The last year-plus has seen some talk of AT&T selling off their regional sports networks (they have majority stakes in the former Root Sports channels now known as AT&T SportsNet Pittsburgh, AT&T SportsNet Rocky Mountain, and AT&T SportsNet Southwest, and a 40 percent stake in Root Sports Northwest, which is majority-owned by the Seattle Mariners), but that now may not be happening. Back in July, Bloomberg’s Nabila Ahmed, Eben Novy-Williams, and Scott Moritz reported that AT&T was “weighing a sale of its regional sports networks,” and in September, activist investor Elliott Management pushed for AT&T to consider various assets (including the RSNs) for divestment. But Josh Kosman of The New York Post reported Monday that AT&T received much less than the $1 billion they were hoping for, and they may not sell the RSNs now after all:
The wireless giant has received multiple bids for its group of four sports channels covering markets around Seattle, Denver, Pittsburgh and Houston — but all of them came in around or below $500 million for the lot, significantly short of expectations estimated to be around $1 billion, sources told The Post.
…Since receiving the underwhelming bids late last year, AT&T has not moved on an offer — raising concerns that it might cancel altogether, sources said.
“They don’t need to sell,” said a source with knowledge of the auction, which includes the rights to air games of teams such as the Houston Rockets, the Seattle Mariners and the Pittsburgh Penguins.
Kosman notes that part of the issue there is that the networks are expected to see a big drop in their EBITDA (earnings before interest, taxes, depreciation and amortization) this coming year, from around $115 million last year to $55 million this year. And while they still got some bids here (Kosman mentions that Sinclair, which bought the former Fox RSNs from Disney last summer, was the leading bidder), if those bids are so far below what AT&T was hoping for, maybe it makes some sense for them to hang on for now and hope for a better valuation later. But that’s a gamble in its own right, with many skeptical of what the future will hold for RSNs in an era of increased cord-cutting and carriage disputes.
It’s also notable that this comes at a time of larger concerns around AT&T. They have a lot of debt as a result of their 2018 acquisition of Time Warner, and while they’ve made some progress on paying that down thanks to sales of their stake in Hulu and some of their real-estate holdings, their debt load is still challenging. They also lost more pay-TV subscribers than expected in the fourth quarter of 2019, and they lost a lot of potential licensing revenue by holding shows back for the upcoming HBO Max service. So the RSNs aren’t the only issue facing the company, and they’re certainly not getting all of the focus. We’ll see if AT&T does in fact opt to hang on to these RSNs for now, and if so, how that works out for them.