Yankee Global Enterprises, along with strategic partners Sinclair Broadcast Group and Amazon, has closed on the 80% of YES Network not already owned by the club (bought from The Walt Disney Company). The group, which also counts RedBird Capital, Blackstone and Mubadala Capital as investors, bought the country’s most valuable regional sports network at a $3.47 billion valuation. It has been reported that Sinclair will work with YES team management to manage traditional and virtual distribution relationships. The press release issued by Yankee Global Enterprises (dated 8.29.19) did not address how Amazon fits into the fold, but it’s believed the company invested in the RSN with the belief that it would be receiving the rights to stream Yankees games; as it currently stands MLB controls each teams’ local digital rights.
Howie Long-Short: The Yankees involvement in the deal indicates that the organization is bullish on content monetization and that it sees value in establishing a more direct relationship with its fan base (think: ability to sell tickets, merchandise). The iconic franchise reclaimed controlling interest in YES Network at a valuation $500 million less than Fox invested at 2014, while hand selecting strategic partners to close the transaction; partners that will assume most of the financial risk as the club grows non-sharable revenues. It’s hard to argue that the team isn’t among the deal’s winners.
The deal also puts Sinclair in a position of strength. One media industry insider explained that the company “has a pretty good handle on retrans, they now control all of these valuable RSN rights [which provide leverage in carriage negotiations] and they’re looking to take advantage of opportunities that sports betting has created; particularly in-play betting.” The volume of discreet in-game bet-able opportunities in baseball is tremendous relative to most other sports and remember, New Jersey (which is generating sports betting revenues comparable to Nevada) is part of the Yankees home broadcast territory. That doesn’t mean the company intends on serving as a gaming operator. It’s far more likely Sinclair partners with a 3rd party (think: Fox and BetStars NJ) to avoid concerns relating to the games’ integrity.
As for Amazon, it’s difficult to imagine that they would have participated in this deal “without a wink and a nod” that MLB was going to reassign local direct-to-consumer standalone broadcast rights to the clubs. Our source wondered, “why else would they be doing it?” The e-commerce giant certainly isn’t looking to operate a media business – it uses content to sell products. Yankees President Randy Levine hinted that change is coming saying, “you should just stay tuned because I think the [MLB] commissioner will be speaking about that in the near future.”
Fan Marino: While on the topic of OTT, it’s the pressure on the paid television ecosystem from digital/mobile platforms that has driven content and distribution consolidation across the legacy media business. While the vast majority of consumption still occurs inside of the traditional cable bundle, substantial viewership now occurs outside of it as well. The challenge that OTT service providers face is that the monetization of sports content in digital only platforms remains substantially behind the level of consumption and it is going to take some time for that to catch up. The insider we spoke to said to “look for the next set of NHL, PGA, NFL and P5 college broadcast agreements (those coming up within the next 5 years) to address this dynamic by moving certain rights to non-traditional platforms.” We were also told to “expect those deals to reflect the enormous value of key live sports rights in the rapidly changing distribution landscape” – promising news for teams and leagues.
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