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

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.

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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.