Billionaire "Cable Cowboy" John Malone, looking for the next notch in his belt, is eyeing the 21 Fox regional sports networks, FOX Business has learned.
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People with knowledge of the bidding process say Malone, chairman of Liberty Media, and his long-time No. 2, Greg Maffei, have recently indicated they are looking to team up with private equity firm Platinum Equity and possibly other investors to potentially purchase the networks, according to two people with knowledge of the matter. Platinum’s chief, Tom Gores, also owns the Detroit Pistons basketball team, while Malone owns baseball's Atlanta Braves.
Both teams have their games aired on a Fox regional sports network (RSN), which was the motivating factor in their desire to own the networks, the people say.
The Liberty-Platinum interest, which has yet to be reported, adds a new twist to the auction of the Fox RSNs. The properties are currently held by Disney as part of its $71 billion purchase of 21st Century Fox's entertainment assets announced in December 2017. Disney must sell the RSNs to meet regulatory requirements since it also owns the sports channel ESPN.
As FOX Business was first to report, the auction attracted as many as three bidders as the second round of the process closed on Thursday: Major League Baseball, Sinclair Broadcasting and Apollo Management. Liberty-Platinum's intentions were relayed by Maffei to people involved in the auction just before the second round ended, surprising other players seeking the properties, these people add. It could not be confirmed whether Maffei placed an official bid for the networks, but two people involved in the auction told FOX Business that Maffei has expressed to others a willingness to pay around $10 billion for the RSNs – close to what other bidders have offered. The auction is being conducted by bankers at Allen & Co. and JPMorgan.
Depending on how eager Malone and Maffei are to wage war with the other bidders, bankers could ramp up the price of the RSNs closer to the $20 billion initially sought, people with knowledge of the matter say. The bidding process, which began in November, has so far faced lackluster interest, lowball offers and confusion over whether buyers would ultimately own the digital rights of various sports programming.
Complicating the process, Malone and Maffei have signaled to banking executives that their investment group may include at least one other owner of another MLB team, these people add. Malone, himself, controls the Atlanta Braves, meaning that MLB and its commissioner, Rob Manfred, will possibly be bidding against two baseball team owners for the RSNs.
A spokeswoman for Liberty didn’t return repeated calls and emails for comment; spokesmen for Platinum didn't return repeated calls and emails for comment. Bankers at Allen & Co., and JPMorgan declined comment, but wouldn't deny Liberty's interest in the RSNs. A spokesman for MLB had no comment.
Regional sports networks are a group of cable networks that provide a variety of sports broadcasting throughout the country distributed by regional cable carriers. For years, RSNs were considered lucrative properties within the Fox media empire. But more recently, their cash-cow status has been diminished amid declining cable subscriptions as customers increasingly "cut-the-cord," and ditch their cable boxes to view programming on their computers or mobile devices.
Malone, 77, is worth an estimated $7 billion, while the 54-year-old Gores is worth approximately $3.7 billion, making them a formidable team as the auction process continues. Malone’s fortune was amassed during his long career as a pioneer in the cable and pay TV business, mainly as chief executive of Tele-Communications Inc., also known as TCI, where he earned the sobriquet “The Cable Cowboy” for his prodigious deal making. Gores is a longtime private equity executive.
Liberty Media is a spin-off of TCI and under the leadership of Malone and Maffei, the former chief financial officer of Microsoft and Oracle, it has diversified away from cable and controls a range of investments from the Braves to Sirius XM Holdings and other assets.
In recent years, Malone has expressed concerns over the impact of cord cutting on the cable business, making his interest in the Fox RSNs somewhat surprising. One possible motivating factor for Malone is his ownership of the Braves. Owners of sports franchises in the Fox RSN network have been concerned that the winning bid may go to an investment group that will not invest in properties and cut back on marketing, promotion and distribution, which is why they are looking to buy the networks.
MLB’s Manfred has similar concerns, which is why the league is involved in the auction, people close to the process tell FOX Business.
People close the auction say it's in its final stages and could be wrapped up in weeks. Bankers had originally hoped that the process would have concluded by the second week of January, amid the initial strong interest from possible bidders like online retailer Amazon, which has been slowly moving into streaming sports programming.
But Amazon did not bid in the first round and did not make an official bid in the second round as it focuses on cutting a deal to buy a portion of just one of the RSNs, the Yankees Entertainment and Sports Network, or YES Network.
The sale of YES – which was 80 percent owned by Fox and 20 percent by the New York Yankees – is being conducted under a separate negotiation between the Yankees, and Amazon’s CEO Jeff Bezos, FOX Business has learned. YES is considered the crown jewel of the RSNs, and the Yankees chose to buy back the portion of YES it didn’t own and seek new partners after Disney’s deal with 21st Century Fox.
Amazon, meanwhile, has expressed interest in possibly placing a formal bid for the other RSNs, perhaps later in the process.