Sinclair Broadcast Group said Friday that it had agreed to acquire 21 regional sports networks from Walt Disney Company in a deal worth $10.6 billion, giving the largest operator of local television stations in the United States a foothold in the cable industry with the rights to broadcast games of dozens of professional teams.

Disney was forced to sell the networks to receive antitrust approval for its $71.3 billion acquisition of most of Rupert Murdoch’s 21st Century Fox in a deal that closed in March. The Justice Department required the sale of the networks, which were part of Fox, because Disney, through its ownership of ESPN, already dominates the market for televised sports.

One of the 22 sports properties that Disney was required to sell, the YES Network, is being acquired by the New York Yankees and the e-commerce giant Amazon for about $3.5 billion, according to people familiar with the transaction. Sinclair also has a stake in that deal.

Disney is getting less for the sports networks than some analysts had expected. Last year, Guggenheim Securities estimated that, including the YES Network, the channels had a value of $22 billion. Regional sports networks have lost value in recent years as fewer people pay for television.</s>BALTIMORE and BURBANK, Cailf., May 3, 2019 /PRNewswire/ -- Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) ("Sinclair" or the "Company") and The Walt Disney Company (NYSE: DIS) ("Disney") today announced that they have entered into a definitive agreement under which Sinclair will acquire the equity interests in 21 Regional Sports Networks (the "RSNs") and Fox College Sports, which were acquired by Disney in its acquisition of Twenty-First Century Fox, Inc. ("21st Century Fox"). The transaction ascribes a total enterprise value to the RSNs equal to $10.6 billion, reflecting a purchase price of $9.6 billion, after adjusting for minority equity interests. Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice.

The RSN portfolio, which excludes the YES Network, is the largest collection of RSNs in the marketplace today, with an extensive footprint that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball (MLB) teams, 16 National Basketball Association (NBA) teams, and 12 National Hockey League (NHL) teams. In calendar year 2018, the RSN portfolio delivered a combined $3.8 billion in revenue across 74 million subscribers.

The RSNs will be acquired via a newly formed indirect wholly-owned subsidiary of Sinclair, Diamond Sports Group LLC ("Diamond"). Byron Allen has agreed to become an equity and content partner in a newly formed indirect wholly-owned subsidiary of Sinclair and an indirect parent of Diamond ("RSN Holding Company"). Mr. Allen, who bought The Weather Channel in 2018, is the Founder, Chairman, and Chief Executive Officer of Entertainment Studios, a global media, content and technology company.

Sinclair's existing sports business consists of Marquee Sports Network (a recently announced joint venture with the iconic Chicago Cubs), Tennis Channel and Tennis Media Company (dedicated to live tennis events and tennis lifestyle), Stadium (a joint venture focused on college sports and professional highlights), Ring of Honor Wrestling (professional wrestling), and robust high school sports programming (with Friday Night Rivals and Thursday Night Lights).

"This is a very exciting transaction for Sinclair to be able to acquire highly complementary assets," commented Chris Ripley, President and CEO of Sinclair. "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."

Mr. Ripley continued, "The transaction is expected to be highly accretive to free cash flow and brings consolidated net leverage to 4.7x and 5.1x through the preferred financing. This acquisition is an extraordinary opportunity to diversify Sinclair's content sources and revenue streams with high-quality assets that are driving live viewing. We also see this as an opportunity to realize cross-promotional collaboration, and synergistic benefits related to programming and production."

"We are pleased to have reached this agreement with Sinclair for the sale of these 21 RSNs, subject to the conditions of the consent decree with the U.S. Department of Justice," said Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company.

Last year, Disney and 21st Century Fox entered into a consent decree with the U.S. Department of Justice that allowed Disney's acquisition of 21st Century Fox to proceed while requiring the subsequent sale of the RSNs. Sinclair's purchase does not include 21st Century Fox's equity interest in the YES Network, the disposition of which is also required as part of the consent decree. Disney completed its $71 billion acquisition of 21st Century Fox in March.

The RSNs to be acquired by Sinclair are: Fox Sports Arizona, Fox Sports Detroit, Fox Sports Florida, Fox Sports Sun, Fox Sports North, Fox Sports Wisconsin, Fox Sports Ohio, SportsTime Ohio, Fox Sports South, Fox Sports Carolina, Fox Sports Tennessee, Fox Sports Southeast, Fox Sports Southwest, Fox Sports Oklahoma, Fox Sports New Orleans, Fox Sports Midwest, Fox Sports Kansas City, Fox Sports Indiana, Fox Sports San Diego, Fox Sports West, and Prime Ticket. Also included in the acquisition is Fox College Sports.

