The Walt Disney’s company blockbuster $52.4 billion acquisition of most of 21st Century Fox’s assets will be a game-changer for both ESPN and rival Fox Sports/FS1.
Here’s some key questions and answers on how this Hollywood mega-merger will impact sports TV viewers.
MORE: More details on the ESPN-Fox merger
Question: Who's winning, who's losing here?
Answer: Disney’s ESPN appears to be the early winner by far. Under the proposed deal, ESPN would get its mitts on Fox’s 22 regional sports networks (RSNs) across the country. The group includes the crown jewel YES Network, jointly owned by Fox and the Yankees, which broadcasts Yankees and Nets games. Led by John Litner, YES has ranked as the most-watched RSN in the U.S. for 12 of the past 13 years.
After losing 13 million subscribers over the past six years, ESPN would instantly gain millions of local sports TV viewers across the country. That will quiet critics on Wall Street who have been grousing about subscriber losses that have reduced ESPN's footprint to 87 million households from a broadcast network-like high of 100 million.
But Disney will not get the Fox broadcast network and its 28 TV stations, Fox News or Fox Business. Nor would it get the FS1 and FS2 sports cable channels, that were founded four years ago as national competitors to ESPN/ESPN2, the Big Ten Network or Fox Deportes.
Fox has aggressively gone after ESPN the last two years, recruiting talents such as Skip Bayless, Colin Cowherd and Jason Whitlock to FS1. But if this deal goes through, Fox’s overall sports operation will be smaller and less well-funded. The RSNs, in particular, are viewed as a cash cow that helped bankroll FS1’s aggressive expansion and acquisition of national sports rights. All told, these RSNs currently carry games for 44 MLB, NBA and NHL teams.
“FS1 is screwed if this deal goes through. The RSNs made $2 billion last year. They paid for everything,” said one source.
Fox founder Rupert Murdoch countered the notion that his company is in retreat.
“This will be a growth company, centered on live news, sports brands and the strength of the Fox Network. Those of you who know me know I’m a newsman with a competitive spirit,” Murdoch said Thursday.
Q: Will my local Fox sports channel be re-branded ESPN?
A: Bet on it. There exist few companies more brand-conscious than ESPN, with the possible exception of parent Disney. So the chances are slim and none the RSNs will continue under their current monikers. Some networks don't even have the Fox brand in their title. Expect ESPN to slap the four letters on every property.
Look for YES Network in New York to become “ESPN New York,” Prime Ticket in Southern California to become “ESPN Los Angeles,” Fox Sports Carolinas to become “ESPN Carolinas” and so on down the line.
Here's a quick chart that will bring you up to speed on the various RSNs and their rights deals.
Q: Does this mean I’m going to be seeing Stephen A. Smith on my local Fox sports cable channel?
A: Probably. Disney boss Bob Iger told CNBC he views Fox’s RSNs as a “complement” to ESPN’s national cable channels.
“There will be a sharing of product so that we can infuse ESPN national with some more local content. And infuse the local regional sports networks with more national content. The result is both will be better for the consumer than they are today,” Iger said Thursday.
An ESPN source says the company will use the regional networks as a minor league of sorts to develop TV/radio talent who can be developed and finally promoted to the national networks. Both Smith and “First Take” sparring partner Max Kellerman cut their teeth on local radio before going national on ESPN.
The RSNs are also expected to feed content to the new ESPN+ streaming service, which president John Skipper touted as one of the company' most important initiatives Wednesday.
Q: So is this a done deal?
A: No. Antitrust regulators could step in. The U.S. Justice Department, for example, just launched a lawsuit to block the AT&T-Time Warner merger. Don’t rule out the possibility of another media giant such as Comcast trying to crash the party with a hostile bid for Fox assets. Comcast, parent company of NBCUniversal, recently dropped out of the bidding for Fox assets leaving Disney in the pole position.
Don’t forget, Comcast’s Brian Roberts and Steve Burke launched their own unsolicited $54 billion bid to take over the Mouse House in 2004. Both Roberts and Burke have a reputation for making bold moves. They’re still running Comcast/NBC Universal.
Still, many financial experts expected the Disney-Fox the deal to go through on Thursday. So the Mouse House will likely get bigger and better. And ESPN looks like the main beneficary.
