Buyer of Fox Sports South, other networks sees new opportunities

Credit: Mike Zarrilli

Credit: Mike Zarrilli

The buyer of Fox Sports South, Fox Sports Southeast and 19 other regional sports networks sees opportunities for growth from non-game programming, digital streaming and legalized sports betting.

Sinclair Broadcast Group CEO Chris Ripley discussed the company's acquisition of the Fox regional sports networks from the Walt Disney Company on a conference call with investment analysts Monday. He said the $10.6 billion transaction, announced Friday, is expected to close in the third quarter of this year.

“We see tremendous opportunity for the RSNs in the continued adoption of digital streaming, as well as in the nascent but fast-growing legalized sports betting space,” Ripley said. While the networks’ focus is on telecasts of games, including pre- and post-game shows, he also cited potential for “enhanced non-game programming” about sports throughout the day.

The networks, scattered across the country, hold local broadcast rights to 14 MLB teams and 16 NBA teams, including the Braves and Hawks on Fox Sports South/Southeast and the Fox Sports Go streaming app. Ripley expressed confidence in the sustainable value of sports broadcast rights despite increased resistance from some cable subscribers to paying high fees for sports networks.

“We realize there has been much written about cord-cutting and the future of the pay-TV ecosystem, but we believe such concerns have been overstated,” he said.

“We asked ourselves sort of a simple question: Ten years from now, would the local MLB, NBA and NHL teams’ rights be important to people? And the answer to that was pretty easy – they will be. We see the digital distributors, the streamers, being the next frontier for distribution of these games. … We look to expand our distribution to as many platforms as possible.”

Ripley expects an increase in viewership as a result of last year's U.S. Supreme Court decision that cleared the way for individual states to legalize sports gambling if they choose.

“Research reflects that legalized sports betting is expected to increase engagement and viewing and therefore revenue opportunities,” he said. “… We see upside from increased viewership, advertising and in-game betting integrated directly into the media.”

The average time remaining on the MLB, NBA and NHL  broadcast rights contracts inherited in the deal is 11 years. The Braves’ contact runs until 2027.

Sinclair, based near Baltimore, owns or operates 191 local TV stations across the country.

Disney had been seeking a buyer for the Fox regional sports networks since acquiring them as part of a $71 billion purchase of 21st Century Fox’s entertainment assets earlier this year. Disney agreed to sell off the RSNs as a condition of U.S. Justice Department approval of the larger deal because regulators believed Disney, which owns ESPN, would have too much control over sports television if it kept the regional channels.