Sinclair Broadcast Group CEO Chris Ripley declined to offer many new details about the company’s pursuit of Fox’s high-profile portfolio of regional sports networks during the company’s fourth-quarter earnings call. But anyone listening could tell the company remains very much in the mix.
In order to obtain regulatory approval for its acquisition of most of Fox, Disney has agreed to sell off the 22 RSNs, whose collective value is pegged at north of $15 billion. Fox several weeks ago said it would not be in the running to re-acquire any of the networks for its stand-alone future company. Sinclair has coordinated early overtures with private equity firm Apollo, and has been seen as a serious contender in bidding that has also which has also drawn suitors like Liberty Media and Major League Baseball.
“I can’t comment specifically on those reports due to non-disclosure agreements we have signed, but there is a very unique moment in time here in the RSN space that we really like our positioning on,” Ripley said. He went on to describe the attraction to the RSN properties, whose viewership patterns and advertising potential align with those of the company’s 191 local TV stations in their markets.
“These RSNs represent the most watched programs on TV and they’re really super-premium content with true scarcity value. You can’t create more sports,” Ripley said. “It’s shown in the ratings. Sports has grown overall in the last eight years in linear ratings and really the only thing that’s even close to that is news. Everything else has suffered due to fragmentation and increased supply.”
One analyst asked Ripley whether Sinclair will look to engage a private-equity partner or seek to finance a transaction on its own. The latter scenario may be feasible — especially if the networks are sold off as pieces, rather than as a whole collection — given Sinclair has record-low leverage after its agreement to acquire Tribune Media fell through in mid-2018.
“For lots of different reasons, I’m not going to handicap it for you,” Ripley said of the chances of a P.E. firm getting involved. “But it is certainly a possibility and part of active discussions.”
Ripley also addressed the company’s joint venture with the Chicago Cubs on a new RSN, Marquee Sports Network, which was announced earlier this month. He offered ample reasons why the company believes Marquee will not encounter the same issues that have dogged SportsNet LA, which is carried only by Charter’s Spectrum cable systems — and not DirecTV or other providers — five years after its launch.
“There was a very, very high subscriber fee ask associated with Sports Net LA that was essentially needed to make the financing work for the purchase of the Dodgers,” Ripley said in response to an analyst’s question during Sinclair’s conference call to discuss fourth-quarter results. “So it was sort of a leveraged play. We don’t have that situation here. We’re not buying a team. We don’t have a huge ask on the table.”
Marquee Sports Network will launch in 2020, taking over broadcasts of Cubs games from NBC Sports Chicago and local broadcast stations WLS and WGN. SportsNet LA was created in 2014 by the LA Dodgers and Time Warner Cable before the company was acquired by Charter Communications.
“The Cubs fan base is incredibly strong,” Ripley added. “Chicago is a Cubs town. When you take a look at where they live right now, which is on a multi-sport RSN, they comprise well over half of the total ratings of that RSN, which gives you an idea of the strength of the Cubs. The fan base is not as diffuse as it is in LA, with the Dodgers. LA is more of a transient city.”