Sinclair Broadcast Group Deal With Disney is Big Bet on Sports Gambling

  • Sinclair Broadcasting Group has acquired 21 regional sports networks from Disney for $10.6bn
  • The Group already owns more than 200 TV stations
  • The deal is part of its strategy to take advantage of the nascent sports betting market in the US
  • There will be new lucrative ad revenue, exclusive access revenue and direct sports betting handle revenue potentially available to Sinclair
The Sinclair Broadcast Group has acquired 21 regional sports networks from Disney.
The Sinclair Broadcast Group has acquired 21 regional sports networks from Disney, in a deal being worth $10.6bn

Major Sports TV Deal

Sinclair Broadcast Group is pinning its future on sports, as well as sports betting. The broadcaster has signed a deal with Entertainment Studios. It will pay Disney $10.6bn in return for 21 regional sports networks across the US.

Following announcement of the deal, Sinclair’s share price rose by 30%. This was an increase of more than $13 following early morning trading.

The federal regulator ordered Disney to sell its regional sports networks after its acquisition of the majority of 21st Century Fox. That deal was worth $71.6bn.

Sinclair already has an interest in New York’s YES Network following the brokering of a deal worth $3.5bn. Co-partners in this deal include Amazon and the New York Yankees.

The Group also came together with the Chicago Cubs to bring the Marquee Sports Network to market in Chicago. The network will begin airing during 2020.

This is an ambitious plan by Sinclair, which now controls more than 200 different stations.

Embracing the Evolution of Sports

The viewing of TV in real time has been fading in recent years; on-demand television and the internet have significantly diluted the market. But sports broadcasting is one of the last bastions of live TV.

Most people still consume sports content and events through TV. Sinclair Broadcast Group seems to be aware of the shifting landscape in the sporting scene in the US, since the end of the federal ban on sports betting.

While only nine states have legal sports betting at the moment, dozens more are expected to make the move in the coming years. Therefore, parties that position themselves well in this space now could benefit handsomely from this burgeoning sector.

Analysts estimate that tens of billions of dollars are up for grabs once the sector spreads across the country.

Sinclair has suggested it might license some of its sports content to platforms seeking more access to the sector, such as AT&T and Amazon. The latter is already well established in the online streaming sector.

Those within Sinclair Broadcast Group see the Disney acquisition as a bargain. Analysts had estimated the deal would be worth in the region of $15bn to $20bn. Therefore, $10.6bn looks like great value.

Areas Sinclair Broadcast Could Benefit

An obvious way sports networks can take advantage of sports betting is through gambling advertising. This is a new avenue of revenue for networks and could see up to $2bn in new advertising revenue from sports betting operators and gambling companies.

This is at a time when TV advertising has been in decline following the explosion in growth of online advertising.

The legalization of gambling will also likely see a further willingness for people to pay for exclusive access to innovative content.

Sinclair Broadcast Group already owns the Tennis Channel, which is the second most popular sport to bet on in Europe. The majority of bets on tennis matches are in-play bets, which of course means that live access to these matches is vital for bettors.

Therefore, Sinclair is planning on creating technology that can allow for quick live betting during its broadcasting of games and events. As tennis matches have plenty of breaks, it makes it even easier to cater for prop bets. This could translate well to basketball, baseball, and American football.

With so many resources now at its disposal, the Sinclair Broadcast Group is making serious moves to take advantage of this growing sector.