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News Corp buying 49 percent of YES


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#1 ifmanis5


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Posted 19 November 2012 - 02:26 PM

http://www.fangraphs...he-yes-network/


News Corporation is reportedly set to buy a 49 percent stake in the YES Network and it may be a hedge against losing its local TV contract with the Dodgers.

The YES Network broadcasts Yankee games and a full slate of Yankees-related programming. It is also the broadcast home of the Brooklyn Nets of the NBA. YES is considered the most successful and profitable regional sports network in the country.

Over the weekend, the New York Times reported that News Corp. is close to acquiring a 49 percent share of YES, which has been valued for purposes of the transaction at $3 billion. A 49 percent share, then, will cost News Corp. $1.47 billion. Until now, shares in YES were divided among the Yankees (34 percent), investment banks Goldman Sachs and Provident Equity (40 percent) and a group of former Nets owners (26 percent). The deal includes an option for News Corp. to increase its stake to 80 percent within five years.


Commence with the Evil Empire jokes...

#2 E5 Yaz


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Posted 19 November 2012 - 02:40 PM

Doesn't hurt Jeter; never could go to his left.

Lather. Rinse. Repeat.

#3 SemperFidelisSox


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Posted 19 November 2012 - 05:13 PM

Selling 49% of YES (with Murdoch having the option of increasing the share to 80 within the next five years), reducing payroll to get under the luxury tax threshold. Are we still supposed to believe the Steinbrenners aren't selling the team?

#4 jon abbey


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Posted 19 November 2012 - 06:59 PM

But can he buy the whole team in time to kill the $189M mandate that seems to be crippling the front office currently?

http://espn.go.com/n...urdoch-takeover

#5 jon abbey


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Posted 19 November 2012 - 07:01 PM

Also worth noting that the Yankees don't own the other 51 percent, Murdoch would essentially control YES with this purchase, with the right to buy up to 80 percent overall within 5 years (lower down in that article).

#6 JimBoSox9


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Posted 19 November 2012 - 08:23 PM

YES is a valuable asset. It seems like an odd choice to divest if they're gearing up to sell, no?

#7 jon abbey


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Posted 19 November 2012 - 11:33 PM

Unless they're planning to sell to Murdoch, anyway.

#8 ifmanis5


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Posted 20 November 2012 - 03:07 PM

It's official:

http://www.mediabistro.com/tvNews Conference/news-corp-acquires-stake-in-yes-network-but-how-does-it-affect-fox-sports-1_b155903

Fox Sports has even gone so far as to design a logo for the channel, which it filed with the US Patent and Trademark Office in early October. You can see the logo in the graphic above.Update: Fox Sports has also registered FoxSports1.com and has secured the Twitter handle @FoxSports1.



Edit: Can't fix link. SoSH hates it. Maybe that's a sign.

Edited by ifmanis5, 20 November 2012 - 05:15 PM.


#9 ThePrideofShiner

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Posted 20 November 2012 - 03:19 PM

The above link didn't work. Here is another one: http://www.newsday.c...twork-1.4246229

Ganis, who advised the Yankees previously, said the agreement makes it highly unlikely that the family of George Steinbrenner, who died in July 2010, would sell the team. Getting rid of the Yankees would cut off the rich revenue stream.

.....

Acquiring YES strengthens News Corp.'s regional sports business by adding a channel with the Yankees, a marquee MLB team, and the National Basketball Association's Brooklyn Nets. The company plans a national sports channel next year to compete with Walt Disney Co.'s ESPN and NBC Universal's NBC Sports, and is seeking to extend rights to Los Angeles Dodgers pay-TV baseball telecasts.



#10 ifmanis5


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Posted 20 November 2012 - 05:55 PM

This deal ups ESPN's value, say researchers.

