FoxSports and FoxNews spinning out of Fox

[nelsonmuntz]

Disney to buy key 21st Century Fox assets in $52.4 billion deal

FoxSports is probably not viable without the affiliation with the broader Fox Networks. This company has to be merged into something else or it will not survive. FoxNews won't be big enough by itself to carry FoxSports.

This is earth shaking for college athletics, and probably puts a spike in any hope of getting a semi-reasonable bid from ESPN on the next AAC TV deal.

 

[Waquoit]

Don't they need to spend some of that cash somewhere?

 

[nelsonmuntz]

Don't they need to spend some of that cash somewhere?

Fox was a multi billion dollar corporation that could afford to invest hundreds of millions to build FoxSports into a viable competitor to ESPN. Whatever this NewCo is going to be called will be none of those things. It will have to be self sufficient and investment capital will be harder to find. FoxSports lost its sugar daddy.

 

[huskymedic]

 

[HuskyHawk]

You've got it backwards Nelson. They spun off the movie studio (or plan to), which will provide the rest of NewsCorp with a vast amount of money to invest in the remaining business. Expanding Fox News, Fox Sports and the TV properties. That is their plan. It has particular value to Disney, because the Fox movie studios own the rights to several Marvel properties (including X-men), which hampers Disney's plans around the Marvel universe. So Disney is overpaying a bit to secure the whole package. I would not be surprised to see a Marvel Universe theme park open up at Disney Orlando.

 

[The Funster]

Part of the deal was Fox's interest in Hulu and Sky

 

[UConnJim]

New Fox is FOX News Channel, FOX Broadcast Network, FOX Business Network, 28 TV stations, FS1/FS2, and 49% of the Big 10 Network. Proforma revenues will be ~$10 billion and EBITA will be ~$2.8 billion so New Fox will not be a small company, somewhat smaller than CBS. They are saying they will FOCUS on live news and sports.

Are Nelson's conclusions correct? New FOX will be focusing on live sports, but in my opinion, it's too early to tell what the future will look like for the value for sports rights and how live sports will be viewed. The large tech companies like Google, Amazon, and Microsoft, which each have an equity market cap of multiples of Disney, could start chasing sports rights and they may not be that price sensitive as someone like Amazon could view live sports as a benefit for Amazon Prime members.

The current issue is not that live sports are going down in value, but the problem is with how consumers pay for live sports. The cable bundle business model for paying for live sports is in steady decline which is what ESPN's problem is. As with any radical change in a business, the incumbent winner is usually the slowest to adjust to the new reality.