News Corp. Buys Chunk of YES Network, Yankees Regional Sports Network
News Corp (News - Alert)., parent company of Fox ventures is picking up a substantial chunk of the regional cable sports channel of the New York Yankees. Following a payment of $500 million and some shifting around in the overall ownership structure, News Corp. will have a 49 percent stake in the YES Network.
The YES Network had several investors involved in its ownership structure, from Yankee Global Enterprises and Goldman Sachs to several others, all of whom are said to be reducing their own respective stakes to allow News Corp. in on the action. Currently, the YES Network is valued at $3 billion, and in three years, will increase to $3.8 billion when News Corp. will be offered an opportunity to increase its ownership stake in the company from 49 percent to 80 percent. Yankee Global Enterprises, meanwhile, would retain what's described as “a significant minority stake”.
Hal Steinbrenner, managing partner of the Yankees, said, “The Steinbrenner family expects to have a continuing, long-term ownership stake in the YES Network and we will continue our yearly commitment of fielding a championship caliber team for decades to come.”
Additionally, the Yankees also committed to staying on the YES Network through 2042, assuming Major League Baseball approves the deal, which was formerly set to expire in 2021. The network reportedly has an additional three five-year options available.
While News Corp.'s image hasn't been the greatest of late—News Corp. is still trying to live down the British phone hacking scandal—getting back into not only sports but also the New York market may well prove to be a bigger step than expected for recovering some of that public goodwill. Sports content has always had loyal fans, so getting in on a source of sports content is generally a smart idea as well, in terms of potential revenue. Even in bad times, sports content is a welcome source of fun and entertainment (or maybe just distraction) that in turn keeps plenty of viewers on hand.
Fox Sports Media Group actually owns 20 different regional sports networks throughout the United States, and getting the Yankees into their fold should prove a solid addition to an already substantial lineup. Additionally, since Fox also has investment in the Big Ten Network, the move to own a chunk of YES could get that one on more televisions throughout New York, especially given that Rutgers has plans to join the conference as well.
News Corp. has likely made a sound move by bringing in the YES Network, and sports fans everywhere should be very happy indeed.
Edited by Amanda Ciccatelli