🎉 We've launched our new mobile app! Learn about it here

Channel Surfing

Sinclair's $11 billion sports acquisition

Image source: stockphoto-graf, Ron Dale, sraphotohut - Shutterstock

What's going on?

Sinclair Broadcast Group – the largest TV station operator in the US – agreed on Friday to buy 21 sports networks from Disney for a total of $11 billion.

What does this mean?

Significant relaxation of US television ownership rules in 2017 led to a wave of consolidation, with broadcasters under pressure as a growing number of people prefer to Netflix and chill – and switch off their traditional TV subscriptions. There could be strength in numbers, however: Friday’s deal, which is subject to regulatory approval, would give Sinclair the most regional sports networks of any US broadcast player – along with those networks’ 74 million subscribers.

Confusingly, Sinclair sold several local TV channels to 21st Century Fox – which was being taken over by Disney – only a year ago. The change of tack may be due to regulators subsequently blocking Sinclair’s attempt to buy rival Tribune (a fate that may yet befall Tribune’s replacement buyer).

Why should I care?

For markets: When you gotta sell, you gotta sell.

Sinclair paid a much lower price than the $22 billion some analysts expected the sports networks would fetch. Perhaps Disney was keen to get rid of the networks toot sweet, rather than hold out for more money – the sale was demanded by regulators as a condition for them approving the $71 billion Fox-Disney marriage.

The bigger picture: Go big, go live, or go home.

While consumers flock to YouTube, Netflix, and (from November) Disney’s streaming service, live events – and sports in particular – are keeping some tethered to cable networks: watching live sports is essentially hardwired into American culture. But cordless rivals are coming for that too: YouTube will exclusively live-stream 13 Major League Baseball games this year, for example. Disney’s YES Network – home of the New York Yankees – is also up for sale independently of Friday’s deal package. It’s reportedly being sold to a collective including Sinclair, the Yankees themselves, and none other than Amazon…

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over 400,000 Finimizers

Read next

Good Jobs, Wages Debatable

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.