11.21.2012 09:33 AM
News Corp to acquire large stake in YES Network
The agreement makes the New York Yankees TV channel worth some $3 billion.
The New York Yankees baseball team and its partners have agreed to sell a 49 percent stake in its YES Network to News Corp., parent to 20 Fox Sports regional networks that provide live programming to more than 67 million subscribers across the country. The Fox regional sports channels are not expected to provide local or national sports programming to YES, or to manage the channel.
No financial details were available, but many say the deal would make the YES Network sports channel worth roughly $3 billion. News Corp. has the right to increase its stake to 80 percent in three years.
The agreement comes at a time when NBC Sports and Fox Sports are committed to challenging ESPN's dominance in sports programming. That's because live sports content is proving to be among the most popular with consumers using their TVs, computers, smart phones and tablets to watch.
Tracy Dolgin, YES president and CEO (and a former News Corp. sports executive), told The New York Post newspaper that sports rights are critical to pay-TV subscriber retention.
“Sports is unique,” he said. “It’s the only way you can get people to subscribe to a distributor — a cable, satellite or telco operator. If you don’t watch sports live, it’s gone. Ratings go up immediately when the Yankees are ahead, that’s how immediate it is.”
Owned by the Walt Disney Company and Hearst (which owns a 20 percent stake in ESPN), ESPN and the combined resources of ABC Sports, is said to be worth some $40 billion. With all of its various properties, News Corp. as a whole is said to be worth $58 billion.
The YES Network broadcast Yankees baseball and Brooklyn Nets basketball games to 15 million subscribers. Yankee Global Enterprises, the parent company of the Yankees, owns 34 percent of YES; Goldman Sachs and Providence Equity own another 40 percent and the remainder is controlled by former owners of the Nets.
The deal would allow YES to raise the $2.99 monthly fee per subscriber it currently charges cable and satellite operators to carry the channel, Reuters reported. News Corp would negotiate on its behalf with the operators as part of a larger package of sports channels.