The sale of the YES Network, the regional sports network home of the New York Yankees and Brooklyn Nets, to a consortium including the Amazon, the Yankees and Sinclair Broadcast Group, was finalized Thursday.
At $3.47 billion, the transaction is the largest piece of turf in the larger landscape of the formerly Fox-owned regional sports networks unloaded by Disney in the wake of its Fox acquisition. As a condition of approving the $71.3 billion acquisition of 21st Century Fox assets, the U.S. Department of Justice forced Disney to sell off the RSNs in order to avoid antitrust issues given its ownership of ESPN. The 21 other RSNs are now owned by a group of investors including Sinclair and Byron Allen, with the official news of that deal landing last Friday.
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Prior to the auction process for the 21 RSNs, the Yankees had exercised their right to control their own TV destiny, striking a separate deal for YES. The team now owns 20% of the media property.
While the fate of YES had been widely reported and unofficially confirmed by stakeholders months ago, it was not officially announced until Thursday.
Over the past two decades, RSNs have evolved into valuable but complicated media properties. Although they can generate massive in-market tune-in and throw off significant cash to their owners, they also can be problematic in terms of traditional carriage fees. Streaming has also proven to be a nettlesome challenge — one reason Amazon’s involvement is seen as a deus ex machina in the case of YES.
Due to the high cost of sports rights and the escalating value of sports franchises overall, RSNs have managed to secure steeper and steeper rate increases. At the same time, though, the level of overall pay-TV penetration in the U.S. is lower than it has been in at least 12 years, and many customers cite sports-driven fees when shaving or cutting the cord. The former Fox-run RSNs, for example, are in a carriage dispute with Dish Network. AT&T’s DirecTV has never agreed to carry SportsNet LA, the RSN partly owned by the Los Angeles Dodgers in the six years the network has been on the air.
In almost every year since its 2002 launch, YES has reigned as the most-watched RSN. The Yankees have this season’s best winning percentage in the American League and are favored to get to their first World Series since winning their last title in 2009.
“This transaction brings the YES Network and all of its popular programming even closer to the organization that inspired its very development,” Yankee Global Enterprises CEO Hal Steinbrenner said in the official announcement. “Along with our partners, we look forward to greatly expanding the way that sports content is delivered and consumed by fans everywhere.”
The partnership got equity investments from three leading financial investors: RedBird Capital, funds managed by Blackstone’s Tactical Opportunities business, and Mubadala Capital.
“Throughout its nearly two decades on air, the YES Network has set the gold standard for regional sports coverage,” Yankees president Randy Levine said. “We look forward to working with our strategic partners and our investors.”
Sinclair, already the No. 1 owner of local TV stations in the U.S., has been leveraging its local ad-sales and distribution infrastructure in making an aggressive push into the regional sports business. In addition to the Fox acquisitions, it struck a deal this year with the Chicago Cubs to jointly launch a new RSN in 2020.
“There are very few sports brands in the world as great as the New York Yankees that offer impressive reach and recognition,” Sinclair CEO Chris Ripley said.