Twenty-First Century Fox (NASDAQ:) recently inked a seven-year deal with Major League Baseball (MLB) extending the current deal, which ends in 2021.
The deal worth at least $5.1 billion, per Bloomberg, will continue Fox as the exclusive broadcast partner of World Series, two Division Series (DS), one League Championship Series (LCS) and the All-Star Game.
MLB Network will continue to enjoy rights to two games from the League's DS and LCS, which will alternate each season.
Moreover, Fox sports will continue its Saturday regular season games, including highlights packages and MLB-centric programs. Fox Deportes has the Spanish-language rights.
From 2022, there will be an increased number of regular-season and postseason games broadcast. The deal will extend Fox Sports’ digital, streaming, social media and highlight rights as well. Reportedly, Fox is paying 39% more for the latest deal.
Twenty-First Century Fox, Inc. Revenue (TTM)
Twenty-First Century Fox, Inc. Revenue (TTM) | Twenty-First Century Fox, Inc. Quote
Focus on Live Programming to Boost Primetime Viewership
In the past year, shares of Fox have gained 57.1%, outperforming the industry’s 33.6% rally.
Fox is increasingly focusing on enhancement of its live programming portfolio to support new Fox business. Notably, this business will come into existence post Disney’s (NYSE:) acquisition of certain Fox’s assets, including Fox Film and Television studios, and cable and international TV businesses.
Fox, which has been the exclusive national broadcast partner for MLB since 2001, is expected to command more ad dollars for commercial slots, which is a positive.
Moreover, baseball continues to have strong primetime ratings in the television space, per Nielsen. Regional sports networks (RSNs) that host baseball games, especially MLB, ranked number one in their primetime market. Fox regional sports is said to air half of those MLB games, per Forbes.
The popularity of the MLB games and Fox’s growing focus on sports make it prudent for the company to extend a multi-year and multi-platform deal aimed at increasing its programming slate and primetime viewership.
Earlier this year, Fox also inked deals with Premier Boxing Champions (PBC), National Football League (NFL) and World Wrestling Entertainment (NYSE:) .
Fox and PBC entered into a four-year deal to air ten prime time fight nights on Fox, with FS1 and FOX Deportes broadcasting additional 12 fight nights annually. Additionally, pay-per-view events are included in the deal, and Fox will co-produce live events and other boxing content along with PBC.
Fox too secured a five-year deal for NFL’s "Thursday Night Football", which is valued at approximately $660 million annually. Under the deal, Fox will broadcast 11 games and the rest seven games will air exclusively on NFL Network. Notably, Fox will produce all the 18 games. Fox also signed a five-year deal with WWE to air SmackDown on Friday’s.
Competition Prevails
However, intensifying competition from media and broadcasting companies as well as Facebook (NASDAQ:) and Twitter in the sports event broadcasting space is a concern.
Facebook has inked exclusive deals with the likes of Union of European Football Associations and La Liga, to benefit from the huge reach among young audiences. Additionally, Twitter has renewed its deal with MLB to live stream weekly games.
Moreover, increasing programming related costs does not bode well for Fox, which currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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