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YES Network Deal Means ESPN's Worth $66.5 Billion: Analyst

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In a note to investors, Bernstein Research's Todd Juenger says News Corp's. investment in the Yankees network has implications for Disney's massive sports asset.

After News Corp. bought 49 percent of YES at a valuation of $3 billion with an option to acquire 80 percent of the company at a valuation of $3.8 billion, Disney’s ESPN asset is worth up to an impressive $66.5 billion, an analyst said Tuesday.

YES, a TV network dedicated to the New York Yankees baseball team, is “not the same thing as ESPN,” Bernstein Research analyst Todd Juenger wrote in a note Tuesday, but the News Corp. deal creates a “mark-to-market event” for ESPN.

ESPN and YES are the No. 1 national and regional sports networks, respectively, he notes. With the earnings before interest, taxes, depreciation and amortization at YES estimated at $200 million annually, the valuation is from 15-times to 19-times EBITDA.

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Juenger estimates the EBITDA at ESPN is close to $3.5 billion, so ESPN’s value is at least $45 billion and as much as $66.5 billion.

“So if ESPN were valued at $66.5 billion (meaning Disney’s 80 percent share would be worth $53 billion), that would leave the rest of the Disney Enterprise valued at only approximately 4.5 times EBITDA!” the analyst wrote with an exclamation point.

Juenger rates Disney shares at “outperform” with a target price of $56. The stock closed Tuesday up 1 percent to $48.44, giving it a market capitalization of $87.2 billion.