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Could MLB Buy Fox’s Regional Sports Business?

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Dec. 3 2018, Updated 7:32 a.m. ET

MLB’s interest in Fox’s local sports channel

Major League Baseball (or MLB) is seeking to buy 21st Century Fox’s (FOXA) regional sports networks. Walt Disney (DIS) is looking for a suitable buyer for Fox’s local sports networks (or RSN) to close its acquisition deal with Fox, as part of the US regulatory condition. Apart from MLB, tech giants including AT&T (T), Comcast (CMCSA), Verizon (VZ), and Amazon are looking to buy RSNs. According to last month’s reports, Fox might also consider buying back the 22 RSNs.

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Why MLB?

Reportedly, MLB has experience with negotiating broadcast rights packages and has also proved itself in offering streaming options for its fans. Through its MLB.tv, MLB became the first league to start broadcasting all its games live online.

Since MLB already owns the digital rights to the NHL’s content, acquiring Fox’s RSN channels would make MLB a broadcaster of some NBA and NHL games. According to reports, MLB expects basketball fans to grow if MLB owns RSNs. MLB could also add innovation in the way it streams games for fans. MLB can also stream individual games for a fee with no limitations. If MLB gets hold of Fox’s RSNs, it could also have pricing power for the acquired channels.

MLB’s in-house video arm, MLB Advanced Media Tech (or “BAM Tech”), was spun off last year, and Disney acquired a majority stake in it. However, during the fourth quarter, Disney witnessed a loss at BAM Tech due to higher content and marketing costs and higher ongoing investments in technology related to the launch of ESPN+.

BAM Tech losses led to a 6% decline in the cable network’s operating income within the company’s Media Networks segment. In the fourth quarter, the segment earned revenues of ~$6 billion, a ~9% YoY increase from the year-ago revenues of $5.5 billion driven by a strong 21% YoY increase in the broadcasting unit as well as a 5% increase in the cable network division.

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