Hostetter Teams with Hindery
By MIKE FARRELL and R. THOMAS UMSTEAD -- Multichannel News, 8/12/2001 8:00:00 PM
Amos Hostetter has joined the growing list of investors in a new regional sports network that houses the telecast rights of YankeeNets, the sports team holding company formed in 1999, sources said last week.
Hostetter, former chairman of Continental Cablevision and current non-executive chairman of AT&T Corp., will join former AT&T Broadband president Leo J. Hindery Jr. as a minority investor in the network and is expected to be named chairman of the company soon.
Hindery will serve as CEO of the network that is set to begin covering Major League Baseball's New York Yankees in the 2002 season.
Although it could not be determined just how much Hindery and Hostetter are investing in the network, sources said the two would own less than 10 percent combined. The YankeeNets — a holding company that includes MLB's Yankees, the National Basketball Association's New Jersey Nets and the National Hockey League's New Jersey Devils — will own a majority stake in the network.
Goldman, Sachs & Co. and The Quadrangle Group, a New York City private equity fund, are expected to be the network's other investors.
Quadrangle was formed last year and is headed by Steve Rattner, former deputy chairman of investment bank Lazard Freres & Co.
Rattner, a former New York Times reporter who started his banking career at Lehman Bros. and Morgan Stanley & Co. specializing in the media sector, has been a big player in the cable industry for years. Many former clients, including Hostetter, Comcast Corp. president Brian Roberts and USA Networks Inc. chairman Barry Diller, became investors in Quadrangle.
YankeeNets is expected to sell a 40-percent stake in the network for more than $300 million, sources said last week. Goldman and Quadrangle will have an identical stake in the network.
"They [Goldman and Quadrangle] have been talking to Amos ever since they got involved," said one source familiar with the deal. "As they've gone along, he's gotten more interested."
The source added that Hindery would be responsible for day-to-day operations of the network, while Hostetter would serve as chairman and "an important board member."
The combination of Hindery and Hostetter should give the Yankees Network added clout in negotiations with MSOs Cablevision Systems Corp. and Time Warner Cable, among others, that it will need to secure distribution deals with.
"It can't hurt; they are all familiar with the business and are highly respected among those in the cable universe," Kagan Associates sports analyst John Mansell said.
"But business is business, and if I'm Time Warner and Cablevision, I'm likely to hold out and offer the new network as a pay service," Mansell added.
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