Amazon Places First-Round Bid For Disney’s 22 Sports Networks
Amazon has placed a first-round bid for Disney’s 22 regional sports networks. If Disney CEO Bob Iger accepts the bid, it could pave the way for the end of traditional cable TV networks that includes Disney’s very own ESPN. Amazon’s threat of buying sports rights that include declining businesses like regional sports networks could intimidate traditional media companies.
Disney has to divest of the 22 networks as part of the $71.3 billion deal for Fox assets. The 22 networks include YES network that broadcasts the games of New York Yankees and other networks that broadcast live the regional games of professional leagues like MBL, NBA and NHL.
However, the competitive bidding situation has its benefits. It could push up the sale price to more than $20 billion. Other first-round bidders aside from Amazon include private equity firms and two broadcast TV companies – Tegna and Sinclair. The problem is the lack of balance sheets that will allow them to compete with the big traditional media players like Fox.
In order to stay relevant, Fox needs live TV that will feature sports. This is the reason why it wants buy back the 22 networks even if the company has not submitted a first round bid. With Amazon competing for the 22 networks, the price could go up which will be advantageous for Disney. Disney will gain maximum value by divesting of the 22 networks.
If an e-commerce giant like Amazon can buy sports rights that has a market capitalization of more than $700 billion, it could encourage other technology giants like Apple, Google and Facebook to bid for sports rights to remain competitive. Tech giants could easily outbid traditional media players for exclusive and digital-only rights. However, before this happens, the leagues themselves must be willing to abandon their partners.
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