Comcast Takes Control Sky PLC, to Challenge Netflix, Amazon Overseas

SKY

Comcast emerged triumphant in its effort to take over Sky PLC (Europe’s largest pay TV provider) after outbidding Twenty-First Century Fox (on behalf of Disney), by +/- $3.6 billion, in a rare settlement auction; Comcast’s bid valued the company at +/- $39 billion. Disney, which will take over most of Fox’s film and TV assets, subsequently announced it would sell Comcast Fox’s existing 39% stake in Sky at the auction-winning bid price of $22.54/share. The addition of Sky expands Comcast’s distribution outside of the U.S. (to UK, Ireland, Germany Austria, Italy, Spain and Switzerland) and increases their global footprint to +/- 53 million customers; existing infrastructure that puts the company in position to effectively compete with Netflix (+/- 29 million subscribers across Europe in 2017) and Amazon outside of North America.

Howie Long-Short: Selling its 39% stake in Sky PLC (SKYAY) at $22.54/share ($15.6 billion) must be considered a win for DIS considering it valued control in the company at just $20.44/share during the blind auction and Comcast didn’t need their stake (i.e. little leverage) to gain control over the British pay-TV group.

The +/- $15.6 billion price tag greatly reduces the financial leverage DIS needs to close the $71.3 billion Fox (FOXA) acquisition and when you consider the revenue that’s expected to be generated from the sale of FOXA’s 22 RSNs (valued at +/- $15 billion-22 billion), it’s feasible net acquisition costs could drop all the way down to +/- $35 billion. Significantly reducing the financial debt load is important to Disney with costly broadcast rights renewals on the horizon (see: NFL 2021, MLB 2021, NBA 2025) and the company undergoing the capital-intensive transition from legacy wholesale model to a direct-to-consumer business model (Disneyflix). Disney shareholders seem to be on board with the decision, shares are up +/- 6% from the morning of the tender announcement (9.26); they’ll open at $116.94 on Monday 10.1.

Fan Marino: While some might believe that Comcast’s acquisition of Sky (EPL’s most valued media partner in U.K.) would ensure NBC remains the Premier League’s U.S. broadcast partner beyond the ’21-’22 season, historically, the EPL has ignored affiliation between rights holders and taken the highest offer; back in ’16, Sky in Germany lost EPL rights to then-newcomer DAZN (unproven, yet deep pocketed), despite have the rights of 126/128 games in the U.K.

Across the pond, U.K. soccer fans must be wondering if there will be any changes coming to Sky’s broadcast coverage in the wake of the ownership change. English futbol fans aren’t going to want NBC’s “Americanized” version, so Comcast would be wise to let Sky run their EPL coverage autonomously; focusing on the distribution of non-sports entertainment assets instead (see: Universal Pictures).

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PBC Now Controls the Largest Annual Budget in Boxing

PBC

Premier Boxing Champions has signed a 4-year broadcast deal with Fox and extended its contract with Showtime (the networks will work in conjunction with each other) through 2021, agreements that will give Al Haymon’s promotion the largest annual budget in boxing; each deal is said to be worth more than $60 million/year. The deal with “new Fox” (live sports & news focused) calls for 10 “championship-level” fights to air on the 4th broadcast cable network and another 12 fights to be shown on FS1; Showtime will carry “a monthly series of events”. PBC’s new annual budget reportedly surpasses the $125 million/year Matchroom Boxing USA receives from DAZN. PBC cards will be held at the Barclays Center; the promotion has signed an exclusive deal with the Brooklyn arena to host 8 cards/year.

Howie Long-Short: PBC fights currently air on Fox and FS1, but PBC paid the network for that broadcast time. Times most certainly have changed! The first PBC card on Fox (under the new agreement) is scheduled for December.

