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So an absolute blockbuster just hit the streets when CNBC reported Disney had been discussing buying 21st Century Fox.
Here’s the opening to that CNBC story:
“21st Century Fox has been holding talks to sell most of the company to Walt Disney Co., leaving behind a media company tightly focused on news and sports, according to people familiar with the situation.
The talks have taken place over the last few weeks and there is no certainty they will lead to a deal. The two sides are not currently talking at this very moment, but given the on again, off again nature of the talks, they could be revisited.
For Fox, the willingness to engage in sale talks with Disney stems from a growing belief among its senior management that scale in media is of immediate importance and there is not a path to gain that scale in entertainment through acquisition. The company is said to believe that a more tightly focused group of properties around news and sports could compete more effectively in the current marketplace.”
But the most important aspect to this story for those of us who are interested in sports media is that the potential sell wouldn’t include the Fox broadcast network, Fox News or the Fox Sports companies.
“The company could not own two broadcast networks and would therefore not buy the Fox broadcast network. It would not buy Fox’s sports programming assets in the belief that combining them with ESPN could be seen as anti-competitive from an antitrust standpoint and it would not buy the Fox News or Business channel. Disney would also not purchase Fox’s local broadcasting affiliates, according to people familiar with the negotiations.
In addition to the movie studio, TV production and international assets such as Star and Sky, Disney would also add entertainment networks such as FX and National Geographic.”
Whenever stories like these break my first thought is who leaked the news?
Typically my first thought is that the leaker is the person who benefits most from the news being public. So my initial inclination is that Fox may be the leaking party. Why would Fox leak? In an effort to gin up interest from other companies in buying it who believe that Disney might otherwise buy the company.
But does that really make sense?
Wouldn’t Fox have just reached out privately to companies with the assets to buy 21st Century Fox? And given that nondisclosure agreements are typically filed in situations like these wouldn’t the risk here be substantial for either Disney or Fox?
So I’m just not sure we can assess how a story like this went public.
But the more interesting question for readers of this site is this — who would buy Fox Sports and its assets? (Disclosure I am not a Fox Sports employee and I am using zero conversations with anyone in Fox Sports management to write this article.)
But I think there are several fascinating suitors for the Fox Sports assets.
Especially the NFL.
1. The NFL
What if the NFL decided to buy the Fox broadcasting channel and FS1 and FS2 and gave them, along with the NFL Network, exclusive rights to the NFL games beginning in 2021?
Remember, Fox already owns the NFC broadcast rights so the NFL knows the sports network can handle all distribution with ease here.
What if the NFL gave Fox Sports all day broadcast rights to the league on Sunday and on Thursday and Monday? (Or at least threatened to do so to drive up the price for anyone else to buy NFL games.)
Can you imagine Fox kicking off games from London in the morning, then leading into a normal 1 eastern window followed by an afternoon and primetime game?
You could couple that with simultaneously airing all non-national games on FS1, FS2, and the NFL Network meaning that every game could be aired beginning on 2021.
Yes, it would be expensive to acquire these networks, but the long range play could be genius.
The NFL would control its own means of distribution and also turn into a powerful broadcasting play regardless of whether the future is over linear TV, cable, or streaming. Plus, if the NFL thinks the media coverage of its league has been too negative, who would hear any other criticism if the league had its own megaphone?
Think about the rates the NFL could command for FS1, FS2 and the NFL Network if they put every game on those channels.
I mean we’re talking insane dollar amounts all going direct to the NFL. At the same time the NFL could use the Fox existing ad sales teams to integrate ad partnerships directly with the teams and the league.
Remember, it was Fox’s ability to buy the NFL that started Fox Sports in 1994. Can you imagine if a little over a generation later the NFL realized that instead of making media companies billions it should make that money itself? And so it bought back all of Fox to carry its games.
Honestly, it’s genius, but it’s also a big spend.
Would the league have the balls to try and pull it off?
So far Netflix has avoided creating any substantial sports offerings, what if they decided to get into the sports business by buying Fox? Hell, to be honest the entire Fox business could make sense for Netflix.
Now the challenge here is this — Fox’s rights fees all expire in the years ahead in the world of sports. So does it make sense to buy a company that’s just renting sports rights? That’s my argument for why no one should buy ESPN either. If you want to enter the sports arena, just wait and bid for the rights yourself.
That’s why I think it makes more sense for a producer of original content to want to buy Fox more than a distributor.
The rationale would be the same as for Netflix.
This would aid the Amazon Prime offerings a great deal. I actually think it would make sense for Amazon to buy all of 21st Century Fox too, not just sports at all.
The benefit here isn’t just that you buy the Fox movie studio and all the programming catalog, it’s that you keep your top streaming competitors — Netflix and Amazon from accessing this cache of valuable content.
It’s hard to see a liberal company like Apple wanting to get in bed with Fox News, but could it make complete sense for Apple to buy the Fox Sports brand?
But, again, the problem is all of Fox’s sports contracts eventually expire. So if you want to get into the sports business why not just wait and buy the rights yourself?
But when Apple is presently nearly a trillion dollar business and the entire market cap of 21st Century Fox is around $50 billion, could you buy up the rest of the assets and sell off Fox News to another buyer?
Will Facebook ever enter live sports?
Does it want to be a real programmer or just dabble in it?
Honestly, the entity that makes the most sense to buy the Fox Sports assets is the NFL.