News Corp. Nearing Deal to Acquire YES Network Stake

Investment Could Help Bolster Affiliate Fees for Yankees' RSN
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While Prime Ticket continues its exclusive negotiations to retain media rights to the Los Angeles Dodgers, News Corp. has set its sights on connecting with a regional sports network in New York: the YES Network.

News Corp. is said to be nearing a deal that would give it a large minority stake in YES, the cable home to the New York Yankees and the NBA’s Brooklyn Nets, with an eye toward increasing the regional sports network’s affiliate fees structure.

According to published reports, News Corp. within the next couple of days could acquire as much as 40% of YES by purchasing stakes from longtime investors Goldman Sachs Group and Providence Equity Partners that would value the RSN at some $3 billion. Those investment firms, along with Yankee Global Enterprises, the MLB team’s holding company, are the principal holders in YES, which has consistently ranked at or near the top of RSNs when it comes to primetime ratings, driven by its Bronx Bombers' telecasts.

Sources familiar with the negotiations indicate that after the deal Goldman and Providence would retain smaller stakes in YES. Yankees Global Enterprises holds a 34% in the RSN.

Officials at News Corp. and YES declined to comment.

Fox’s gambit, at least initially, seems to center on enhancing the value of YES by increasing the affiliate fees it collects. YES, according to reports, SNL Kagan data and sources, receives a $3 monthly subscriber fee, a level that has been surpassed by some other RSNs and one perhaps not commensurate with the Nielsens YES historically produces.

To that end, sources familiar with the negotiations indicate that should the deal be consummated, YES would be bundled with the other 20 RSNs Fox owns as part of a broader programming portfolio to bolster its affiliate revenue stream.

Back on the West Coast, Prime Ticket continues to talk with Dodgers officials as its exclusive negotiating window lasts through Nov. 30. Sister RSN Fox Sports West, along with KCAL-TV, lost the rights to the Los Angeles Lakers as Time Warner Cable Sports has tipped off a pair of RSNs, including the nation’s first dedicated Spanish-language service, centering around the storied NBA franchise. Together, those RSNs -- reportedly collecting a monthly subscriber license fee of $3.95 -- have secured a number of deals with top providers in the Lakers' TV territory, although DirecTV and Dish currently remain on the distribution sidelines.

For News Corp. and Fox, holding a significant stake in YES and building its value, as well as regaining a New York RSN presence-- if nothing else -- would be a hedge if the Dodgers rights were to go astray.