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What the FOX/Disney deal means for sports media

Disney's purchase of Fox's RSN properties changes the game in sports media.

Disney already had the world wide leader in sports under its umbrella, but that wasn’t enough. Disney’s $54.2 billion stock purchase of 21st Century Fox — along with the assumption of $13.7 million of Fox’s net debt — means Disney also now owns regional sports broadcasting as well. All of Fox’s RSNs now belong to Disney which includes YES Network, Prime Ticket, and Fox Sports West. The mouse now owns regional sports television content from Cincinnati to Los Angeles.

Fox will maintain FS1, FS2, and the Fox broadcast network, so they still have national live sports. The company isn’t giving up the NFL or national MLB games. They aren’t giving up the playoffs in either sport, but they are giving up their daily local content that is consumed at a pretty strong number when all their viewers are added up. Daily local content can be more engaging to a fan than national games. After all, Disney will now be in front of sports fans in specific markets almost every day.

Now Disney owns access to 23 different markets through ownership and affiliate agreements. The first thing Disney needs to do is rebrand the properties that make them more Disney friendly. That could make them change to ESPN Sports West, ESPN Prime Ticket or ESPN Bay Area. Disney could also launch an entire new brand, but they wouldn’t want to do that. Here’s the kicker: Disney could be using the RSNs to rebuild ESPN’s stranglehold on sports media consumers.

Now it’s easier to cross promote. ESPN personalities can make an appearance on a regional network touting their programming. Theoretically, Disney could take any ESPN owned content — let’s say 30 for 30 — air it on a regional network to get viewers interested. This could lead to people watching more 30 for 30s when they are released on ESPN. The brand extension could help ESPN bring in viewers. It won’t stop the entire issue of cord cutting. It won’t stop some people who think ESPN has turned into MSESPN, but anything to slow the proverbial bleeding of viewers is good for ESPN right now. The firehose could turn into a regular hose, or even a drip. Disney will leverage their properties across multiple distribution channels. That’s what they do best.

Fox, meanwhile, will have to rely on its broadcast network and pray they can convince enough viewers to start tuning into FS1 and FS2. Maybe this takes a weight off the company and they can focus on marquee events. Maybe they really enter bidding wars for national television rights since they don’t have to worry about the P&L of their RSNs — some of those RSNs are on bad deals.

In any case, this is a dramatic shift in the marketplace. Disney now owns sports. They know that sports are one of the only pieces of content people consume live. This gives them a much larger net to reach those viewers.

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