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Disney’s Plans for Selling Fox’s Regional Sports Networks

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Disney to sell Fox’s regional sports networks

Walt Disney (DIS) recently agreed to divest 21st Century Fox’s (FOXA) regional sports networks. This move would allow Disney to receive regulatory approval from the United States Department of Justice (or DoJ), which would allow it to acquire Fox’s media and entertainment assets for $71.3 billion. The DoJ stated that Disney would be required to divest Fox’s sports networks in 90 days from the closing of the Fox deal.

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Bidders for Fox’s regional sports network

Fox’s regional sports networks include New York’s YES Network and Fox Sports West in Los Angeles, which have about 61.0 million subscribers. These networks are valued at ~$19.0 billion, according to research by MoffettNathanson. 

However, the regional sports networks, which were once very profitable, have been witnessing a decline in recent years due to the cord-cutting phenomenon. Viewers are shifting from traditional pay-TV packages to smaller bundles at lower price points.

According to industry sources, Fox is reportedly not interested in taking back the regional sports networks. So, Disney is looking for a third-party buyer for Fox’s local sports networks rather than reaching an agreement with Fox to retain its regional sports networks. 

Industry sources note that potential buyers could include John Malone’s Liberty Media Corporation or cable operators such as Charter Communications and Altice USA. Digital giants Facebook (FB) and Amazon (AMZN) are included in this group, as they are spending billions of dollars to secure a position in the sports programming space.

Investments in live sports streaming

Technology and media companies are increasingly looking to acquire live sports content. Alphabet’s (GOOGL) YouTube recently inked a streaming deal with MLB. Twitter and Univision Sports recently partnered with Major League Soccer to stream 24 matches in 2018.

According to a Cisco Systems (CSCO) VNI (visual networking index) report, global mobile data traffic has risen 63.0% since 2016. This traffic is expected to increase sevenfold by 2021 to ~49.0 exabytes per month, as can be seen in the chart above.

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