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STO SOLD (New Thread Name)

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Posted: 12/2/2012 8:03 PM

STO SOLD (New Thread Name) 


NASHVILLE, Tenn. -- Fox Sports Ohio is close to purchasing SportsTime Ohio for between $200 million and $250 million, said a source familiar with the negotiations. The sale could be completed by the end of December and would increase the Indians' rights fees for broadcasting their games from $30 million to an estimated $40 million a year.

Link

The extra $10 million will be nice but won't make a huge difference.

What could be big is how much of the remaining amount after taxes.a recouping of capital investment and paying off of debt is used to make a capital investment in the Tribe.

When STO was created it was asserted that it was done to improve the Tribe's financial position.  Tribe ownership now by how much is invested in the Tribe improve the Tribe's financial situation or make a large profit off of STO.

Last edited 12/28/2012 11:12 AM by JenniferMarie

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Posted: 12/2/2012 8:10 PM

RE: STO TO BE SOLD 


The Deadspin article I posted from a week back or so explains why RSNs are no longer worthwhile. It's worth reading.

deadspin.com/5962206/news-corp...ser-to-bursting
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Posted: 12/2/2012 8:39 PM

RE: STO TO BE SOLD 



GopherIndianHybrid wrote: The Deadspin article I posted from a week back or so explains why RSNs are no longer worthwhile. It's worth reading.

deadspin.com/5962206/news-corp...ser-to-bursting
An RSN has, I believe, three main revenue streams, subscriber fee, advertising and synergy.

The synergy might be the least obvious.  Promoting your other programs on games you broadcast increases ratings for those programs thus increasing advertising revenue.  The broadcast networks pay big bucks to the NFL in part because of the large audience the games provide to promote other programming.

Small RSN's like STO don't promote this synergy very much because you can promote the heck out of its programs (except the ones about the Browns and the Tribe) and not increase viewership very much.

Broadcast and Cable networks also enjoy far greater economies of scale and scope than any RSN but particularly small RSNs can achieve.

All else being equal one would expect that a broadcast or cable network has the ability to pay a team a higher rights fee and be profitable than a small RSN.
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Posted: 12/2/2012 9:23 PM

RE: STO TO BE SOLD 


Well put.
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Posted: 12/3/2012 1:23 AM

Re: STO TO BE SOLD 


I don't understand much about this subject so I have to ask:

When STO is sold back to FSN what exactly is "Sold" all the programming and intellectual properties of Sports Time Ohio or just the airing rights?
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Posted: 12/3/2012 3:20 AM

Re: STO TO BE SOLD 



Dromag67 wrote: I don't understand much about this subject so I have to ask:

When STO is sold back to FSN what exactly is "Sold" all the programming and intellectual properties of Sports Time Ohio or just the airing rights?
Good question.  The answer is that it "depends"biggrin on the terms of the sales agreement.

From what Hoynes wrote it appears STO by the time of the sale will have negotiated a deal with the Tribe for an increased payment for broadcast rights that will be assumed by Fox or alternatively as part of the closing Fox will receive the rights directly from Fox. 

Beyond that it sounds like Fox will assume all other STO rights and responsibilities and that for a short period of time STO will continue to exist as a wholly owned subsidiary of FoxSports.  At some point, probably a few months (how ever long it takes to accomplish it) STO will merge into FoxSports and will cease to exist.

The above probably is not the clearest thing I've ever wrote so please don't hesitate to ask for clarification.
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Posted: 12/3/2012 3:48 AM

Re: STO TO BE SOLD 


Alright, interesting.

Was wondering if they would cherry pick programming and keep the channel alive as a secondary to Fox Sports or if they would dump all the employees of STO and just take the properties and broadcast rights.

I imagine this also will make them direct competitors with Channel 3 and will cease local broadcasts. It also makes me wonder if the Indians continue to have losing season if Fox will begin to cut out some of the Indians games altogether so that they can air different programming.

Amazing how quickly business practices can change. Yikes.

Last edited 12/3/2012 4:00 AM by Dromag67

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Posted: 12/3/2012 6:20 AM

Re: STO TO BE SOLD 



Dromag67 wrote: Alright, interesting.

