It's Official: News Corp. to Buy 49 Percent Stake in YES Network
UPDATED: The $500 million deal will strengthen the company's regional sports networks portfolio.
Rupert Murdoch's News Corp. and Yankee Global Enterprises made things official Tuesday, unveiling a deal that calls for the entertainment conglomerate to acquire a 49 percent equity stake in the Yankees Entertainment and Sports (YES) Network.
Sports Business Journal reported that News Corp. will pay the Yankees $300 million upon the closing of the deal, with another $200 million due in three years. The initial investment, expected to close by the end of the calendar year, will boost News Corp.'s regional sports networks portfolio.
A source familiar with the deal told The Hollywood Reporter that it values YES at $3 billion. SBJ said that if News Corp. in three years exercises its option to increase its stake to as much as 80 percent, the valuation jumps to $3.8 billion.
The current owners -- Yankee Global Enterprises, Goldman Sachs, Providence Equity and other investors -- will reduce their holdings as part of the transaction, with the storied baseball franchise now keeping 25 percent.
YES also announced a new rights agreement that will keep Yankees games on the network through 2042, when SBJ reported, it will pay the team $300 million that year, up from $85 million this season. The club's existing agreement with YES was set to expire in 2021.
The News Corp. deal is subject to Major League Baseball approval.
"We've long been a believer in the unique appeal of sports entertainment," said News Corp. deputy COO James Murdoch, the son of chairman and CEO Rupert. "This is a tremendous opportunity to enhance News Corporation’s industry-leading portfolio of sports properties while also strategically re-entering the New York market."
He added: "The YES Network represents the gold standard for regional sports networks and is a pioneer in sports media."
James Murdoch has been sitting on the board of Yankees Global Enterprises.
News Corp.’s Fox Sports Media Group already owns 20 U.S. regional sports networks, including Fox Sports West and Prime Ticket in the Los Angeles market.
YES, which also broadcasts Brooklyn Nets' NBA games, launched in 2002. It has about about 15 million subscribers in the U.S., including 9 million in the New York area.