There are 2 reasons why broadcast networks/streaming services (see: DAZN, ESPN/ESPN+, HBO) are pumping money into boxing; live sporting events are in demand (Murdoch called live sports “the most valuable content in our industry”) and broadcast rights to the NFL, NBA, MLB and NHL are tied up until at least 2022. Fox, in particular, is hungry for programming with up to 15 primetime hours/week to fill once the Disney deal closes; SmackDown Live will air on Friday nights, PBC boxing will take the Saturday night primetime slot.

To understand how PBC and Fox backed into the annual broadcast rights fee ($60 million+), it’s important to understand that broadcast rights fees are typically determined on a per fight basis and that a contest featuring 2 top-tier boxers draws upwards of $5 million. If each of the 12 FS1 fights featuring less decorated fighters were to draw $1 million on the open market, the math works. It’s worth noting that Fox holds PPV broadcast rights as part of this deal, so it’s possible the arrangement could end up being more lucrative than already assumed.

Twenty-First Century Fox (FOXA) reported fiscal Q4 earnings rose 58% YoY (to $.57/share) on August 8th. FOXA increased revenues +18% YoY (to $7.94 billion) with “strong double-digit growth across all operating segments”; the company’s Filmed Entertainment segment (see: Deadpool 2, The Greatest Showman), Cable Network Programming (see: Fox News, Fox Business) and Television segments were credited with driving the top line growth. Of course, most those FOXA’s film and television assets will be under Disney control moving forward; the company will not hold an earnings call during fiscal Q1 as it works through the transformation. Shares are +27% YTD. They’ll open at $44.88 on Friday morning.

Fan Marino: PBC’s deal with Fox will mark the first time in nearly 40 years that boxing appears weekly on broadcast television. That’s great news for boxing fans as it’s unreasonable to expect even the biggest of fans to subscribe to ESPN+ ($4.99/mo) and DAZN ($9.99 mo.), carry a premium cable subscription (for HBO & Showtime) and still pay for the occasional PPV fight. There is a limit to ones’ discretionary income.

Yes, the addition of new broadcast partners increases the number of fights taking place and boosts the sport’s exposure (it also increases the size of the purses for fighters), but it’s important to point that it also creates a fractured environment where network affiliation prevents some of the biggest fights from being scheduled (think: HBO vs. Showtime, now add a handful of other players).

PBC has an impressive stable of fighters. WBC heavyweight champion Deontay Wilder, welterweight champions Errol Spence Jr. and Keith Thurman and former welterweight champions Shawn Porter and Danny Garcia (fighting Sat night on Showtime) all signed with Al Haymon.

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Cubs Set to Launch TV Channel in 2020, Control Exclusive Local Broadcast Rights to Games

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The Chicago Cubs are reportedly planning to launch their own television network (think: YES) at the completion of next season, as the Ricketts family wants to control the team’s exclusive local broadcast rights. While rumors that the Northsiders would leave NBC Sports Chicago for greener pastures (pun intended) have persisted for years, the club’s recent decision to hire Mike McCarthy (former President of MSG Network and CEO of St. Louis Blues, not the Packers coach) to execute the transition is the clearest indicator to date that the team is moving forward with the plan. President of Business Operations Crane Kennedy announced on Wednesday, in no uncertain terms, that “2019 is our last year with Comcast, so we’ll move over and launch our own channel in 2020”. It remains unclear if the team will “bring in a carrier to oversee the production or go at it alone by producing and selling their own product.”

Howie Long-Short: The Cubs own 20% of the RSN NBC Sports Chicago (as do NBC Sports Group, White Sox, Bulls and Blackhawks), but the club’s existing broadcast deal with the network (and with ABC, WGN) expires in October ’19 and there are no mandates requiring team games remain on the station. It’s the front-office’s belief that they can maximize revenues by maintaining a team-owned network, capital needed for the franchise to operate with a “big market” payroll. Of course, there’s no guarantee the move will be successful; “the carriage problems surrounding the Los Angeles Dodgers and their reported $8 billion deal with Time Warner Cable have fueled fears of a bubble.” It’s worth mentioning that should the Cubs decide to partner with an established carrier, NBC Sports and Disney are said to be interested.