Was wondering if they would cherry pick programming and keep the channel alive as a secondary to Fox Sports or if they would dump all the employees of STO and just take the properties and broadcast rights.

I imagine this also will make them direct competitors with Channel 3 and will cease local broadcasts. It also makes me wonder if the Indians continue to have losing season if Fox will begin to cut out some of the Indians games altogether so that they can air different programming.

Amazing how quickly business practices can change. Yikes.
Any existing contracts STO has (unless terminated by contractual provision, such as providing automatic termination upon change in employment) must be honored or bought out.  the WKYC still has a year to run.  As a general rule employees status remain unchanged.  Employees at will can be terminated at anytime while those under contract for a specific term must have their contracts honored or bought.  People that host shows like Drennan and are under contract can have their shows cancelled but still must be paid. 

Note that the opinions I'm expressing are general.  Whenever, a contract is involved the specific provisions must be reviewed for definitive answers.
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Posted: 12/3/2012 7:25 AM

Re: STO TO BE SOLD 



JenniferMarie wrote:
Dromag67 wrote: Alright, interesting.

Was wondering if they would cherry pick programming and keep the channel alive as a secondary to Fox Sports or if they would dump all the employees of STO and just take the properties and broadcast rights.

I imagine this also will make them direct competitors with Channel 3 and will cease local broadcasts. It also makes me wonder if the Indians continue to have losing season if Fox will begin to cut out some of the Indians games altogether so that they can air different programming.

Amazing how quickly business practices can change. Yikes.
Any existing contracts STO has (unless terminated by contractual provision, such as providing automatic termination upon change in employment) must be honored or bought out.  the WKYC still has a year to run.  As a general rule employees status remain unchanged.  Employees at will can be terminated at anytime while those under contract for a specific term must have their contracts honored or bought.  People that host shows like Drennan and are under contract can have their shows cancelled but still must be paid. 

Note that the opinions I'm expressing are general.  Whenever, a contract is involved the specific provisions must be reviewed for definitive answers.
Yeah it's not like I would be crying over losing any of the sports talk shows on STO.

So another year of guaranteed WKYC.

So really the 2014 season is the year to watch as far as major organizational changes for Indians broadcasting. They should have all of their long-term plans in place by the end of the 2013 season.
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Posted: 12/3/2012 9:54 AM

Re: STO TO BE SOLD 


I'll only care if Fox Sports dumps Matt Underwood and sends him to "souvenir city".
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Posted: 12/3/2012 11:07 AM

Re: STO TO BE SOLD 


Half of your cable bill is because of sports networks.

Oh, and it's going to rise 40% in the next three years.
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Posted: 12/3/2012 11:13 AM

Re: STO TO BE SOLD 



GopherIndianHybrid wrote: Half of your cable bill is because of sports networks.

Oh, and it's going to rise 40% in the next three years.

That bubble is going to pop. Too much stuff is freely available on the internets. I have a friend that is a big sports fan that dropped cable and has not had a dip in his sports viewing pleasure.
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Posted: 12/3/2012 11:57 AM

Re: STO TO BE SOLD 


Sports is half your cable/dish bill because sports are more and more becoming the only thing people watch live.  Advertisers care about live eyeballs only.  That makes sports extremely valuable to cable/dish providers.
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Posted: 12/3/2012 1:13 PM

Re: STO TO BE SOLD 



JenniferMarie wrote: NASHVILLE, Tenn. -- Fox Sports Ohio is close to purchasing SportsTime Ohio for between $200 million and $250 million, said a source familiar with the negotiations. The sale could be completed by the end of December and would increase the Indians' rights fees for broadcasting their games from $30 million to an estimated $40 million a year.

Link

The extra $10 million will be nice but won't make a huge difference.

What could be big is how much of the remaining amount after taxes.a recouping of capital investment and paying off of debt is used to make a capital investment in the Tribe.