Sinclair expects to capitalize Diamond with $1.4 billion in cash equity, comprised of a combination of approximately $0.7 billion of cash on hand and a contribution of $0.7 billion in the form of new fully committed debt at Sinclair Television Group, Inc. In addition, the purchase price will be funded with $1.0 billion of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of Sinclair and direct parent of RSN Holding Company. The remainder of the purchase price is being funded by $8.2 billion of fully committed secured and unsecured debt incurred by Diamond. The transaction will be treated as an asset sale for tax purposes, with Sinclair receiving a full step-up in basis.

The transaction has been unanimously approved by the Board of Directors of both Sinclair and Disney.

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Guggenheim Securities, LLC, Deutsche Bank Securities Inc., RBC Capital Markets, Pursuit Advisors, and Moelis & Company are acting as Sinclair's financial advisors. Fried, Frank, Harris, Shriver & Jacobson LLP, Pillsbury Winthrop Shaw Pittman LLP, Latham & Watkins LLP and Thomas & Libowitz P.A. are acting as legal advisors to Sinclair in connection with this transaction.

Allen & Company LLC and J.P. Morgan are acting as Disney's financial advisors. Cravath, Swaine & Moore LLP and Covington & Burling LLP are acting as legal advisors to Disney in connection with this transaction.

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JPMorgan Chase Bank, N.A., Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Royal Bank of Canada, and Bank of America N.A. and Merrill Lynch, Pierce, Fenner & Smith Inc. are providing committed debt financing. Committed preferred equity financing will be provided by JPMorgan Chase Funding, Inc.

The senior management of Sinclair intends to hold a conference call to discuss the RSN acquisition on May 6, 2019 at 9:00 a.m. ET. The call will be webcast live and a slide presentation will be available during the call and can be accessed at www.sbgi.net under "Investors/Webcasts." After the call, an audio replay will remain available at www.sbgi.net. The press and the public will be welcome on the call in a listen-only mode. The dial-in number is (844) 602-0380.

Sinclair is one of the largest and most diversified television broadcasting companies in the country. The Company owns, operates and/or provides services to 191 television stations in 89 markets. Sinclair is a leading local news provider in the country and is dedicated to impactful journalism with a local focus. The Company has multiple national networks, live local sports production, as well as stations affiliated with all the major networks. Sinclair's content is delivered via multiple-platforms, including over-the-air, multi-channel video program distributors, and digital platforms. The Company regularly uses its website as a key source of Company information which can be accessed at www.sbgi.net.



The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments: Media Networks; Studio Entertainment; Parks, Experiences and Products; and Direct-to-Consumer and International. Disney is a Dow 30 company and had annual revenues of $59.4 billion in its Fiscal Year 2018.

Chairman and CEO Byron Allen founded Entertainment Studios, one of the largest independent media companies, in 1993. The Entertainment Studios portfolio includes nine television networks serving nearly 150 million subscribers: THE WEATHER CHANNEL, THE WEATHER CHANNEL EN ESPAÑOL, PETS.TV, COMEDY.TV, RECIPE.TV, CARS.TV, ES.TV, MYDESTINATION.TV, and JUSTICE CENTRAL.TV, as well as the LOCAL NOW streaming service. The company also owns Entertainment Studios Motion Pictures -- one of the world's leading independent movie finance and theatrical distribution companies.

Certain statements and information in this communication may be deemed to be "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to Disney's and Sinclair's objectives, plans and strategies, and all statements (other than statements of historical facts) that address activities, events or developments that Disney and Sinclair intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as "believe," "hope," "may," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions, and are based on assumptions and assessments made by Disney and Sinclair's management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statements in this communication are made as of the date hereof, and Disney and Sinclair undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including: general economic, market, or business conditions; risks associated with the ability to consummate the RSN acquisition and the timing of the closing thereof; the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained or is obtained subject to conditions that are not anticipated; pricing fluctuations in local and national advertising; future regulatory actions and conditions in the television stations' operating areas; competition from others in the broadcast television markets; volatility in programming costs; the ability to successfully integrate the RSN operations and employees; the ability to realize anticipated benefits of the RSN acquisition; the potential impact of announcement of the RSN acquisition or consummation of the transaction on relationships, including with employees, customers and competitors; and other circumstances beyond Disney's and Sinclair's control. Refer to the section entitled "Risk Factors" in Disney's, 21st Century Fox's and Sinclair's annual and quarterly reports filed with the SEC for a discussion of important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements.</s>(Bloomberg) -- Sinclair Broadcast Group Inc. agreed to buy the Fox regional sports networks from Walt Disney Co., turning the local-TV company into a powerhouse in cable-sports broadcasting, the Wall Street Journal reported.

