The Walt Disney Company (DIS) is close to acquiring Twenty-First Century Fox’s (FOXA) movie and television productions assets, including their valuable regional sports networks, in a deal that could be announced as early as next week. Under the terms of the proposed agreement, DIS would also receive FOXA’s stake in Nat Geo, Star Network (in India), SKYAY and Hulu; while FOXA maintains its news division, broadcast network and FS1. The enterprise value of the assets DIS is said to be looking to acquire exceed $60 billion.
Howie Long-Short: DIS is looking to go all-in on ESPN and live sports programming; both on a national and now, local basis. In the evolving media landscape, scale matters and adding FOXA’s MLB, NBA & NHL local broadcast rights make the ESPN+ OTT streaming service (set to launch in ’18) far more compelling. Should the deal be completed (CMCSA remains in contention, though FOXA prefers DIS stock), current FOXA shareholders would receive one share of the company following the close of the transaction; plus, additional shares of DIS in a fixed exchange ratio.
Fan Marino: Murdoch hasn’t been high on RSN’s for some time now, as he’s watched broadcasting rights rise at a faster rate than affiliate revenue can grow; but DIS isn’t taking on a sinking ship. A 2016 Nielsen study found that sports fans consider RSNs to be their most valuable cable channel and the 5th most important channel within their entire cable bundle (behind the 4 broadcast networks). In St. Louis, where hockey and baseball games draw massive audiences on Fox Sports Midwest nightly, viewers rated the RSN more important than any other channel (including the broadcast networks); Detroit fans rated their RSN 2nd most the important channel within their bundle.
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