sources and revenue streams with
high-quality assets that are driving live viewing. We also see this
as an opportunity to realize cross-promotional collaboration, and
synergistic benefits related to programming and production."
"We are pleased to have reached this agreement with Sinclair for
the sale of these 21 RSNs, subject to the conditions of the consent
decree with the U.S. Department of Justice," said Christine McCarthy, Senior Executive Vice
President and Chief Financial Officer, The Walt Disney Company.
Last year, Disney and 21st Century Fox entered into a consent
decree with the U.S. Department of Justice that allowed Disney's
acquisition of 21st Century Fox to proceed while requiring the
subsequent sale of the RSNs. Sinclair's purchase does not include
21st Century Fox's equity interest in the YES Network, the
disposition of which is also required as part of the consent
decree. Disney completed its $71
billion acquisition of 21st Century Fox in March.
The RSNs to be acquired by Sinclair 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.
Also included in the acquisition is Fox
College Sports.
Sinclair expects to capitalize Diamond with
$1.4 billion in cash
equity, comprised of a combination
of approximately $0.7
billion of cash on hand and a contribution of
$0.7 billion in the form
of new fully committed debt at
Sinclair Television Group, Inc. In addition, the
purchase price will be funded with $1.0 billion of fully
committed privately-placed preferred equity of a
newly-formed indirect wholly-owned subsidiary of Sinclair and
direct parent of RSN Holding Company. The remainder of
the purchase price is being funded by $8.2
billion of fully committed secured and unsecured
debt incurred by Diamond. The transaction will be treated
as an asset sale for tax purposes, with Sinclair receiving a full
step-up in basis.
The transaction has been unanimously approved by the Board of
Directors of both Sinclair and Disney.
Advisors:
Guggenheim Securities, LLC, Deutsche
Bank Securities Inc., RBC Capital Markets, Pursuit Advisors,
and Moelis & Company are acting as Sinclair's financial
advisors. Fried, Frank, Harris, Shriver & Jacobson LLP,
Pillsbury Winthrop Shaw Pittman LLP, Latham & Watkins LLP and
Thomas & Libowitz P.A. are acting as legal advisors to Sinclair
in connection with this transaction.
Allen & Company LLC and J.P. Morgan are acting as Disney's
financial advisors. Cravath, Swaine & Moore LLP and Covington
& Burling LLP are acting as legal advisors to Disney in
connection with this transaction.
Financing:
JPMorgan Chase Bank, N.A., Deutsche Bank AG New York Branch,
Deutsche Bank Securities Inc., Royal Bank of Canada, and Bank of America N.A. and Merrill
Lynch, Pierce, Fenner & Smith Inc. are providing committed debt
financing. Committed preferred equity financing will be provided by
JPMorgan Chase Funding, Inc.
Investor Call:
The senior management of Sinclair
intends to hold a conference call to discuss the RSN acquisition on
May 6, 2019 at 9:00 a.m. ET. The call will be webcast live
and a slide presentation will be available during the call and can
be accessed at www.sbgi.net under "Investors/Webcasts." After
the call, an audio replay will remain available at
www.sbgi.net. The press and the public will be welcome on the
call in a listen-only mode. The dial-in number is (844)
602-0380.
About Sinclair Broadcast Group, Inc.:
Sinclair is one
of the largest and most diversified television broadcasting
companies in the country. The Company owns, operates and/or
provides services to 191 television stations in 89 markets.
Sinclair is a leading local news provider in the country and is
dedicated to impactful journalism with a local focus. The Company
has multiple national networks, live local sports production, as
well as stations affiliated with all the major networks. Sinclair's
content is delivered via multiple-platforms, including
over-the-air, multi-channel video program distributors, and digital
platforms. The Company regularly uses its website as a key source
of Company information which can be accessed at www.sbgi.net.
About The Walt Disney Company
The Walt Disney
Company, together with its subsidiaries, is a diversified worldwide
entertainment company with operations in four business segments:
Media Networks; Studio Entertainment; Parks, Experiences and
Products; and Direct-to-Consumer and International. Disney is a Dow
30 company and had annual revenues of $59.4
billion in its Fiscal Year 2018.
About Entertainment Studios/Allen Media
Chairman and
CEO Byron Allen founded
Entertainment Studios, one of the largest independent media
companies, in 1993. The Entertainment Studios portfolio includes
nine television networks serving nearly 150 million subscribers:
THE WEATHER CHANNEL, THE WEATHER CHANNEL EN ESPAÑOL, PETS.TV,
COMEDY.TV, RECIPE.TV, CARS.TV, ES.TV, MYDESTINATION.TV, and JUSTICE
CENTRAL.TV, as well as the LOCAL NOW streaming service. The company
also owns Entertainment Studios Motion Pictures -- one of the
world's leading independent movie finance and theatrical
distribution companies.
Forward-Looking Statements:
Certain statements
and information in this communication may be deemed to be
"forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may include, but are not limited to, statements relating
to Disney's and Sinclair's objectives, plans and strategies, and
all statements (other than statements of historical facts) that
address activities, events or developments that Disney and Sinclair
intend, expect, project, believe or anticipate will or may occur in
the future. These statements are often characterized by terminology
such as "believe," "hope," "may," "anticipate," "should," "intend,"
"plan," "will," "expect," "estimate," "project," "positioned,"
"strategy" and similar expressions, and are based on assumptions
and assessments made by Disney and Sinclair's management in light
of their experience and their perception of historical trends,
current conditions, expected future developments, and other factors
they believe to be appropriate. Any forward-looking statements in
this communication are made as of the date hereof, and Disney and
Sinclair undertake no duty to update or revise any such statements,
whether as a result of new information, future events or otherwise.
Forward-looking statements are not guarantees of future
performance. Whether actual results will conform to expectations
and predictions is subject to known and unknown risks and
uncertainties, including: general economic, market, or business
conditions; risks associated with the ability to consummate the RSN
acquisition and the timing of the closing thereof; the risk that a
regulatory approval that may be required for the proposed
transaction is delayed, is not obtained or is obtained subject to
conditions that are not anticipated; pricing fluctuations in local
and national advertising; future regulatory actions and conditions
in the television stations' operating areas; competition from
others in the broadcast television markets; volatility in
programming costs; the ability to successfully integrate the RSN
operations and employees; the ability to realize anticipated
benefits of the RSN acquisition; the potential impact of
announcement of the RSN acquisition or consummation of the
transaction on relationships, including with employees, customers
and competitors; and other circumstances beyond Disney's and
Sinclair's control. Refer to the section entitled "Risk Factors" in
Disney's, 21st Century Fox's and Sinclair's annual and quarterly
reports filed with the SEC for a discussion of important factors
that could cause actual results, developments and business
decisions to differ materially from forward-looking statements.
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SOURCE Sinclair Broadcast Group, Inc.