When STO was created it was asserted that it was done to improve the Tribe's financial position.  Tribe ownership now by how much is invested in the Tribe improve the Tribe's financial situation or make a large profit off of STO.
That puts the value of STO at $65 to $85 million.  Not bad for such a short time.
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Posted: 12/3/2012 2:23 PM

Re: STO TO BE SOLD 



LuisMedina wrote: I'll only care if Fox Sports dumps Matt Underwood and sends him to "souvenir city".
Yes please x 1 million.
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Posted: 12/3/2012 2:29 PM

Re: STO TO BE SOLD 



Craplanta wrote:
JenniferMarie wrote: NASHVILLE, Tenn. -- Fox Sports Ohio is close to purchasing SportsTime Ohio for between $200 million and $250 million, said a source familiar with the negotiations. The sale could be completed by the end of December and would increase the Indians' rights fees for broadcasting their games from $30 million to an estimated $40 million a year.

Link

The extra $10 million will be nice but won't make a huge difference.

What could be big is how much of the remaining amount after taxes.a recouping of capital investment and paying off of debt is used to make a capital investment in the Tribe.

When STO was created it was asserted that it was done to improve the Tribe's financial position.  Tribe ownership now by how much is invested in the Tribe improve the Tribe's financial situation or make a large profit off of STO.
That puts the value of STO at $65 to $85 million.  Not bad for such a short time.

Not sure what $65 to $85 million refers to? Is this what the Dolans will clear after recouping their intital outlay, taxes, etc?

The increase in annual rights fees, especially in comparison to the Yankees and Dodgers deals is puny, and demonstrates the growing divide between the major markets and everyone else. Bud Selig will point to the A's, Reds, Brewers, Tampa Bay, etc., but if you only get to compete  for 2-3 years every 10-15 years, while the big money teams make the playoffs all the time, that's not a fair system.

Since it seems like we can't get rid of the Dolan family, I was hoping they would get a major infusion of cash, either from a new minority investor or from the STO sale, (or both). They seem like nice people, but seem extremely undercapitilized compared to other owenership groups, so maybe this will help.

The optimist in me thinks that Terry Francona knew this was coming, and signed on with the thought that we could take the payroll north. The pessimist thinks that Dolan saw a good price on STO, desperately needs the cash, and decided to sell before we gut the team through trades.

I think we can all realistically agree that short of a significant payroll increase, and divine intervention, that this team has no shot at the playoffs, won't be able to retain Perez, Choo, Masterson, and Jimenez,
and has one of the worst collections of minor league talent in baseball.

We'll know in the next few weeks by the actions the front office takes. I'm reasonably optimistic, in that I can't imagine the team would be kicking the tires on Youkilis, Victorino, Edwin Jackson, or any older free agent looking for a multi-year deal if we were going to have a fire sale. 

I hope this STO sale is really big news for us! 

Last edited 12/3/2012 2:50 PM by gomerhodge

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Posted: 12/3/2012 2:46 PM

Re: STO TO BE SOLD 


I would be shocked if any of the money earned in the sale is applied directly to the payroll- that would just be a band-aid.  The real money is the extra 10M per from the new contract.  That can be used for a Jeremy Guthrie + a Max Aviles, or a combination of Delmon Young, Scott Kazmir, and Jason Bay.  Or they can instead wager all of it on a Kevin Youkilis or Brian Wilson and REALLY upgrade this team.  Good times ahead!!!

All kidding aside, holy shizzle, this should show just how big the disparity is now in baseball.  While the Dodgers are not only getting 100m a year from their station, plus billions more, the Tribe is having to bail on theirs.  This is a flawed landscape for salaries that will just continue the current cycle of low revenue teams serving as the farm system for the Bostons, NYs and LAs.  It really is a bummer.
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Posted: 12/3/2012 4:32 PM

RE: STO TO BE SOLD 


I'm gonna miss Bruce Drennan and Chuck Galeti. Ugh.
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Posted: 12/3/2012 4:39 PM

Re: STO TO BE SOLD 



allhailshapiro wrote: I would be shocked if any of the money earned in the sale is applied directly to the payroll- that would just be a band-aid.  The real money is the extra 10M per from the new contract.  That can be used for a Jeremy Guthrie + a Max Aviles, or a combination of Delmon Young, Scott Kazmir, and Jason Bay.  Or they can instead wager all of it on a Kevin Youkilis or Brian Wilson and REALLY upgrade this team.  Good times ahead!!!

