Why MLB buying Fox regional sports networks would make sense

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Ever since Disney got provisional approval in June from the U.S. Department of Justice to acquire most of 21st Century Fox’s entertainment assets for $71.3 billion, the fate of 22 regional sports networks has been up in the air.

The DOJ told Disney it could not keep the RSNs, and would have to sell them off within 90 days of the Disney-Fox deal closing. That restriction launched a parlor game for sports media folks: Who will buy the RSNs?

Comcast, AT&T, Verizon, and Discovery all looked like potential bidders. There were also reports that Fox could end up buying the networks back. Then, last week, CNBC reported that Amazon was bidding in the first round, along with less surprising names including Sinclair, Apollo Global Management, Blackstone, and KKR.

And now Major League Baseball may be in the mix.

MLB Commissioner Rob Manfred, speaking with Corey Leff of the sports business blog JohnWallStreet on Tuesday after the annual March of Dimes sports luncheon in New York City, gave an eyebrow-raising answer when asked about the RSNs: “We’re very interested in the RSN sale process and have preferences in terms of who the owners are going to be. Candidly, we’re looking at the RSNs ourselves.”

Major League Baseball declined to comment any further to Yahoo Finance.

Rob Manfred, commissioner of Major League Baseball, speaks at the Yahoo Finance All Markets Summit in New York on Feb. 8, 2017. REUTERS/Lucas Jackson
Rob Manfred, commissioner of Major League Baseball, speaks at the Yahoo Finance All Markets Summit in New York on Feb. 8, 2017. REUTERS/Lucas Jackson

The Fox RSN portfolio includes 22 local sports channels spread across the country, concentrated in the Midwest, with names like Fox Sports Kansas City, Fox Sports Oklahoma, and SportsTime Ohio—names that will obviously change once the channels change hands. The gem of the portfolio is YES Network, a joint venture between Fox and the New York Yankees. (The Yankees own 20% of YES but are reportedly in talks to buy the rest from Disney, so it’s likely the eventual buyer of the RSNs will only be buying 21 channels.) These channels have the rights to 44 pro teams in MLB, NBA, and NHL (no NFL). Guggenheim has valued the RSN portfolio at $25 billion.

Either Amazon or MLB buying the networks would represent a complete changing of the guard.

As intriguing as Amazon’s interest is to media onlookers, it doesn’t make much clear sense. Amazon obviously has its toes in an eye-popping breadth of industries, but it has zero experience in operating linear cable channels. In live sports, it has bought up some rights here and there, including streaming 10 NFL games for the past two seasons. But that is a far cry from owning television channels.

MLB, on the other hand, makes a little more sense as a buyer, even if at first glance it looks like a buyer out of left field. The league (and particularly Manfred, as an attorney and the longtime MLB VP of economics and league affairs under Bud Selig) has experience with negotiating broadcast rights packages; it has intimate understanding of which teams bring the biggest local ratings, which are unhappy with their current deals, and other granular nuances of the local-market cable landscape.