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Disney Could Be Buying a Substantial Part of FOX, Which Is a Huge Deal for ESPN

By Kyle Scott

Published: Dec 5th, 2017 · 10:51 AM EST

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Wow. Big news today.

From CNBC:

Walt Disney Co. and 21st Century Fox are closing in on a deal and it could come as soon as next week, according to sources familiar with the matter.

CNBC has been reporting that Disney has held talks with the Rupert Murdoch-controlled media company to acquire its studio and television production assets, leaving Fox with its news and sports assets. Fox is also talking to CNBC parent company Comcast, but the talks with Disney have progressed more significantly.

The deal contemplates the sale of Fox’s A&E, Star, regional sports networks, movie studios and stakes in Sky and Hulu, among other properties. What would remain at Fox includes its news and business news divisions, broadcast network and Fox sports.

Disney will reportedly get FOX’s regional sports networks, which are basically everywhere there is not a NBC Sports regional network. What the deal won’t include, however, is FS1.

The deal will have a huge impact across the entertainment and media landscape, including sports. If it goes through as reported, Disney (ABC, ESPN) would instantly have a sports network in a substantial number of major cities. That would include the broadcast rights for, oh, just the Thunder, Cavs, Cardinals, Hawks, Braves, Mavericks, Spurs, Heat and Yankees, among many others. FOX would retain FOX Sports (network broadcasts) and FS1.

On the surface, this would seem like a great deal for Disney (ESPN) since regional sports networks are indispensable to sports fans– even those who cut the cord wind up with a service like PlayStation Vue or YouTube TV, which pay fees to those networks. Some Tweets on the matter:

This is the story of the day. From Disney's perspective, I totally get it. From Fox's? Unless they are bailing on sports entirely (NFL, CFB, etc) on the broadcast net and Disney is just saying NAH to FS1…I don't get it. https://t.co/c7VPULchuK

— Sports TV Ratings (@SportsTVRatings) December 5, 2017

Stop what? ESPN: HUGE affiliate fees. RSN's: HUGE affiliate fees. FS1: OK affiliate fees. Fox broadcast: has lagged (particularly relative to CBS) growing affiliate fees. The business models look different to me and the RSN/ESPN version looks like a much better model to me. https://t.co/0CQMBX8T7g

— Sports TV Ratings (@SportsTVRatings) December 5, 2017

If this winds up being true, you cannot overstate how massive a paradigm shift this is in sports media. Most Fox Sports profits come from RSNs. Wonder if/how these could be integrated into ESPN OTT. Wow. https://t.co/8KKGNmYiSn

— Ryan Glasspiegel (@sportsrapport) December 5, 2017

What’s more, last year FOX Sports cited in their own press release the importance of regional sports networks:

FOX Sports today released the results of “The 5th Network: Regional Sports Network Passion Index,” a Nielsen Media Analytics Primary Research study finding that sports fans rate regional sports networks (RSNs) as their most essential non-broadcast channels.

Just spitballing here, but ESPN has lacked a “TV” (now including streaming video) presence in individual markets, leaving sports fans to turn elsewhere for local game broadcasts. They won’t get one everywhere now, but they’ll have one in a lot of cities, which suddenly makes for a no so fast, my friends to those hastening the demise of ESPN. We can all do without First Take, but can we do without our hometown MLB and NBA games? Probably not. I wouldn’t be shocked if an eventual ESPN streaming option included local sports in the cities where they would own RSNs, making it a must-subscribe for sports fans.

Meanwhile, FOX has an increasingly polarizing FOX News, and FS1, which is good for basically nothing but Villanova basketball and making fun of Nick’s Wright giant fucking nose.