ESPN seems to have found a working solution their well-publicized revenue problem: If more money is needed, buy some profitable networks.
According to a CNBC report on Tuesday morning, a deal could soon be announced in which 21st Century Fox will sell much of its assets to Disney. That deal, reportedly worth $60 billion, could be officially announced as early as next week.
Somewhat buried in the details of that report, however, is that under the terms of the deal, Disney will receive the Fox Sports regional networks. This new detail contradicts an earlier report, which suggested that Fox Sports properties would not be included.
According to The Big Lead, “You cannot overstate how enormous this is for both companies. The RSNs, which distribute about half of the local MLB, NBA, and NHL rights in America, deliver a bulk of the profit to the broader Fox Sports division of the company, and have been a major factor in enabling their continued pursuit of national rights in the NFL, MLB, and college football.”
According to Sports Business Journal’s John Ourand, “[Rupert] Murdoch has not been high on the RSNs for several years. Same old media story: rights fees rising at a faster rate than affiliate revenue.”
So, Fox will retain its national sports and news properties, the official deal will not include the RSN’s. Not including the RSN’s could still have a huge impact on Fox Sports and FS1. As Ryan Glasspiegel says in The Big Lead, the RSN’s make a large portion of the profit that allowed Fox to pursue rights for NFL, MLB, and CFB games.
By bowing out of the regional game while retaining the national networks, Fox could be looking at a future where they offer far more in the way of analysis, re-cap, and opinion coverage; instead of broadcasting live games.
Meanwhile, if the deal goes through as advertised, ESPN will bring in proven money-earning networks at a time when their company has been hemorrhaging money and subscribers. Details on the deal will continue to come in, however, one thing is clear: Fox seems intent on minimizing its footprint in competing for rights fees. While ESPN seems to be doubling-down.