Speaking of Disney, the company has 22 RSNs it must sell within 90 days as a condition of its acquisition of 21st Century Fox film and television assets. We’ve suggested several potential landing spots, but one we hadn’t mentioned was Fox (FOXA). It now appears as if that is a possibility, as The Information has reported Fox execs are considering buying back the channels. It’s been estimated the RSNs could sell for between $15-20 billion, which would be upwards of 10x EBITDA – if MoffettNathonson’s estimate that the stations earn a combined $2 billion in EBITDA is accurate.

Fan Marino: MLB attendance is down, but fans continue to watch on television. Nielsen Media reported that through the All-Star break, 11 RSNs with rights to broadcast MLB games ranked #1 in their market in primetime (amongst all channels) and 11 more finished in the Top 3 (if only comparing cable channels). RSNs that host MLB franchises were #1 in primetime in 24 (of 29) U.S. markets. It’s worth noting that 6 (Cards, Indians, Brewers, Royals, Yankees and Diamondbacks) of the 11 RSNs ranked #1 in the market in primetime (amongst all channels) are Fox Sports affiliates that Disney must unload.

FYI, the Cardinals draw the largest TV audience in MLB, averaging 86,000 fans/game on Fox Sports Midwest.

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Comcast Out of Fox Bidding War, Focused on Landing Sky

Comcast

Comcast has dropped out of a bidding war with The Walt Disney Company (DIS) for 21st Century Fox’s (FOXA) film and television assets to focus its efforts on acquiring Sky Plc (SKYAY), the “crown jewel” of the Fox portfolio. By pulling out of the competition for Fox’s entertainment assets, Comcast avoids bidding up the implied value of SKYAY; the consequence of an “arcane provision in U.K. takeover rules”. Back on July 11th, Comcast (CMCSA) improved its cash offer for the European cable provider by 18% (to +/- $19.50/share, $34 billion); a 5% premium to the latest FOXA offer. Disney has indicated in regulatory filings that it will determine if FOXA is to continue with its pursuit of SKYAY; no decision has been made and one is not expected prior to the DIS shareholder vote on July 27th (re: Fox acquisition).

Howie Long-Short: Comcast’s decision to drop out of the bidding all but ensures that The Walt Disney Company (DIS) will take down the Fox film and tv assets. Of course, DIS had always been considered the front-runner for those FOXA properties having submitted the highest offer ($71.3 billion vs. Comcast’s $65 billion) and maintaining the support of both Rupert Murdoch and President Trump. Comcast shares popped 3% on the news, but nearly all gains realized were lost by Friday’s close ($34.30).

CMCSA appears to be willing to split the spoils with DIS, taking SKYAY and leaving the balance of the Fox assets for Disney’s taking. Comcast is now well positioned financially to outbid Disney should they make an aggressive play for SKYAY. BTIG Analyst Rich Greenfield expects that to happen saying, “while it is certainly possible that Fox (and in turn, Disney) is going to walk away from Sky and not match/exceed Comcast’s offer, it does feel hard to believe.”

SKYAY is the asset that Comcast really wants. The British pay-TV service could bring both the original content and distribution (satellite & broadband) capabilities to make the alliance “a mini Comcast-NBCU”. Adding 23 million subscribers across 7 countries, also give CMCSA the international expansion it seeks as the company strives to keep up with Amazon and Netflix in the global streaming race. While Comcast seeks 100% of Sky (including FOXA’s 39% stake), the company appears willing to settle for majority ownership; it’s unclear if Disney intends on selling its stake.

I asked Dan Cohen, Octagon SVP, Global Media Rights Consulting Division which deal (SKYAY or Fox Film/TV assets) contains the most valuable sports media rights?

