It is hard to imagine that the 22 regional sports networks Disney is acquiring in the 21st Century Fox transaction are heading to auction in search of foster homes. This is the largest sports transaction in the history of modern business with a value well over $20 billion (Guggenheim Partners estimates $22 billion while others portend a quick selling discount). Further, It's the most expensive sports property to come available, even if it is 20 individual markets serving up 40 professional teams.
Related: Books Out on Fox RSNs
Having witnessed first-hand the focus that Fox displayed in aggregating these valuable assets in the late 90's, then creating efficiencies across their collective national footprint, it's hard to believe it's all over now. The chance that one owner of all 22 networks will emerge is slim to none. In its place, a collection of competing interests will likely send RSNs scattering in multiple directions. Plenty of other business journalists have written about who has what to gain and the potential leverage they can create by grabbing at least some of these, but the truth is, times have changed. Much like a great but aging champion who has lost a step, their outside shot, bat speed or simply the nerve, so too have these once mighty RSN viewing magnets.
I grew up working in sports television and when the deal was first announced I was downright exhilarated at the prospect of ESPN actually owning and operating all 22 of these networks. The thought of these RSNs coursing through the veins of the mothership in Bristol, Conn., was exciting. ESPN has always had servicing the fan as the core mission and I absolutely believed a comprehensive sports service from the Worldwide Leader could be pro-consumer. Further, with Disney's majority stake in Major League Baseball's Advanced Media platform, it could have delivered a superior and elegant sports offering. Alas, it was never Disney's game plan and taking these RSNs as part of the 21st Century deal was probably forced by the Murdochs.... which leads us to the Hot Potato auction we now have... Here, you take them!
The strong and proven teams will take care of their own houses. YES Network will head back to their Bronx, N.Y. birthplace, the Cubs will launch their own long dreamt RSN and Guggenheim Partners (and/or Charter-Spectrum) may very well use the Los Angeles RSNs to cure their Dodger distribution woes. It's also highly likely the powerhouse private equity groups have recruited the gray hairs who first built the RSN business and will choose a broadcast partner (or partners) to leverage the other RSNs. Finally, the idea that FAANG scoops these up as a way to promote their varied interests seems too otherworldly for this aged industry observer: Buy a new iPhone XS Max and get your local RSN free? Amazon Prime Sports Plus+, maybe ?
Perhaps the executives at Fenway Sports Group have the best model as they've grown the long dominant and independent New England Sports Network into the centerpiece of a powerful ownership group with multiple interests across the sports ecosystem. There very well could be an expansion strategy on the horizon led by the master RSN craftsmen of NESN. One group however appears committed to staying on the sidelines and out of this auction fray: Comcast-NBC Sports. With a strategic collection of 8 RSNs that synch-up to their Xfinity cable markets, it appears they're content and will instead focus on their pending Sky acquisition... At least until such time as a new RSN ownership group comes knocking with an old RSN play... the Joint Venture.
Yes, there will be a plethora of pro-formas and various visions of leverage in play as RSN draft day draws closer. But my parting thought is that when it's all said and done, the consumer will be more in charge than ever. More to the point, do the hometown fans who built the RSNs still care enough to spend 3+ hours watching a major league baseball game, NBA super-teams, or those NHL players who battle with such heart but enjoy only fractional RSN audiences?
More critical, as cord cutting trends continue depleting the once-mighty cable and satellite television subscriber universe, will fans fully abandon the RSNs and grow their habit for snacking on sports via social media?
It is quite the curious case indeed but the new cast members for the RSN Redux are just an auction away.
Matt Cacciato is a former affiliate distribution executive for SportsChannel NY, ESPN, Fox and YES Network. He's currently Director, Masters of Sports Administration program and Executive in Residence at Ohio University. He can be reached at email@example.com.
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