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…