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.




http://www.hollywood...-espn-at-393409

#11 soxhop411


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Posted 24 January 2014 - 06:19 PM

Fox now owns 80%

 

21st Century Fox to acquire majority stake in Yankees' YES Network; 21st Century Fox raises YES Network stake from 49% to 80% • $FOXa

 

https://twitter.com/...856750625878016



#12 MentalDisabldLst


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Posted 24 January 2014 - 06:32 PM

Isn't nearly the entire value of the network tied up in their (sweetheart) broadcast deals with the Yankees and Nets?  Couldn't the value of the network be submarined if the Yankees switch their broadcasts to someone else who has cable distribution (I mean, they already put Friday games on MY9 here in NYC...)?  I mean, few people put one over on Rupert Murdoch, but I'm surprised you can dissociate the team from its broadcast network, ownership-wise, and still maintain the same value synergy.

 

Synergy.



#13 axx

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Posted 24 January 2014 - 06:57 PM

Strange, I wonder if this is a prelude to selling the Yankees.



#14 Sampo Gida

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Posted 24 January 2014 - 10:18 PM

Isn't nearly the entire value of the network tied up in their (sweetheart) broadcast deals with the Yankees and Nets?  Couldn't the value of the network be submarined if the Yankees switch their broadcasts to someone else who has cable distribution (I mean, they already put Friday games on MY9 here in NYC...)?  I mean, few people put one over on Rupert Murdoch, but I'm surprised you can dissociate the team from its broadcast network, ownership-wise, and still maintain the same value synergy.

 

Synergy.

 

As part of the deal in 2012 the Yankees received over 400 million to extend their rights to YES until 2042.   Yankees get 85 million a year from Yes which escalates at 4% annually


Edited by Sampo Gida, 24 January 2014 - 10:19 PM.


#15 derekson

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Posted 25 January 2014 - 02:56 PM

 

As part of the deal in 2012 the Yankees received over 400 million to extend their rights to YES until 2042.   Yankees get 85 million a year from Yes which escalates at 4% annually

 

That's still a sweetheart deal compared to what regional FOX networks are paying for large market teams right now. It's a bit bizarre for the Yankees to cut a sweetheart deal and then sell off the RSN, but I guess if they want money up front then that's the way to do it. Maybe this was the solution for Hal and Hank to get a lot of cash without giving up control of the team itself.



#16 Sampo Gida

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Posted 25 January 2014 - 07:06 PM

 

That's still a sweetheart deal compared to what regional FOX networks are paying for large market teams right now. It's a bit bizarre for the Yankees to cut a sweetheart deal and then sell off the RSN, but I guess if they want money up front then that's the way to do it. Maybe this was the solution for Hal and Hank to get a lot of cash without giving up control of the team itself.

 

According to a tweet by Wendy Thurn at Fan Graphs, she says there is an agreement for a larger rights fee if Fox acquired 80%.  She guesses it would be 150 million. If true, this puts it in Dodgers territory in the 1st year of their deal.  The Dodgers deal has a 4% annual escalator so their 240 million average is likely 150 or so in the early years and topping out at over 350 at the end.  If the Yankees still have a 4-5% escalator at 150 million in year 1, then their deal is roughly as large as the Dodgers annually, and a few years longer.  The Dodgers numbers are after revenue sharing while the Yankees numbers are before revenues sharing though.  Yankees also will still likely earn about 40 million a year in profits from Yes with their 20% ownership (assuming 350 million revenues and 60% profit margin that I had read elsewhere)



#17 terrisus


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Posted 25 January 2014 - 08:49 PM

 

As part of the deal in 2012 the Yankees received over 400 million to extend their rights to YES until 2042.   Yankees get 85 million a year from Yes which escalates at 4% annually

 

Weren't the Yankees using some sort of absurdly-high "assumed" payment to YES for their broadcasting rights as a way to balance the books in their favor? Anyone have any idea how this change impacts that?



#18 CaskNFappin


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Posted 26 January 2014 - 02:47 AM

The Yankees and Fox News.....to me the most insufferable things in this liberal sox fan's world.

