Disney would need to sell 22 regional sports networks under its deal with Fox, and those interested in buying them might include tech champions like Amazon and YouTube, according to analysts who spoke with TheWrap.
"I think there's a lot of interest out there in the marketplace," Lee Berke, president and CEO of sports consultancy LHB Sports, told TheWrap. "The reality is that it's very rare you have a group of sports networks you can combine."
Last week, Disney gained approval from the Department of Justice in its $71.3 billion acquisition of Fox's film and TV entertainment assets and agreed to divest Fox's 22 regional sports networks, which it would gain in the acquisition. Disney will have at least 90 days from the date of closing of the transaction to complete this sale, with the possibility that the DOJ can grant extensions.
Despite the rapid escalation of rights fees and the general downward trend of live TV ratings, analysts agree that regional sports networks are still a valuable commodity in the TV ecosystem. For starters, they carry with them a very loyal viewer base and still provide reliable revenue streams.
"It generates ratings and viewership on a regular basis. It's not like another category of entertainment programming," Berke said. "You're putting out thousands of games per year and the audience keeps on coming back."
The 22 regional sports networks collectively hold local TV rights for 44 professional sports teams across the NHL, NBA and Major League Baseball. The crown jewel is the YES Network, which airs New York Yankees and Brooklyn Nets games, while also owning RSNs in other major markets including Detroit, Southern California, Dallas, Cleveland and Miami.
In December, Guggenheim Securities placed the value of the 22 RSNs at $22.4 billion, according to the Los Angeles Times. That's almost one-third of Guggenheim's $68-billion valuation for all of the assets that Disney is set to buy from Fox.
Streaming bundles, or so-called Virtual MVPDs (Multichannel Video Programming Distributors), "are going to bloom over the next few years," says Alan Wolk, co-founder and lead analyst at media consulting firm TV[R]EV. "As they explode, the downside for the people who own them is it's very easy for people to jump from one to the other."
As DirecTV has no doubt learned with its NFL Sunday Ticket deal, having something your competitors don't can tip the scales. Companies like AT&T, Dish Network, YouTube and even Amazon could make a play. "If you can put 22 networks across the country, than you establish a footprint for that kind of content," said Berke. "The over-the-top companies and virtual MVPDs are picking up some of the slack for the shrinking pay TV universe."
Amazon in particular has been trying to make inroads into the live sports arena, as it seeks to pump its Prime Video service to compete with Netflix and Hulu. In the last few years, the retailer has grabbed rights in the U.K. for the Premier League and Tennis' U.S. Open to go along with the NFL's "Thursday Night Football," which the company recently renewed for two more seasons.
"Amazon's a really interesting possibility," said Wolk. He said Amazon could use sports to boost its retail business by looking up what viewers are watching and then try to sell them sports merchandise.
"The flip of Amazon is that they don't have a whole lot of viewers and they haven't done a great job," added Wolk.
Amazon did not immediately respond to a request for comment.