All kidding aside, holy shizzle, this should show just how big the disparity is now in baseball.  While the Dodgers are not only getting 100m a year from their station, plus billions more, the Tribe is having to bail on theirs.  This is a flawed landscape for salaries that will just continue the current cycle of low revenue teams serving as the farm system for the Bostons, NYs and LAs.  It really is a bummer.
When I first read your first paragraph I wondered if you had finally gone off the deep end but on further review. . .

Since I started this thread I've given the proposed sale a lot of thought and have concluded that I would not only be shocked but totally outraged if a piece of the net proceeds were not used as to make a contribution to capital.

However, in saying that I don't necessarily foresee too much of a visible effect immediately because the free agent market is so poor.


There is another reason this might be true think that.  The Tribe will have $10 million more to spend annually beginning in 2013. another $20-$25 million to spend annually beginning in 2014 and an unknown amount to spend annually beginning in 2013 as a result of a capital infusion.  The stupidist thing ownership and the FO can do is to start spending before a long term plan is established.  My assumption, but I certsinly don't know it for a fact, is that lf a plan is not already established there is a nearly completed one.  The STO deal did not suddenly spring up, there were two parties with a strong interest in buying and at least a ballpark estimate of the final financial numbers should have been discernible.
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Posted: 12/3/2012 5:02 PM

Re: STO TO BE SOLD 



gomerhodge wrote:
Craplanta wrote:
JenniferMarie wrote: NASHVILLE, Tenn. -- Fox Sports Ohio is close to purchasing SportsTime Ohio for between $200 million and $250 million, said a source familiar with the negotiations. The sale could be completed by the end of December and would increase the Indians' rights fees for broadcasting their games from $30 million to an estimated $40 million a year.

Link

The extra $10 million will be nice but won't make a huge difference.

What could be big is how much of the remaining amount after taxes.a recouping of capital investment and paying off of debt is used to make a capital investment in the Tribe.

When STO was created it was asserted that it was done to improve the Tribe's financial position.  Tribe ownership now by how much is invested in the Tribe improve the Tribe's financial situation or make a large profit off of STO.
That puts the value of STO at $65 to $85 million.  Not bad for such a short time.

Not sure what $65 to $85 million refers to? Is this what the Dolans will clear after recouping their intital outlay, taxes, etc?

The increase in annual rights fees, especially in comparison to the Yankees and Dodgers deals is puny, and demonstrates the growing divide between the major markets and everyone else. Bud Selig will point to the A's, Reds, Brewers, Tampa Bay, etc., but if you only get to compete  for 2-3 years every 10-15 years, while the big money teams make the playoffs all the time, that's not a fair system.

Since it seems like we can't get rid of the Dolan family, I was hoping they would get a major infusion of cash, either from a new minority investor or from the STO sale, (or both). They seem like nice people, but seem extremely undercapitilized compared to other owenership groups, so maybe this will help.

The optimist in me thinks that Terry Francona knew this was coming, and signed on with the thought that we could take the payroll north. The pessimist thinks that Dolan saw a good price on STO, desperately needs the cash, and decided to sell before we gut the team through trades.

I think we can all realistically agree that short of a significant payroll increase, and divine intervention, that this team has no shot at the playoffs, won't be able to retain Perez, Choo, Masterson, and Jimenez,
and has one of the worst collections of minor league talent in baseball.

We'll know in the next few weeks by the actions the front office takes. I'm reasonably optimistic, in that I can't imagine the team would be kicking the tires on Youkilis, Victorino, Edwin Jackson, or any older free agent looking for a multi-year deal if we were going to have a fire sale. 

I hope this STO sale is really big news for us! 
All the STO sale will benefit is the Dolans, not the Indians.

The 65 to 85 million is because you try to sell you company at 3 times value.

Last edited 12/3/2012 5:04 PM by Craplanta

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