Dan: Sky is the stronger sports specific acquisition with a robust portfolio not only in the UK, but other significant European markets. The crown jewel is obviously Premier League, but F1, Cricket and Golf are significant as well. Sky Italia offers up premium content after just renewing Serie A rights in Italy and Sky is a player in Ireland Spain, Germany and Austria.

Editor Note: Fox assets include Star India and Fox International channels, but no domestic rights. Comcast (had they continued pursuit of Fox assets) also intended on divesting the 22 RSNs to avoid anti-trust concerns.

Fan Marino: As Dan notes, SKYAY’s portfolio of sports broadcast rights is impressive (particularly the EPL), but the control over and value of those rights remains tentative. Exclusive broadcast deals cannot be counted on to last and as MoffettNathanson analyst Craig Moffett astutely pointed out, “absent these exclusives, Sky is, well, just satellite TV.”

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IPL (Cricket) Generates More Sponsorship Money Than MLB

IPL

Indian Premier League (IPL), India’s most profitable sporting league, generates more sponsorship dollars annually than Major League Baseball; despite its season being just 47 days long. Last year, in just its 11th season, IPL took in $1 billion in sponsorship revenue; 12% more ($892 million) than its baseball counterparts (founded in 1903). It’s not just sponsorship dollars that are ballooning in cricket though, newly signed broadcast deals, the rising value of title sponsorship rights and the increasing brand value of the individual teams has sent the league’s valuation soaring +26% (to $5.3 billion) over the last year. As former General Manager of the BCCI (Board of Control for Cricket in India) Amrit Mather explained, “cricket has shown through the IPL that it defies normal economics. Investing in cricket is a no-brainer.”

Howie Long-Short: Rupert Murdoch is certainly on board with Mather’s assessment. Back in September ’17 Fox acquired (Facebook and Sony were also interested) global broadcast rights to the IPL; agreeing to a 5-year deal worth $2.5 billion. In April, subsidiary Star India bought the television and digital broadcast rights to Indian cricket for $944 million (5 years, through ‘23), a +51.2% increase over the terms of their expiring deal. On a per match basis, Fox is paying just slightly less for Indian cricket than for English Premier League rights and more than both the NBA and MLB command. It should be mentioned that Indian cricket and IPL rights are likely headed to Disney as part of their $71.3 billion acquisition of FOXA film and television assets.

Vivo, a Chinese phone manufacturer, is the title sponsor of the IPL. The company paid $340 million for the annual tournament to be known as the Vivo IPL until ’22, a +554% increase over the value of their previous deal. Vivo is a subsidiary of BBK Electronics Corporation, the largest smartphone seller in India and the 3rd largest in the world. BBK Electronics is a privately held entity, there are no ways to invest in the company.

Fan Marino: You know how they turned a game from the 1500s into a commercial success? They shortened the length of the matches! Games that once took days, have been streamlined (known as Twenty20) to 3 hour blocks (max). Baseball purists won’t be on board, but MLB should consider doing something similar; attendance is down 10% (lowest in 15 years), primetime TV ratings were down 6% in ’17 and the sport has an aging fan base (57 years old, up from 52 just 5 years ago). I propose the 27 rule (I just coined that name); 2 hours or 7 innings, whatever comes first. 

Fun Fact: Did you know? The longest cricket match in history (England v. South Africa, 1939) spanned 10 days.

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Comcast Positioned to Take Down Sky, Could Drop Pursuit of Fox Assets (including 22 RSNs)

SKY

21st Century Fox (FOXA) raised its bid 30% (to +/- $18.50/share) for Sky PLC (SKYAY) on Wednesday, before Comcast (CMCSA) improved its cash offer for the European cable provider by 18% (to +/- $19.50/share); a 5% premium to the latest FOXA offer. Comcast’s offer was reportedly “recommended by Sky’s independent directors” and the company is said to have “earmarked funds to fulfill the terms of the deal”; the company hopes to complete the acquisition by October, having already received regulatory approval (had been an issue with Fox’s Dec. ‘16 bid) from the EU, Austria, Germany, Italy, and Jersey. The WSJ indicated that if Comcast were to take down Sky, the company could drop its pursuit of Fox’s film and TV assets; FOXA’s existing 39% stake in SKYAY has been a target in that deal.

