The sale of the 21 Fox regional sports networks (RSNs) is finally nearing an end with bankers telling companies the third and final round of bids are due April 15th, concluding a nearly six-month long process of lackluster interest, low-ball offers and confusion over whether buyers would ultimately own the digital rights, as well as rights to broadcast various sports programming, FOX Business has learned.
The four bidders in the running, as of now, include Liberty Media, Major League Baseball (MLB), Sinclair Broadcast Group, and BIG3, a new basketball league created by hip-hop impresario Ice Cube, according to people with direct knowledge of the matter.
Most of the bids hovered around $10 billion—far below the $20 billion bankers originally sought. In recent weeks, MLB has been working with the deal’s bankers at Allen & Co., to sweeten its offer, negotiating what was described as “add-ons," or additional deals that would enhance the value of the bid, these people tell FOX Business. Sinclair, meanwhile, was discussing upping its bid to around $11 billion, thus making it the highest offer so far, these people add.
The auction is an outgrowth of one of the biggest media deals in recent memory, the $71 billion sale of 21st Century Fox’s entertainment assets to Disney (the entire company, except Fox News, FOX Business, Fox Sports, Fox TV Network and its owned and operated affiliates). The deal, which closed March 20, received U.S. antitrust approval on the grounds that Disney unload the RSNs because of its overlapping ownership of sports channel ESPN. Disney must divest the Fox RSNs by June 18th, 90 days after closing the deal with Fox, which is the parent of FOX Business and Fox News.
While one of the four bidders mentioned is expected to nab the networks, another company could make a last minute offer. Private equity firm Apollo Global Management was reportedly interested in the assets, but has yet to make an offer. Likewise Amazon.com, which became a minority owner of one RSN, the Yankees Entertainment Network (YES), was said to possibly be interested in the other 21 but has yet to make an offer, according to people with knowledge of the matter.
The final bids are binding, meaning bidders are fully committed to their offers. People close to the matter say some companies may be waiting to bid as close to April 15 as possible in order to gauge interest and not overpay.
BIG3 declined comment. Sinclair, Liberty, Disney, Amazon, and MLB did not respond to a request for comment. Bankers at Allen & Co., didn’t return calls for comment, and a spokesman for JPMorgan Chase had no immediate comment
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The RSNs feature a variety of sports programming in various regional markets, mainly in the South and Midwest that are offered through various local cable operators. Disney is handling the sale with Allen & Company and JPMorgan Chase conducting the auction.
The outcome of the bid could have big implications for sports viewers. Some athletic officials worry that a private equity company looking to generate profits may skimp on marketing and distribution for RSNs that offer programming of smaller-market sports franchises.
That’s why MLB, in an unusual move, began to entertain the thought of getting into the sports cable business. In November, MLB Commissioner Rob Manfred publicly stated, "We’re very interested in the RSN sale process and have preferences in terms of who the owners are going to be.”
If MLB is successful, it would mark a significant change to the league’s business model. MLB, like other major sports leagues, has its own national cable TV network, and it streams some games on its web service MLB.com, subject to regional blackouts based on cable arrangements with various teams.
Purchasing the RSNs would be the first time a major sports league has owned regional cable television networks. Additionally, its interest in the properties underscores the dicey nature of the bidding process. Given the media landscape, it’s riskier than ever to bet on television—the sale comes as cable subscriptions are declining as customers "cut-the-cord" and ditch their cable boxes in favor of watching programming on their computers or mobile devices—capping the future earnings potential of the RSNs.