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ERROR: type should be string, got "https://www.barrons.com/articles/disney-fox-rsn-sale-51547849801\nHow Disney’s Deal With Fox Is Complicating Sports TV\nNicholas Jasinski\nJan. 21, 2019 8:00 am ET\nPhotograph by Lynne Cameron/Getty Images\nAs Walt Disney ’s (DIS) acquisition of 21st Century Fox ’s (FOXA) entertainment properties enters its final innings, one loose thread remains. Disney is required by regulators to sell off a collection of regional sports networks that are part of the Fox deal.\nThe market for Fox’s RSNs, as they’re known, hasn’t materialized as some had hoped. And that’s creating a dilemma for MSG Networks, the New York-based RSN that’s home to New York Knicks, Rangers, Islanders, New Jersey Devils, and New York Red Bulls programming for about 7 million subscribers in the New York area.\nIt’s separate from The Madison Square Garden Co mpany (MSG), which owns the Knicks and Rangers franchises, the Madison Square Garden arena, and a few dozen other entertainment venues around the world. The two companies split in 2015, and both remain majority-controlled by James Dolan.\nWhile MSG Networks isn’t a perfect comp to Fox’s 22 regional sports networks, which include YES Network, it’s the only pure-play publicly traded RSN out there today. And according to BTIG analyst Richard Greenfield, the Dolans spun out MSG Networks in order to eventually sell it. “Unfortunately, to date, there has not been a buyer,” Greenfield wrote in a recent report.\nThe Fox RSNs, meanwhile are all on the block, since Disney has to divest them in order to gain regulatory approval for its Fox purchase. The sale will also help Disney defray some part of the $71 billion price tag.\nMSG Networks investors should be watching the sale process closely, as the price and multiple Disney receives in that transaction is likely to be a good indicator of what MSG Networks could be worth in its own deal. YES Network, another New York-based RSN, is part of the Fox RSN, making the bundle a particularly good comp for MSG Networks.\nThe Fox RSN-buyer may eventually even be interested in adding MSG Networks to its portfolio, given the benefits of scale.\nInitial reports in late November suggested that Disney and Fox were receiving significant interest for all or some of the RSNs. The suitors reportedly ranged from Amazon.com (AMZN)--owner of Prime Video-- to local broadcasters Sinclair Broadcast Group (SBGI) and Tegna (TGNA). Multiple private-equity players such as Blackstone Group (BX) and KKR were also said to be interested. Yankee Global Enterprises, the owner of the New York Yankees baseball team, was said to be interested in the 80% of YES Network it doesn’t already own.\nWhile the size of the bids wasn’t publicly known, the fact that there seemed to be so many willing bidders for the Fox RSNs boosted expectations that they would fetch a strong price. The research firm MoffettNathanson estimated that the full RSN business could be worth $18.6 billion. MSG Networks rallied close to 10% in late November on the news.\nBut since then, the market for the Fox RSNs hasn’t quite come together. That’s been bad news for Disney and MSG Networks alike. Including debt, Greenfield estimates that a weaker RSN sale would result in Disney effectively paying as much as 20 times Ebitda, or earnings before interest, taxes, and depreciation for the remainder of the Fox assets.\nThat would be pricey compared with other recent media acquisitions. In 2013, Comcast (CMCSA) paid 9.7 times Ebitda for NBCUniversal, and AT&T paid 14 times for Time Warner last year. CBS (CBS) currently trades for 9.6 times Ebitda, and MSG Networks and Discovery (DISCA) both trade for 11.3 times.\nNow, Greenfield doesn’t see the Fox RSNs going for more than 5 or 6 times Ebitda. The portfolio just isn’t worth as much to a local broadcaster of private equity player as it is to Disney or other major network owners, such as Comcast, CBS, AT&T (T), or Fox itself, which will continue to own Fox News and Fox Sports as a standalone company.\n“New Fox,” though, surprised the market recently when it said that it did not intend to bid for the RSNs.\nThere’s now the risk that Disney isn’t able to find a willing buyer for all 22 of the networks and is forced to write off stranded channels.\nAccordingly, MSG Networks stock has dropped about 15% in the past six weeks, versus just a 3% decline for the iShares Evolved U.S. Media & Entertainment ETF (IEME).\nAs Walt Disney’s (DIS) acquisition of 21st Century Fox’s (FOXA) entertainment properties enters its final innings, one loose thread remains."