Wall Street misunderstands new sports joint venture

Local TV station owners including Sinclair, TEGNA and EW Scripps all saw their valuations plummet this week after Disney, Warner Bros. Discovery and Fox announced a new sports joint venture set to launch this fall.

Sinclair dropped 12% Wednesday, TEGNA fell 7.2% and Scripps plummeted 24% as investors weighed the meaning of a new, skinnier cable bundle of sports networks that will include ESPN, TNT and Fox but will leave out CBS and NBC. Sinclair bounced back by rising 7% Thursday, but TEGNA and Scripps were little changed.

But Wall Street’s reaction is overblown, according to EW Scripps CEO Adam Symson.

For one, investors appear to be pricing in that local ABC and Fox affiliates wouldn’t be part of the new skinnier bundle, Symson told CNBC in an interview. They will be included, he said, citing assurances he’s been given in conversations with Disney executives. Scripps owns 18 ABC stations, in markets such as Phoenix, Detroit, Cleveland and Tampa, and 4 Fox stations.

“Affiliates are going to be compensated for being carried along,” Symson said.

The joint venture will work collaboratively with all local broadcast affiliate partners in a similar manner to other digital multichannel bundlers, such as YouTube TV and Hulu with Live TV, according to a person familiar with the matter, who asked not to be named because the discussions are private.

This means consumers of the new bundle will be able to get their local news and sports from ABC and Fox.

A spokesperson for the joint venture declined to comment.

Still, Paramount Global‘s CBS and Comcast‘s NBC are not part of the new bundle, putting affiliates of those broadcast stations potentially at risk.

But only if the bundle takes off. Which, according to Symson, is unlikely without those channels. Scripps has 9 CBS and 11 NBC stations.

“Wall Street acted like this was a sea change product,” Symson said. “I don’t take issue with the opportunity or the idea that there’s…