co-executive chairman Rupert Murdoch will be tough to beat in the battle for the 21 Fox regional sports networks (RSNs) that antitrust regulators are requiring
to divest in order to receive approval for the company’s $71 billion purchase of Fox’s entertainment assets.
Though pundits have noted that Murdoch may be able to buy them at a “discount” from the valuation Fox sold the networks to Disney, the Australian-born media tycoon isn’t a bargain hunter when it comes to sports, a business that it wants “New Fox” to focus on once the Disney deal closes.
Earlier this year, Fox signed a five-year, $3.3 billion deal for the rights to the NFL’s Thursday Night Football broadcast, considered by many fans to be the league’s weakest. On a per-game basis, that works out to $60 million per game, roughly 33% higher than the $45 million-per-game rate that incumbents
and NBC paid. Fox also signed a five-year, $1 billion deal with the WWE for its marquee Smackdown Live broadcast in June, a three-fold increase over what incumbent NBCUniversal is paying. A spokesperson for New York-based Fox didn’t respond to a request for comment for this story.
There is plenty about the Fox RSNs for Murdoch to like. For one thing, they have the rights to broadcast 44 teams from Major League Baseball, the National Hockey League and the National Basketball Association. According to the Wall Street Journal, the RSNs generate $2 billion in earnings before interest, taxes, depreciation and amortization (EBITDA). Sports also is one of the few genres of programming that most consumers watch live and continues to attract huge though declining audiences. The legalization of sports betting is expected to boost the audience for professional and college sports and boost the ad revenue for broadcast and cable TV networks.
The best FOX RSN is YES (Yankee Entertainment and Sports Network), the cable home of the Bronx Bombers and the NBA’s Brooklyn Nets. YES’s EBIDTA is roughly $500 million. The Yankees also have a right of first refusal to buy Fox’s stake in YES and have reportedly joined forces with private-equity firm RedBird Capital and other investors to bid for YES. Other teams are interested in buying RSNs in their areas, according to the Journal. The deadline for bids for the RSN is Thursday.
The bidding war between Comast and Walt Disney for Fox’s assets drove up their value to a level that other investors including rapper Ice Cube and private equity players might not feel can be justified. Murdoch, whose family controls Fox, can buy what he wants when he wants without worrying about being challenged by his board of directors, where his son Lachlan also serves as co-executive chairman. His other son, James Murdoch is Fox’s CEO.