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Amazon’s bid for Disney’s regional sports networks is ‘a big deal’ for sports broadcasting

Amazon is among the bidders for 22 regional sports networks. (Pascal Rossignol/Reuters)

Amazon has made a bid to acquire a group of regional sports networks, according to a CNBC report Tuesday, marking the e-commerce giant’s most aggressive foray into sports broadcasting and a potential landmark moment for the industry.

Teams and leagues have been waiting for digital giants like Apple, Facebook and Google to make a push into acquiring live sports rights. And Amazon has already dabbled in sports broadcasting, simulcasting “Thursday Night Football” broadcasts this fall and airing the U.S. Open tennis tournament in the United Kingdom. But the company has now reportedly entered a different sort of bidding war: not for traditional rights fees, but for 22 regional cable networks across the country.

The group of channels includes the YES Network, which broadcasts New York Yankees games, and regional sports networks in St. Louis and Detroit, as well as a slew of others. The networks, valued at around $20 billion, hold the local rights to a tapestry of NBA, NHL and Major League Baseball teams.

“In the other cases, [Amazon has] been taking second dibs, airing content that is also on traditional TV,” said Alan Wolk, co-founder and lead analyst for the media consulting firm TVREV. “This is the first time when it’s like, ‘Yeah we want the whole thing.’ It’s a big deal.”

(Editor’s note: Amazon founder and CEO Jeffrey P. Bezos owns The Washington Post.)

Disney acquired the 22 RSNs, as they are known, from 21st Century Fox last year as part of a much larger deal, but has been required by the Department of Justice to sell them because of antitrust laws. Disney has 90 days to sell the channels from the date the Fox deal closes, which is expected to be early next year.

Disney has said it wants to sell all the channels together, which would limit buyers to those that can afford the hefty price tag. Other potential buyers for the RSNs include Sinclair Broadcast Group and an assortment of private equity firms. It also has been suggested that the new Fox entity could buy them back.

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But a deal with Amazon would be the most notable, potentially shifting live sports rights into a digital sphere. So what does Amazon want with the RSNs? Several industry experts speculated that local game broadcasts could eventually be used to boost the value of a Prime membership.

Wolk suggested that with a slate of new media products soon to be offered by rival companies — Netflix-like options from Warner, Apple and Disney — live sports could be a differentiator for Amazon.

“If you have sports, then you’re more valuable than the competitors if you’re Amazon,” Wolk said.

Putting games behind a paywall and requiring viewers to have a Prime membership, though, might not sit well with professional sports teams that want to reach as many fans as possible.

“NHL, NBA and MLB teams aren’t going to be in love with the idea that their local content could be going to be put behind a Prime subscription,” said Dan Cohen, who leads the sports marketing company Octagon’s media rights consulting practice.

Cohen suggested Amazon could introduce a model where a baseball team, for example, might put some of its games behind a Prime paywall, while other broadcasts would be available to stream free.

Plus, many of the networks for sale already have broadcast deals in place with teams, some of which are on the books for another five years.

“It’s not easy to immediately figure out how it works,” said Patrick Crakes, a former Fox Sports executive.

Unlike national sports broadcasts, the regional networks appeal to loyal local audiences, which could be appealing to Amazon, Wolk said.

“With these channels, you get to attract, for example, the intense Yankees fan who needs to watch every Yankees game,” he said.

Tuesday’s report means only that Amazon is bidding — and there will be another round for more parties to enter the sweepstakes.

“You have some entities that really want these assets who aren’t Amazon,” Crakes said. “This is just the first round of bidding, so there’s a long way to go.”

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