It seems AT&T may in quite the bind. The telecom company has been on a mission to sell off its local sports networks, but may have to reconsider. According to a new report by the New York Post, AT&T’s bid to sell four sports networks that cover the Seattle, Denver, Pittsburgh and Houston areas fell short of expectations, coming in at $500 million as opposed to the expected $1 billion.
Since the bids haven’t been promising, sources told the New York Post that they were concerned the company could cancel the purchase altogether. Sinclair, which bought 21 RSNs, from Disney in August, is believed to be the lead bidder in this transaction as well.
The main issue for AT&T, according to the Post, is that they “admitted to bidders that over the next 12 months it expects its regional sports networks, or RSNs, will suffer a drastic plunge in EBITDA — a closely watched metric of profitability on Wall Street.” Currently, their financial reports show that AT&T’s EBITDA will plunge from $115 million last year, to $55 million this year.
The current stalemate on the deal is also indicative of how tough it is for cable companies carrying RSNs in general, The Post states. While the advent of cord cutting has played a major role, the teams themselves are also playing hardball with cable companies. “AT&T’s Pittsburgh RSN, for example, reached a new multiyear deal in recent months with the Pirates baseball team that will significantly cut into its profits,” a source told The Post. “It’s also bracing for at least one more team to play hardball later this year,” the source continued.
“The RSNs are doing worse than the overall cable model. When you have Sinclair being dropped by Dish and Dish not suffering … the future for the industry does not look good,” analyst Rich Greenfield of LightShed Partners told the Post.