Comcast has seen the conditions on Disney’s $71.1 billion bid for Fox, and it wants to have buyers lined up for Fox’s regional sports networks as it preps a rival bid.
According to Reuters, Comcast is speaking with private equity firms including Blackstone and Apollo, as well as gauging interest from telecoms and media companies toward the RSNs, which could be worth as much as $20 billion. As the report points out, Comcast feels lining up a buyer (or buyers) for the 22 RSNs will help ease the regulatory review process.
Of course, Disney is likely already doing the same. When the U.S. Justice Department granted Disney conditional approval to buy 21st Century Fox’s studio and cable channel assets, it gave Disney a minimum of 90 days (with the possibility of extending the deadline by another 90 days) after closing the Fox deal to secure a sale of the RSNs.
If Comcast is indeed planning to find a buyer for the RSNs, it could easily raise its bid for Fox, according to Barclays analyst Kannan Venkateshwar.
“Assuming Comcast also divests the RSNs, it could in theory go to a high $40 bid to keep leverage at ~4.5x (4.2x leverage based on last Comcast bid). Also, at this point, Comcast will have little incentive to back down, as it may want to force Disney's leverage higher in order to make Comcast's hand stronger with Sky,” Venkateshwar wrote in a research note.
Several potential buyers for the RSNs—which operate in markets including New York, Los Angeles, Dallas and Detroit, and own broadcast rights for various teams from the MLB, NBA, NFL and NHL—have already been floated by various sources and publications. SportsBusiness Journal’s John Ourand said it’s a good bet that the New York Yankees will want to take back full ownership of the YES Network. He also said the networks could be sold up piece by piece to distributors like AT&T, Comcast and Charter.
If Comcast beats out Disney for Fox’s assets, then Disney could end up buying the RSNs to fold into its ESPN operations if regulators sign off on it. And there’s a potential for digital companies like Amazon, Google or Facebook to swoop in.