The deal is valued at more than $10 billion, the Journal said, citing unidentified people familiar with the matter. An agreement could be announced as early as Friday, the newspaper said.

Disney and Sinclair didn’t immediately respond to requests for comment.

For Disney, the transaction would fulfill a key condition for its already-completed acquisition of 21st Century Fox Inc.’s entertainment assets. Bidders for the sports networks included John Malone’s Liberty Media Corp., which teamed up with Major League Baseball, and Ice Cube’s Big3 U.S. basketball league. The entertainer lined up Will Smith, Serena Williams and Snoop Dogg as content partners for his unsuccessful bid.

Disney agreed to sell the properties to get clearance for its $71 billion Fox takeover, a transaction that closed earlier this year. Regulators were concerned that the company would have too much control over sports television if it owned both ESPN and the regional broadcasters. Disney had to sell the networks within 90 days of the Fox deal’s completion in mid-March.

The New York Yankees decided to buy back their network from the group, removing a crown jewel that’s valued at about $4 billion. And several deep-pocketed potential suitors, including Comcast Corp., Discovery Inc. and the new Fox Corp. itself, bowed out of contention for the remaining networks.

That hurt Disney’s ability to command top dollar. Analysts originally estimated that the collection could fetch $20 billion to $22 billion, but bids for the 21 properties -- not counting the Yankees’ channel -- were considerably lower.

Disney’s bankers suggested spinning off the networks to shareholders, rather than selling them. But the company remained committed to the auction.

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net;Anousha Sakoui in Los Angeles at asakoui@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III</s>Disney has reached a deal to sell 21 Fox regional sports networks to Sinclair Broadcast Group for about $10 billion, according to a report by the Wall Street Journal.

The deal is expected to be unveiled on Friday, per the Journal. Reps for Disney and Sinclair did not immediately respond to requests for comment.

Disney has reached a separate agreement with the New York Yankees to sell its majority interest in the YES network, which carries Yankee games in the team’s hometown market, for about $3.5 billion. The team already owns the remainder of the channel. Amazon is a partner with Sinclair and the team in that transaction, according to industry sources.

Disney has been under pressure to find a buyer for the sports cablers that it inherited as part of its $71.3 billion purchase of 21st Century Fox. The sale of the channels was a condition of the Justice Department’s approval of the Fox transaction.

The initial forecasts for the RSN sale values the entire group including YES at $19 billion-$20 billion. But the limited number of players in the auction underscored the concerns about the pay-TV market and the value of channels dependent on licensing high-priced sports programming from local teams.

Sinclair’s muscle in local TV markets as the owner of about 170 TV stations nationwide makes it well suited to extract value from the RSNs by using its leverage for carriage deals with MVPDs.</s>Sinclair Broadcast Group said Friday it agreed to buy 21 regional sports television networks from Walt Disney Co. in a deal worth $10.6 billion.

The regional sports networks were part the assets of Rupert Murdoch's 21st Century Fox sold to Disney in a blockbuster $71 billion deal completed earlier this year.

Disney was required to sell off the sports broadcasters under an agreement with US antitrust regulators.

The sports operations include local rights to 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams. It had some $3.8 billion in revenue and 74 million subscribers in 2018.

Sinclair will merge the operations with its existing sports businesses including the Marquee Sports Network and Tennis Channel.

"This is a very exciting transaction for Sinclair to be able to acquire highly complementary assets," said Chris Ripley, Sinclair's president and chief executive.

"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."

The Fox deal ramped up Disney's operations in film and television and cemented its role as the leading Hollywood studio. It left Murdoch with a slimmed-down "new Fox" that includes the US broadcast network and Fox News Channel.

The largest US local television operator, Sinclair owns or providers services to some 191 stations.</s>Walt Disney Co said on Friday it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair Broadcast Group Inc for US$9.6 billion, a deal that clears the way for its purchase of Twenty-First Century Fox Inc's film and television assets.

[BENGALURU] Walt Disney Co said on Friday it would sell its interests in 21 regional sports networks and Fox College Sports to Sinclair Broadcast Group Inc for US$9.6 billion, a deal that clears the way for its purchase of Twenty-First Century Fox Inc's film and television assets.

