The Walt Disney Company is promising to sell off even more Fox assets if its $71 billion deal for the company’s studio and cable network businesses earns regulatory approval.
In a filing with the SEC, Disney said that it would be willing to part ways with Fox assets representing up to $1 billion in total EBITDA. That’s an increase of $500 million of 21 Century Fox’s EBITDA, which Disney had agreed to in its initial merger agreement.
Disney specifically mentions that Fox’s regional sports networks could be on the chopping block if necessary.
Fox’s RSNs are part of the company’s cable network programming division, which represents the vast majority of Fox’s annual earnings. In 2017, Fox’s annual cable segment operating income before depreciation and amortization (OIBDA) rose 9% to $5.60 billion. Fox’s total segment OIBDA for 2017 was $7.17 billion.
Fox said its full-year 2017 cable revenues were held back somewhat by increased expenses brought on by higher domestic sports programming costs for its RSNs.
If Disney did sell off Fox’s RSNs, the lingering question is: Who would buy them?
Comcast already has a footprint of complementary RSNs, so taking ownership of Fox’s RSNs would be a nice consolation prize.
Ken Fang from the outlet Awful Announcing suggested Turner could be a possible bidder. The company is free from the AT&T-Time Warner deal overhang and could add regional sports rights to its existing rights including Bleacher Report, MLB, NCAA, NBA and UEFA Champions League.
If another broadcaster doesn’t bite on the RSNs, a digital giant could certainly swoop in. Alan Wolk, co-founder and lead analyst at media consulting firm TV[R]EV, said Amazon—which has been snapping up sports rights left and right—could be a player and that it has a big advantage because it can do merchandizing on top of any live sports deal.
Besides the RSNs, Disney is buying 21st Century Fox’s film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000 Pictures; Fox‘s television creative units Twentieth Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; Star India; and Fox’s interests in Hulu, Sky plc and Tata Sky.
Fox’s film and television studios fit under the company’s filmed entertainment segment, which in 2017 recorded total OBIDA of $1.05 billion.