Howie Long-Short: The Walt Disney Company is considered the front-runner for the FOXA properties having submitted a $71.3 billion offer; obtaining full control of SKYAY is critical to completing that transaction, which explains FOXA’s interest in the British television group.

As for Comcast, SKYAY could bring them both the original content and distribution (satellite & broadband) capabilities that would make the alliance “a mini Comcast-NBCU” and give CMCSA the international expansion it seeks as the company looks to keep up with Amazon and Netflix.

I asked Dan Cohen, Octagon SVP, Global Media Rights Consulting Division which deal (Sky or Fox assets) would best position Comcast in the sports media sector?

Dan: Sky is the stronger sports specific acquisition with a robust portfolio not only in the UK but other significant European markets. The crown jewel is obviously Premier League, but F1, Cricket and Golf are significant as well. Sky Italia offer up premium content after just renewing Serie A rights in Italy and Sky is a player in Ireland Spain, Germany and Austria.

Editor Note: Fox assets include Star India and Fox International channels, but no domestic rights. Comcast would also be divesting the 22 RSNs to avoid anti-trust concerns.

Howie: What are the 22 RSNs worth?

Dan: I wouldn’t be surprised if they could fetch as much as $28 billion. Either winner (Comcast or Disney) will be well positioned to reap billions from the sale. The capital earned from the RSN divestiture can help offset the purchase price or be applied to aggressively pursuing even more premium sports content.

FOXA shareholders were less than pleased with Wednesday’s developments, shares declined -4% on the day closing at $47.79.

Fan Marino: Speaking of 21st Century Fox, it’s being reported that despite ad revenue increasing from 4 years ago, the company is going to lose money on the ’18 World Cup. Simply put, the company overestimated (by 7-10%) the number of viewers they expected to tune-in (and guaranteed in ad deals) and are now being forced to offer “make goods” (i.e. additional air time) to advertisers. Interestingly, Telemundo won’t post a profit either; that’s surprising if only because it set network ratings records (including 125 million live streams) throughout the tournament.

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Comcast Preparing to Divest 22 Fox RSNs, To Submit 2nd All-Cash Bid by July 27th  

Comcast

Comcast (CMCSA) is reportedly lining up buyers for 21st Century Fox’s (FOXA) regional sports networks to alleviate anti-trust concerns, as it prepares a bid that would be favorable to The Walt Disney Company’s (DIS) $71 billion dollar offer (cash and stock) for FOXA film & TV assets. CMCSA is open to divesting all 22 RSNs, but believes just 8 overlap with the existing Comcast sports footprint. Reuters is reporting that the company has held conversations with publicly-traded buyout firms Apollo Global Management (APO) and Blackstone Group (BX). Just 2 weeks ago, the U.S. Department of Justice approved DIS’ bid after reaching a settlement with the mouse house to rid itself of the regional sports networks.

Howie Long-Short: It’s been assumed that the RSNs will fetch $20 billion+ (Comcast’s first bid placed a $24 billion valuation on them), so selling them off will help Comcast coffers as the company prepares to submit a 2nd all-cash bid (no dollar amounts given). FOXA shareholders are scheduled to vote on the DIS bid on July 27th, Comcast will submit their bid prior.

Rumors of P.E. firms taking down the RSNs is relatively surprising as most of the discussions surrounding potential landing spots having focused on telecom and media companies. Everyone from Amazon (AMZN) and YouTube (GOOGL) to AT&T (T) and Dish Network (DISH) has been mentioned.

I asked T.K. Gore, sports media consultant, advisor and professor, for his thoughts on who lands the RSNs?

T.K.: The RSN world is a tricky business and experience — coupled with deep pockets — matters. Look for groups like Liberty Media and AT&T to get involved given their experiences.

