What's The Impact of SportsTime Ohio's Sale?

Rumors had been swirling for the last month or so that SportsTime Ohio (STO), owned by the Dolan family, was to be sold. Some suggested either Fox Sports Media Group (Fox) or Time Warner would become the eventual owner. At the end of the day it was Fox. The media property was sold for $233 million dollars and Fox will pay the Indians $400 million over 10 years for the right to broadcast their games. The current deal between STO and the Indians pays $33 million per year, and the new deal will increase that to $40 million.

The combined total of the deal is $633 million dollars, but remember Fox Sports has a TV deal with LA Dodgers that pays between $7b-$8b for 25 years, or about $218 million per year. Between the Dodgers deal and the minority purchase of the YES Network, the STO deal is peanuts. Remember, Fox is owned by News Corporation; they have billions of dollars to throw in all directions.

If you don’t remember, Fox used to own the Indians television rights through its regional network FOX Sports Ohio until 2006 when STO was launched. Fox also owns the broadcasting rights to the Cincinnati Reds and Cleveland Cavaliers. At this time it is unknown if the Fox will keep the Indians and Reds on a separate network or consolidate them and end STO.

It is unknown if FSN Ohio and STO will be consolidated at this time because STO has existing contracts with the Ohio High School Athletic Association (OHSAA), Cleveland Browns, and the Mid-American Conference. All are important and lucrative contracts Fox Sports will want to keep.

My guess is that Fox will consolidate the Indians, Reds, and MAC content onto one network, and re-brand STO into a secondary network and move the high school tournaments, Browns content and MLL lacrosse content there or some combination thereof.

As far as the Indians broadcasters, Rick Manning and Matt Underwood, both are employees of the Indians both are employees of STO and could be replaced, just as unlike the radio broadcast team of Jim Rosenhaus and Tom Hamilton. Each have contracts with the Indians and STO through at least the 2013 season.

Currently WKYC has over-the-air broadcast rights to the Indians and likely have a contract through at least 2013 that Fox will likely honor. Also, STO has its broadcast facilities in the same building with WKYC. It is unknown if that part will change in the near future.

So, while we know the Dolans are no longer the owners of STO, there is also a lot about the transition that we do not know. It is safe to assume that we will know how this will shake out before Spring Training.

One thing, I do not see happening is the sale of the Cleveland Indians by the Dolans. With the increase in rights fees from both STO and WTAM (Cleveland Indians Radio Network), it makes little sense for the family to sell the team. Yes, they are likely to spend a little more money on the franchise (players), but as I have said repeatedly they will not outspend their revenues. No business person would.

Owning a sports team is no different than owning any other business. The goal is to make as much money as possible.

While it is nice for fans to want their owners to be as passionate about a teams as they are, the owners’ first responsibility is to make money.

Randy Lerner, Dan Gilbert and now Jim Haslam will all say the same thing. Winning is good, but making money, or a return on the investment, is the most important part of owning any business.

Fox Sports Media Group release: http://www.foxsportsohio.com/12/28/12/FOX-Sports-Media-Group-completes-acquisi/landing.html?blockID=840961&feedID=4181