M+E Daily
News Corp. Goes Deep With New Yankees Deal
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By Paul Sweeting
The spiraling cost of sports programming is already riling the pay-TV industry by driving up subscriber fees, but don’t expect any respite from the tension in the near term. On Tuesday, News Corp. announced it has acquired a 49% stake in YES Network that values the regional sports network at $3.4 billion.
Key to the News Corp. investment was a new deal between YES and the New York Yankees to give the network exclusive broadcast rights to Yankees’ games for the next 30 years. YES will pay the Yankees a whopping $350 million per year, a more than three-fold increase over the network’s expiring deal, with a 5% bump in the fee each year.
The massive deal is likely to have significant ripple effects throughout the industry. It’s new stake in YES will give News Corp., which already owns 20 regional sports networks around the country, still-greater leverage with cable and satellite providers as it seeks to launch a new. national all-sports network to compete with Disney’s ESPN.
ESPN is already the priciest network for pay-TV providers, garnering an average of $4.69 per subscriber per month in carriage fees, according to SNL Kagan. That doesn’t count the additional 40-50 cents per sub Disney is typically able to squeeze from providers for ESPN2, ESPN Classic it the various other brand extensions that ride the flagship’s negotiating coattails. A new national sports network from News Corp., while unlikely to fetch as much as ESPN right away, will nonetheless hit cable and satellite providers with significant new carriage fees, increasing what Time Warner CEO Jeff Bewkes referred to last week as the “sports tax” imposed on non-sports fans by the high cost of sports programming.
NBC Universal is also seeking to launch a national sports network and recently paid $800 million to grab U.S. rights to the English Premiere League away from News Corp.’s Fox Soccer Channel.
In the meantime, the ever-growing sports tax on non-sports fans will exert increasing pressure on Congress o the Federal Communications Commission to intervene, perhaps by forcing the industry to offer pricey sports programming on an ala carte basis.
