There could be a new TV home for Reds games next season.
Fox owns 22 regional sports networks across the country – including Fox Sports Ohio, which broadcasts Reds, Cleveland Cavaliers and Columbus Blue Jackets games – and they are up for sale in a sports media auction.
The reason for the sale: Disney acquired 21st Century Fox assets in a $71 billion deal but wasn’t allowed to keep Fox’s 22 regional sports networks because the Justice Department said there were antitrust concerns. (Disney already owns ESPN.)
The regional sports networks, which could be sold individually or bunched together, are expected to be sold in early 2019.
Which company will buy the regional sports networks? Right now, it’s just a lot of speculation. Amazon made a bid for all 22 of them, according to CNBC. Some traditional TV companies and private equity firms submitted first-round bids in the auction.
Fox Sports is expected to have an interest in buying them back, but they have yet to submit a bid, according to the Sports Business Journal. Fox Sports continues to operate the networks through the sale. NBC Sports is not expected to enter the bidding.
What would happen if Amazon acquired Fox Sports Ohio? The internet giant has Prime Video, but is it ready to jump into local markets? That’s still the big unknown.
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The Reds agreed to a 15-year extension with Fox Sports Ohio in 2016, which went into effect during the 2018 season and will last through the 2032 season. The deal included an equity stake in the network for the Reds.
“When you buy something like this, you’re basically buying all the contractual obligations, both revenue and expense,” said Eric Fisher, a reporter for the Sports Business Journal covering baseball, technology and digital media. “The Reds and any other team, those rights are locked in. Whoever owns this, they are taking on that obligation to pay.”
Television right deals are a lucrative business for professional teams. Despite a dip in attendance for 17 of the 30 MLB teams, there was a two percent increase in MLB’s TV ratings, according to Forbes. The Reds, on Fox Sports Ohio, had a 4.23 household rating last season. That ranked 10th in the Majors and was up from their 3.98 rating in 2017.
Before agreeing to an extension with Fox Sports Ohio after the 2016 season, the Reds were guaranteed about $30 million per season in TV rights fees. The Reds haven’t disclosed how much more they are making from their latest deal.
“It’s a valid contract, so those (sports networks’) equity may change hands but the clubs have valid contracts,” Fisher said. “This is in part why they signed these things for so long because it gives you revenue certainty for a long period of time.”
The New York Yankees’ YES Network is included in the sale, but they reportedly have a unique clause in their contract that gives them the option to take ownership of their sports network.
When the Reds extended their contract with Fox Sports Ohio, Phil Castellini, the Reds’ chief operating officer, said the club hired a consulting firm to explore establishing their own regional sports network but they opted against it. Instead, they gave themselves equity in the company.
“That’s sort of a way to have some of the advantages of having your own RSN without having to go to the full responsibility of having the full RSN,” Fisher said. “I would think maybe we’ll have some more of those what I would call a hybrid model where there’s a rights fee and then a minority equity stake attached to it as opposed to a bunch of teams like the Cubs or Yankees forming their own thing.”
Industry experts said the “New Fox” that emerged out of the Disney/Fox merger has emphasized national TV deals, plus its FS1 and FS2 cable channels.
Major League Baseball and Fox Sports announced last week that they extended their national TV rights agreement to the 2028 season for $5.1 billion. It was about a 40 percent increase over their current deal and it will allow Fox to broadcast more regular season and postseason games in the future.
Until the regional sports networks’ sale is completed, there won’t be any changes to the way fans can watch games. But the bidding war could be the start of a new era for watching sports on TV.