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Disney to Reduce Debt with Sale of Regional Sports Networks

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May. 3 2019, Published 7:21 a.m. ET

Disney to sell regional sports networks

Walt Disney (DIS) has reportedly decided to sell its 21 regional sports networks (or RSNs) to Sinclair Broadcast Group (SBGI), which is the largest US broadcast station owner, for more than $10 billion. The deal comes after Tribune Media Company (TRCO) canceled the sale of 42 TV stations in 33 markets to Sinclair last year. The sale of the RSNs was a condition that US regulators imposed in order for Disney to acquire the premium media and entertainment assets of 21st Century Fox, which happened last month. Apart from Sinclair, Liberty Media and Big 3 Basketball were also among the interested bidders for Disney’s RSNs.

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Disney to reduce debt

Disney’s debt load is high due to its purchase of 21st Century Fox (in half cash and half stock) and investments related to the launch of the Disney+ streaming service, which is expected on November 12. However, the company is making efforts to reduce its debt load and has already reduced the debt amount from $26.09 billion last year to $20.66 billion in 2018. The company had suspended its share repurchase program temporarily amid a huge debt load. Disney expects to resume share repurchases after it improves its cash-to-debt ratio.

The sale of its 39% stake in London-based Sky to Comcast (CMCSA) for ~$15.3 billion in September has helped Disney to reduce its debt load and invest in its Disney-branded direct-to-consumer offering. The sale of its regional sports network is expected to help the company cut its debt levels.

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