• by Wayne Friedman , Staff Writer, January 19, 2018

One key area that may be overlooked in Walt Disney's $52.4 billion acquisition of Fox’s TV/entertainment businesses is its regional sports networks (RSN).

Projected 2018 cash flow for Fox’s RSN business is expected to reach an impressive $1.9 billion in earnings before interest, taxes, depreciation and amortization (EBITDA), according to MoffettNathanson Research.

Cash for the RSNs registers the highest cash flow of any business Fox is selling, according to MoffettNathanson -- more than Fox’s international cable network businesses and interests ($1.29 billion), Fox’s TV-movie studio (1.16 billion); and the FX Networks/Nat Geo Network ($800 million).

An earlier MoffettNathanson estimate said RSNs were likely to pull in $2.35 billion in cash flow. Why the change? The research group says there are “longer-term secular concerns with those networks.” Still, it’s a big and profitable business in the near-term and somewhat after that.

But if you don’t believe there is a high value in RSNs, take a look at some regional sports network local TV ratings.

For example, in three major markets -- Chicago, San Francisco, and Philadelphia -- NBC Sports Regional Networks says it regularly thrives against bigger national players.

For all of 2017, NBC Sports Chicago ranked higher in prime time (a Nielsen 1.08 household rating for 2017) than all other cable networks in the market. ESPN was at 1.07; MSNBC, 1.06; TBS, 1.04; and Fox News Channel, 0.99.

Similarly in San Francisco, NBC Sports Bay Area was also No. 1, posting an average 1.75 household prime-time rating. MSNBC was second at a 1.16; ESPN, 0.93; and TNT and CNN each with a 0.82.

In Philadelphia, NBC Sports Philadelphia was ranked in the top five of all networks in that market -- a 1.18 household rating -- losing out to MSNBC, 1.62; Fox News Channel, 1.32; ESPN, 1.27; and USA Network, 1.22.

NBC has nine sports networks in all -- including NBC Sports Washington, NBC Sports Boston, NBC Sports Northwest and NBC Sports California.

What does the future hold here?

For any other regional sports network, it could be a complex scenario, especially when it comes to growing powerful digital players. Already, Amazon and Twitter have done deals for national streaming of NFL games. Others, such as Verizon, have a deal for the NFL (mobile) and for NBA games for other digital areas.

Whether these players will move into regional and local sports TV rights is anyone’s guess. But one thing is for sure: Competition will continue to grow as hungry digital media companies look for key media gems.