Disney to sell its regional sports network to Sinclair
Walt Disney (DIS) has agreed to sell its 21 regional sports networks, which were acquired from Fox, to Sinclair Broadcast Group (SBGI) for around $9.6 billion ($10.6 billion after adjusting for minority equity interests). The news pushed up Sinclair stock by ~35% on Monday, while Disney stock was up 0.5%. The deal was finalized on late-Friday and will make Sinclair the owner of the largest collection of regional sports networks (or RSNs) in the US. Sinclair will also have exclusive rights to 42 Major League Baseball, National Basketball Association, and National Hockey League teams. Notably, the Disney-Sinclair deal is yet to receive approval from US regulators.
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Disney’s sell-off of RSNs
Disney wanted to purchase 21st Century Fox’s media and entertainment assets, including its 22 regional sports networks. However, US regulators objected to the deal, as the RSNs would give Disney too much control over the nation’s sports programming, as the media company already had a sports channel called ESPN. Though Disney has completed the Fox acquisition in March, the sale of 22 RSNs is still pending.
While Disney has made a deal to sell its 21 RSNs to Sinclair, it has reportedly sold its 80% stake in its remaining regional sports network, YES Network (or Yankee Entertainment and Sports Network) in March to the New York Yankees for $3.5 billion. The Yankees already had a 20% stake in YES network. Amazon (AMZN), Sinclair, and Blackstone (BX) are the leading investors in the Yankees.
Disney is expected to lower its debt burden with the sale proceeds of these regional sports networks. Meanwhile, the company has already reduced its debt load from $26.09 billion last year to $20.66 billion in 2018.