Byron Allen Secures $10 Billion Sports Network Deal

By CultureBanx Team

  • Byron Allen & Sinclair Broadcast Group acquire Disney’s 21 regional sports channels for $10.6B

  • Disney’s debt was at $20.66B in 2018

In the over crowded race for Disney’s (DIS +0.14%) 21 regional sports channels, Byron Allen and Sinclair Broadcast Group (SBGI +2.81%) have come out on top. As a minority investor in Sinclair, Allen will benefit from the $10.6 billion acquisition as he looks to expand his media entertainment empire. For Disney, will this sale be enough to start paying down the massive debt they’re carrying due to its $71.3 billion 21st Century Fox deal?

Photo: Byron Allen

Photo: Byron Allen

Why This Matters: Regional sports networks, or RSNs, which own the rights to broadcast professional sports games across the country, fit perfectly into Allen’s formulaic approach to spurring the growth of his Entertainment Studios media properties. He is already the owner of The Weather Channel which he bought last year for $300 million, and as part of this Sinclair - Disney agreement Allen will provide content to the sports networks. In 2017, Allen claimed Entertainment Studio’s investments were valued at around $1 billion.

So far Disney has reduced its debt amount from $26.09 billion in 2017 to $20.66 billion last year. The mouse house sold its 39% stake in London based Sky to Comcast (CMCSA+1.50%) for $15.3 billion in September, and temporarily suspended its share repurchase program, all of which helped to lower its debt load. Now with the sale of these sports networks to Sinclair, they should be able to cut down their debt even further.

Disney had to get rid of the channels by mid-June to avoid antitrust concerns raised by its $71.3 billion merger with Fox

Disney had to get rid of the channels by mid-June to avoid antitrust concerns raised by its $71.3 billion merger with Fox. Regulators argued that since Disney owned ESPN they would effectively have a monopoly on sports networks. The deal doesn’t include the New York Yankees team's regional sports network “Yes,” as it will remain under Disney’s umbrella.

Situational Awareness: The comedian wasn’t the only one vying for Disney’s RSNs. Ice Cube’s 3-on-3 pro basketball league Big3 was as well, in a bid backed by stars such as LL Cool J, Magic Johnson and Serena Williams. Liberty Media was also interested however, there’s no love lost between them and Allen due to a $10 billion lawsuit his company filed against cable giant Charter Communications (CHTR +1.96%), where Liberty Media is the largest shareholder. Allen’s Entertainment Studios accused Charter of racial discrimination for refusing to carry any of its content. The deal between Sinclair and Disney is expected to be completed by February 2020.

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