Murdoch Against Disney With Purchase Of Cleveland Indians

Murdoch Continues To Arm For Battle Against Disney With Purchase Of Cleveland Indians
The looming national sports cable network battle between Fox and ESPN just got a lot more serious.

Yesterday’s purchase of SportsTime Ohio by Fox Sports Media Group for $300 million gives Rupert Murdoch one more big weapon in the war he is going to wage against Walt Disney’s ESPN in 2013. Murdoch will now  own regional networks that combined produce over 5,000 live local events each year and serves as the regional TV home to more than half of all MLB, NHL, and NBA teams.  FSN is also one of the leading national distributors of collegiate sports, televising more than 1,000 events from the Big 12, Pac-12, SEC, ACC, and Conference USA.

Last month Murdoch purchased 49% of the New York Yankees YES Network, the most-watched RSN in the country, for $3.4 billion, with Fox increasing its stake to 80% in three years.

While Cleveland may is not New York, the purchase of SportsTime Ohio is a big move strategically because it gives Murdoch exclusive long-term local telecast rights for Indians baseball, ensuring that the Indians will once again be part of the FOX Sports portfolio of regionally televised hometown teams.  Prior to the 2006 season, Indians games were locally televised by FOX Sports Ohio. FOX Sports Ohio serves more than five million homes throughout the state of Ohio, as well as portions of Kentucky, Indiana, western Pennsylvania, western New York, and West Virginia.  FOX Sports Ohio is the exclusive regional TV home of the Cincinnati Reds, Cleveland Cavaliers, Columbus Blue Jackets, Columbus Crew, Xavier Musketeers, and Cincinnati Bearcats. SportsTime Ohio also offers other locally relevant sports content, including Cleveland Browns programming, OHSAA football and basketball playoffs and championships, and Mid-American Conference events.

By my calculations, the ESPN brand is worth $11.5 billion (roughly one-fourth of the amount Walt Disney would get for its national cable network in an arms-length transaction), and is the second-most valuable sports business brand in the world. Murodch lusts after the 35% operating margins (earnings before interest, taxes, depreciation and amortization as a percent of revenue) enjoyed by ESPN. Sure, rights fees have been going through the roof, but ESPN keeps passing the costs on to carriers, who in turn pass them along to sports junkies like me. Last year ESPN got an average of $5.06 per month, per subscriber. But SNL Kagan predicts ESPN will command $5.26 in 2013.

Read More: http://www.forbes.com/sites/mikeozanian/2012/12/29/murdoch-continues-to-arm-for-battle-against-disney-with-purchase-of-cleveland-indians-rsn/?partner=yahootix