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Why Fox May Want to Buy Regional Sports Networks from Disney

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Disney must divest networks

Fox, the expected successor to 21st Century Fox (FOX) (FOXA), wants to buy a portfolio of regional sports networks from Walt Disney (DIS), people familiar with the matter told CNBC. Disney agreed to buy a bundle of assets from 21st Century Fox for $71.3 billion. US regulators approved the deal in June on the condition that Disney divests 22 regional sports networks from the list of assets it is purchasing from 21st Century Fox.

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Fox wants to focus on sports and news

The regional sports networks that Disney must sell to satisfy the conditional approval of its deal with 21st Century Fox has attracted broad interest. Sinclair Broadcast Group (SBGI) has publicly discussed its desire to purchase the regional sports networks being divested by Disney, while Amazon (AMZN), Google (GOOGL), and a number of buyout firms have also been cited as considering bids for the sports networks.

According to people who spoke to CNBC, Fox is leading the race to buy the 22 regional sports networks that Disney must divest. Fox purchasing the regional sports networks would fit into its strategy to narrow its focus to sports and news programming once the Disney transaction closes.

For the fourth quarter of fiscal 2018, which ended in June, 21st Century Fox reported revenue of $7.9 billion. The company is scheduled to release its fiscal 2019 first-quarter results on November 7, and the consensus estimate calls for revenue of $7.3 billion.

Internet companies showing appetite for sports content

The mention of Amazon and Google in relation to bids for the regional sports networks on sale seems to be linked to Internet companies’ growing appetite for sports content. Amazon has inked several sports programming agreements for its online video service, which is mostly offered as part of its Prime loyalty program. Google has sought to make its YouTube TV a go-to-platform for online sports programming.

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