MSG is among the companies that has been associated with having interest in the regional networks. James Dolan has said that he’d be interested in acquiring the assets “at the right price”, noting they’re highly profitable now but a “slow, declining revenue stream.”

Fan Marino: The 22 RSNs collectively control exclusive broadcast rights to 44 NFL, NBA, MLB & NHL franchises, including teams in Detroit, Southern California, Dallas, Cleveland and Miami. The YES Network is the most valuable of the lot, worth an estimated $4 billion; the Yankees are likely to re-acquire that network.

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SmackDown Live Moving to Fox Network Television, WWE Signs $1 Billion Agreement

SmackDown

Fox Sports has confirmed reports that the Fox broadcast network (FOXA) will be the home of WWE SmackDown Live, effective Friday October 4, 2019. The 5-year deal, worth an estimated +/- $200 million annually, gives Fox exclusive rights to the “2nd-longest running weekly episodic cable television show in U.S. prime time history” (Monday Night RAW is 1st). By signing with Fox, the show will move from cable to network television; though it will air on Friday evenings, the least watched television night. In related news, USA Network has announced that is has renewed its contract with the WWE to retain the exclusive broadcast rights to Monday Night RAW.

Howie Long-Short: This isn’t news as much as it is confirmation for JWS readers, as we first wrote of the deals back on May 22nd. Come 2019, Monday Night RAW and SmackDown Live will generate 3.6x ($468 million/year) what the company currently brings in ($130 million) for its 2-weekly prime-time shows. WWE isn’t done yet either, broadcast deals in 5 of their 6 largest international markets are also coming up for renegotiation. WWE now projects the company’s 7 largest TV deals in aggregate will grow from $235 million in 2018 to an average of $542 million by 2021.

The formal announcement of the Monday Night RAW and SmackDown Live deals sent WWE shares up +9.5% last week ($72.82). WWE is up +67% since the news first broke in mid-May and has grown +260% over the last 12 months. Of course, WWE is having success on both the television and streaming fronts; reporting WWE Network (OTT platform) paid subs grew 5% to 1.56 million in Q1 ‘18.

Fan Marino: Vince McMahon has committed to spending $500 million, not the $100 million originally reported, on the XFL over the first 3 years. Players (40 man rosters, +/- $75,000 salaries), coaches and a “broad-based insurance plan” (cost min. $10 million/year) are expected to be the biggest expenses. The league is scheduled to debut in February 2020. While $500 million will give the league some runway, I simply don’t think the competition level will be good enough to give it staying power; and if a wave of top high school prospects decided to forego college to pursue pro careers in the XFL, the NFL would simply renegotiate their CBA to enable HS prospects to enter the 2021 draft. The current NFL CBA expires following the 2020 season. It’s worth noting that WWE shares are up 117% since Vince sold $100 million worth in January, money he’s using to fund the startup league.

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Disney Agrees to Divest 22 Regional Sports Networks

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The Department of Justice has approved The Walt Disney Company’s (DIS) $71.3 billion ($38/share, increased bid from $52.4 billion, includes +/- 50% in cash) acquisition of 21st Century Fox (FOXA) television and film assets, after reaching a settlement with DIS that calls for the company to divest FOXA’s 22 regional sports networks. U.S. A.G. (Anti-Trust Division) Makan Delrahim, concerned DIS’ control of the RSNs would create a potential monopoly, said that the settlement ensures “sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.” The settlement, which requires DIS to divest the RSNs within 90 days of closing, requires approval from a judge; but that is a formality. DISintends on pursuing a 3rd party buyer for the RSNs, as opposed to submitting a new offer; FOXA is not thought to be interested in retaining the assets.

