Sinclair’s stock is booming after the broadcast group emerged with a winning $9.6 billion bid late last week for 21 of Disney’s regional sports networks (RSN).
The deal, which values the networks at $10.6 billion, includes the networks and exclusive local rights to 42 professional teams across the MLB, NBA and NHL. In calendar year 2018, Sinclair said the RSN portfolio delivered a combined $3.8 billion in revenue across 74 million subscribers.
The networks, except for YES Network in New York City, will be acquired by a newly-formed, indirect, wholly-owned subsidiary of Sinclair - Diamond Sports Group. Byron Allen, chairman and CEO of Entertainment Studios, will be an equity and content partner in Diamond Sports.
"This is a very exciting transaction for Sinclair to be able to acquire highly complementary assets," said Chris Ripley, president and CEO of Sinclair, in a statement. "While consumer viewing habits have shifted, the tradition of watching live sports and news remains ingrained in our culture. As one of the largest local news producers in the country and an experienced producer of sports content, we are ideally positioned to transfer our skills to deliver and expand our focus on greater premium sports programming."
Ripley also sees a chance to grow his company’s online video business and break into legal sports betting.
“We see tremendous opportunity for the RSNs in the continued adoption of digital streaming as well as the nascent legalized sports betting space,” Ripley said during a press conference, according to Deadline.
While Sinclair is relishing its new acquisition, the deal is already drawing heavy scrutiny from opponents. Shortly after the deal was confirmed, cable industry group ACA Connects condemned the transaction.
“Big 4 broadcast network programming and RSN programming are both critical for ACA Connects members. By jointly negotiating these assets when they serve the same market, Sinclair can raise prices to cable operators for both offerings,” said ACA Connects President and CEO Matthew Polka in a statement. “It is one of the reasons that the Federal Communications Commission imposed conditions on the Comcast/NBCU merger and that Sinclair's proposal to combine Tribune's network stations with its own ran into severe regulatory trouble, causing Sinclair-Tribune to pull the deal.”