#19 Lose Remerswaal


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Posted 26 January 2014 - 08:34 AM

The Yankees and Fox News.....to me the most insufferable things in this liberal sox fan's world.

 

Pretty sure the Yanks aren't on Fox News.



#20 MentalDisabldLst


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Posted 26 January 2014 - 10:57 AM

Seriously.  I mean, do you like the Simpsons, or Family Guy?  American Idol?  Fox News is pretty small in their overall portfolio.



#21 There is no Rev


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Posted 26 January 2014 - 07:27 PM

Seriously.  I mean, do you like the Simpsons, or Family Guy?  American Idol?  Fox News is pretty small in their overall portfolio.

 

NewsCorp making money hand over fist pillorying American values always makes me think of how, in the book version of The Godfather, one of the mafia schemes is to corner the trucking and road construction industries and then overload the trucks to wreck the roads.



#22 Sampo Gida

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Posted 26 January 2014 - 09:41 PM

 

Weren't the Yankees using some sort of absurdly-high "assumed" payment to YES for their broadcasting rights as a way to balance the books in their favor? Anyone have any idea how this change impacts that?

 

 

All I can find is this

 

Yankee Global Enterprises still owns the remaining 20% of YES and they’re getting a boatload of cash through the deal, with annual television revenue jumping from $85M to an estimated $150M. That number is expected to climb to $350M (!) annually within the next 30 years. That money is separate from what amounts to a $420M signing bonus Yankees Global Enterprises will receive from 2013-15 as part of the deal.

 

http://riveraveblues...-network-98935/



#23 derekson

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Posted 27 January 2014 - 08:37 PM

That's an interesting find Sampo. I had no idea there was an escalator in the rights fees for this exact situation. The Yankees have basically just gone from the NESN/YES model that teams were all shooting for a decade ago to the new model teams are taking where they just FOX handle the RSN stuff and sign huge rights fee deals. It's pretty interesting that they gave themselves the flexibility to go either way. 



#24 Sampo Gida

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Posted 28 January 2014 - 05:42 PM

That's an interesting find Sampo. I had no idea there was an escalator in the rights fees for this exact situation. The Yankees have basically just gone from the NESN/YES model that teams were all shooting for a decade ago to the new model teams are taking where they just FOX handle the RSN stuff and sign huge rights fee deals. It's pretty interesting that they gave themselves the flexibility to go either way. 

 

Looking at the Dodgers and Phillies deals a minority stake seems to be the trend.  The size of Yes makes the Yankees 20% a majority interest elsewhere (in terms of profits). 

 

With YES revenues reported in the 350 million range and profit margins of about 60% and Yankees would still be looking at about 40 million in YES profits on top of their rights fees.  They lose 28 million in profits a year going from 34% to 20% ownership.  So if the report is true the rights fee is jumping 65 million, the Yankees had to have had some way with YES of getting that 37 million (65-28) beyond normal profit distribution , since why would they let 65% of non Yankees ownership at YES reap the benefits of underpaying the Yankees 37 million for the rights?

 

Obviously, avoiding revenue sharing which is about 27% for the Yankees is the reason for the YES/NESN model, but that only works as long as MLB plays along with it. 



#25 Infield Infidel


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Posted 18 February 2014 - 02:23 PM

Isn't nearly the entire value of the network tied up in their (sweetheart) broadcast deals with the Yankees and Nets?  Couldn't the value of the network be submarined if the Yankees switch their broadcasts to someone else who has cable distribution (I mean, they already put Friday games on MY9 here in NYC...)?  I mean, few people put one over on Rupert Murdoch, but I'm surprised you can dissociate the team from its broadcast network, ownership-wise, and still maintain the same value synergy.

 

Synergy.

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#26 MentalDisabldLst


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Posted 18 February 2014 - 03:11 PM

I'll give you that one, but it's a short list.






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