Howie Long-Short: DOJ approval gives DIS an advantage over Comcast (CMCSA) in the competition for the Murdoch empire, just two weeks after Comcast submitted an all-cash bid worth $65 billion ($35/share). While the approval alone won’t win DIS the assets (Comcast is expected to submit a counter offer), it won’t hurt considering it’s been thought the FOXA board has long preferred to sell the assets to DIS in the belief the Comcast bid is bound to face anti-trust concerns. That’s debatable. CMCSA would also divest the RSNs and FOXA’s stake in Hulu is really the only asset that might draw anti-trust concerns; and that doesn’t appear to be a major hurdle. It’s been thought FOXA assets could draw upwards of $43/share.

It should be noted that if the DIS deal goes through as is, FOXA shareholders would own 19% of the joint company. FOXA shares are up +11% (to $49.79) since DIS submitted their latest offer on June 20thDIS hasn’t fared as well, the stock is down -1.25% (to $104.77) over that same period.

Fan Marino: While the Yankees are likely to repurchase YES Network, that still leaves 21 RSNs and a lot of regional sports broadcast rights for taking. Sure, it’s possible that FAANG will pursue exclusive broadcast rights, I would bet on an established linear player making a play to acquire the 5th most important channel on a subscriber’s cable package. CBS (think: CBS Sports HQ), Turner Sports (T, B/R Live) and Discovery Communications (DISCA, which has made a significant push for rights in Europe) are all possible landing spots.

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Yankees Seek to Re-Acquire YES Network, Hold Buyback Option

YES_Network_logo

The New York Yankees have expressed interested in re-acquiring the 80% of the YES Network controlled by 21st Century Fox (FOXA), if FOXA is to proceed with the sale of its film and TV assets (including 22 RSNs). The team reportedly holds a buyback option in the event the network (the most valued/viewed RSN among FOXA lot) goes up for sale. Last week, we wrote that Comcast (CMCSA) had submitted a $65 billion all-cash offer for 21st Century Fox’s (FOXA) assets that trumped the $52.4 billion all-stock offer that The Walt Disney Company (DIS) placed in December; DIS is expected to submit a counter bid. Yankee Global Enterprises, the holding company that owns the baseball club and NYCFC, controls the remaining 20% of YES.

Howie Long-ShortFOXA initially purchased a 49% stake in the YES Network for $1.862 billion in 2012. In 2014, the company acquired an additional 31% at roughly the same $3.8 billion valuation. The 1st place Yankees are drawing the network’s highest ratings since ‘12 and YES also controls the rights to broadcast both Brooklyn Nets and NYCFC games, so it’s certainly not unreasonable to expect FOXA to sell the asset at a valuation north of $4 billion. This means the team would be re-acquiring the network at a loss. That may not be of concern for the franchise though, as they likely value the ability to own/distribute their content with the recent proliferation of direct to consumer platforms/services.

According to Moody’s Investor Service, if Comcast were to acquire FOXA assets the combined entity would carry +/- $170 billion in pro-forma debt; more than every company in the world not named AT&T/Time Warner (which just completed a $85 billion merger).

Fan Marino: Back in April, Forbes released its rankings of the most valuable Major League Baseball teams. The Yankees topped the list with a $4 billion valuation, making them the 2nd most valuable team in all of sports; behind only the Dallas Cowboys ($4.2 billion). The team generated $619 million in revenue last year, 96.5% more than the league average ($315 million). Forbes has the NYY valued at +/- 6.5x revenue, slightly higher than what the Houston Rockets sold for in 2017; for comparison purposes, the Carolina Panthers recently sold for less than 6x revenue. I continue to maintain that David Tepper got a good deal.

The Yankees have signed the PBP voice of the YES Network (for Yankee games) to a 3-year extension (network option for 2 more years) worth more than $1 million/year. The deal makes Michael Kay the highest paid local broadcaster in MLB. Kay takes home a higher annual salary than some of the team’s biggest stars; Luis Severino, Gary Sanchez and Aaron Judge will make $604K, $620K and $622K respectively this season.

Fun Fact: The value of the NYY has compounded 15% annually since George Steinbrenner group bought the team for $8.8 million in 1973.

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