Bidder for Disney's Sports Networks Accuses Charter of Undermining Sale Process--Update

By Joe Flint 

One of the bidders for regional sports networks that Walt Disney Co. is selling has lodged a complaint with federal regulators alleging that cable operator Charter Communications Inc. is undermining the sale process by threatening to drop the channels from its systems.

In letters to the Federal Communications Commission and the Justice Department, Big3 Basketball LLC alleged that Charter's conduct is depressing prices in the auction and suggested the situation could benefit Charter's largest shareholder, Liberty Media Corp., which is also a bidder.

Big3 said it has engaged in negotiations with Charter over the price the cable company would pay to carry the sports networks should Big3 be the winning bidder. Big3 said the discussions broke down and it now fears the channels will lose carriage.

"Charter's conduct risks effectively excluding Big3 from the bidding process and tainting the auction," the company told the FCC. "It has been suggested to Big3's ownership that Charter has disseminated its threat to drop the (regional sports networks) to other members of the industry, thereby suppressing auction prices, chilling bidding, and ultimately hurting Disney's ability to secure the best price for the (channels)," the letter said.

In a statement, Charter said it "welcomes the opportunity to discuss a future carriage agreement for these networks with whomever ultimately owns them including Big3. Regardless of who owns the programming, we approach all negotiations with the same singular objective of reaching carriage agreements that best meet the needs of our customers."

Big3, which runs a 3-on-3 basketball league with backing from entrepreneur Jeff Kwatinetz and rapper and actor Ice Cube, told the FCC it lacks the leverage to compel Charter to carry the regional sports networks.

Disney is divesting 22 regional sports networks it acquired as part of its purchase of 21st Century Fox entertainment assets in order to comply with the government's conditions for approval of the deal.

One of the networks -- the YES channel in New York -- is near a deal to be sold to the New York Yankees, who already own 20%, and Sinclair Broadcast Group Inc., RedBird Capital Partners LLC and Amazon.com Inc. The deal values the channel at $3.5 billion.

Other bidders for the channels include Sinclair and Major League Baseball. Final bids are due on April 15, people familiar with the process said.

Write to Joe Flint at [e-mail]

(END) Dow Jones Newswires

April 11, 2019 13:18 ET (17:18 GMT)

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