The deal will help Sinclair, the largest US broadcast station owner, add channels such as Fox Sports Detroit and Fox Sports Florida to its existing sports business that includes Marquee Sports Network and Ring of Honor Wrestling.

Shares of Sinclair, whose bid for Tribune Media Co collapsed last year following opposition from the Federal Communications Commission, were trading up 14.6 per cent at US$51.50 in after-hours trading.

Friday's deal excludes the New York Yankees team's regional sports network, Yes.

Sinclair plans to make the acquisition through a newly formed indirect subsidiary called Diamond Sports Group LLC.

The company said Byron Allen, CEO of Entertainment Studios, will serve as an equity and content partner in a newly formed indirect wholly-owned unit of Sinclair and an indirect parent of Diamond.

Disney, which closed the acquisition of Fox's film and television assets in March, had agreed to sell the networks as part of an agreement with the US Department of Justice (DoJ).

"The news could bring some closure to Disney's pending obligations regarding the consent decree, while the company continues to take steps to fortify ESPN amid a paradigm shift to direct-to-consumer offerings," CFRA analyst Tuna Amobi wrote after the Wall Street Journal first reported about the impending deal.

The assets are valued at US$10.6 billion, including minority equity interests.

The regional sports networks portfolio delivered a combined US$3.8 billion in revenue across 74 million subscribers in 2018, the companies said.

"The transaction is expected to be highly accretive to free cash flow and brings consolidated net leverage to 4.7x and 5.1x through the preferred financing," said Sinclair chief executive officer Chris Ripley.

Diamond or Disney may end the deal if it is not completed by February 2020, according to a filing.

Completion of the deal is subject to customary closing conditions, including the approval of the US DoJ.

Guggenheim Securities LLC, Deutsche Bank Securities Inc, RBC Capital Markets, Pursuit Advisors and Moelis & Co are Sinclair's financial advisers.</s>Sinclair Broadcast Group Inc. agreed to buy 21 Fox regional sports networks from Walt Disney Co. for US$9.6 billion, turning the local-TV company into a cable-sports powerhouse.

Sinclair will acquire the business via a new subsidiary called Diamond Sports Group, the company said on Friday. Byron Allen, who founded Entertainment Studios and owns the Weather Channel, is investing in the business and will help supply content.

Disney agreed to sell the networks as part of its already-completed acquisition of 21st Century Fox Inc.’s entertainment assets. Bidders for the sports networks included John Malone’s Liberty Media Corp., which teamed up with Major League Baseball, and Ice Cube’s Big3 U.S. basketball league. The entertainer lined up Will Smith, Serena Williams and Snoop Dogg as content partners for his unsuccessful bid.

The transaction allowed Disney to get antitrust approval for its US$71 billion Fox takeover, a transaction that closed earlier this year. Regulators were concerned that the company would have too much control over sports television if it owned both ESPN and the regional broadcasters. Disney had to sell the networks within 90 days of the Fox deal’s completion in mid-March.

The New York Yankees decided to buy back their network from the group, removing a crown jewel that’s valued at about US$4 billion. And several deep-pocketed potential suitors, including Comcast Corp., Discovery Inc. and the new Fox Corp. itself, bowed out of contention for the remaining networks.

That hurt Disney’s ability to command top dollar. Analysts originally estimated that the collection could fetch US$20 billion to US$22 billion, but bids for the 21 properties -- not counting the Yankees’ channel -- were considerably lower.

Disney’s bankers suggested spinning off the networks to shareholders, rather than selling them. But the company remained committed to the auction.

Sinclair has been one of the broadcast industry’s most acquisitive companies for years, but this marks a new direction. It previously focused more on collecting local-TV stations, becoming the dominant company in that area.

More recently, its rivals have grown more formidable. Nexstar Media Group Inc. agreed to buy Tribune Media Co. for about US$4.1 billion in December, vaulting it past Sinclair as the largest owner of TV stations in the U.S.

The Fox sports networks give Sinclair a major foothold in cable TV, and the kind of live programming that appeals to advertisers. The channels serve cities such as Los Angeles, Atlanta and Detroit, with games from major pro leagues.

Sinclair already owns some other sports assets, including the Tennis Channel and the Ring of Honor wrestling circuit.</s>Sinclair Broadcast Group’s reported deal to buy regional sports networks from Walt Disney Co. for $10 billion would give the Hunt Valley broadcaster steady revenue and fit well with its moves into sports programming, a stock analyst said in a report Friday.

The deal has not been announced yet, though it’s the subject of a story in the Wall Street Journal that reported Thursday that the long rumored deal had been finalized, citing unnamed sources.

Late last month, Fox Business had reported that Sinclair was poised to buy the group of 21 Fox regional sports networks after emerging as the front-runner in an auction.

Tuna Amobi, equity analyst at CRFA Research, maintained a “strong buy” rating on both Sinclair’s and Disney’s stock after the reports.

“With regional footprints that traverse several major U.S. markets, the [sports networks] had been expected to fetch a much higher valuation, after a seemingly competitive months-long auction that attracted several other potential bidders,” Amobi said Friday. “We think the [networks] could provide another complementary backdrop for [Sinclair’s] recent forays into sports programming,” through both traditional and online channels.

Regional sports networks, which show local sports such as basketball and baseball, have been losing viewers as more pay-TV customers cut the cord, Amobi noted.

Still, “we see a relatively steady dual revenue stream (subscription and advertising) that could bode well for Sinclair's long-term return on investment,” he wrote.

Sinclair officials could not be reached for comment Friday.

The nation’s largest owner of local television stations also owns professional wrestling’s Ring of Honor and acquired the Tennis Channel in 2016. The broadcaster said in January it will launch a regional sports network with the Chicago Cubs.

Disney, which acquired 21st Century Fox’s entertainment business for $71 billion in March, needs to spin off the sports networks as a condition of securing U.S. antitrust approval for that deal. Disney had agreed to sell the sports networks within 90 days because it owns ESPN. (Fox is keeping Fox News, Fox Business, Fox Sports and the Fox TV network.) The networks include channels in Los Angeles and Detroit.

For Disney, which has been taking steps to strengthen ESPN, such a deal would bring closure to pending obligations under the consent decree for the Fox entertainment deal, the analyst said.

Fox Business had reported that other bidders in the auction for Disney’s sports networks included Liberty Media, led by cable magnate John Malone, and the Big3 Basketball league led by businessman and hip-hop legend Ice Cube. Major League Baseball is reportedly partnered with Liberty Media on its bid. And Ice Cube recently announced via Twitter that Magic Johnson joined his bid.

The Wall Street Journal also reported that Sinclair has a separate partnership with the New York Yankees to buy the YES Network, the team’s New York sports channel, from Fox for $3.45 billion.</s>(Reuters) - Sinclair Broadcast Group Inc, the largest U.S. broadcast station owner, has reached a deal valued at more than $10 billion to buy 21 regional sports networks from Walt Disney Co, the Wall Street Journal reported on Thursday.

The deal, which would include sports channels in Los Angeles and Detroit, is expected to be announced as early as Friday, the newspaper said, citing people familiar with the matter.

Disney and Sinclair were not immediately available for comment.

Disney acquired the sports networks as part of its $71 billion acquisition of Twenty-First Century Fox Inc’s film and television assets.

The company agreed to sell the networks after the U.S. Justice Department said Disney, which owns cable sports network ESPN, must divest the Fox networks that provide sports programming for regional and local markets.

Disney closed the acquisition of Fox’s film and television assets in March, nearly a year after it won a bidding war against cable company Comcast Corp .

The potential deal for Disney’s sports networks would come after Tribune Media Co terminated the sale of 42 TV stations in 33 markets to Sinclair last year.

Other suitors for Disney’s channels included Liberty Media Corp and Big 3 Basketball LLC, whose management includes Jeff Kwatinetz and rapper and actor Ice Cube, according to the Wall Street Journal.</s>Sinclair is buying 21 regional sports networks from Disney in a $10 billion deal that marks the final major detail of Disney’s massive Fox purchase, according to The Wall Street Journal.

It’s the latest move for Sinclair in regional programming, which is an area that the company already has vast control over. (The Federal Communications Commission actually blocked a merger between Sinclair and the Tribune Media Company last year due to concerns about Sinclair’s reach.)

The 21 sports networks in question were part of Disney’s purchase of Fox and its assets in the blockbuster deal that closed earlier this year. But because of Disney’s already heavy presence in sports (mostly through ESPN and its various networks), Disney was required by regulators to divest those regional sports networks in order to get approval for the deal to go through.

Now that the deal is worked out, everything seems to have been wrapped up nicely for Disney’s purchase of Fox. All that’s left is to see how these changes will impact the rest of the entertainment industry, and those effects may take years to fully be seen.
Sinclair Broadcast Group buys Fox Sports Networks (FSN) from The Walt Disney Company for $10.6 billion. Disney was ordered by the U.S. Justice Department to sell FSN as part of its purchase of 21st Century Fox last year due antitrust concerns over its ownership of ESPN Inc.