News Corporation announced on Tuesday that the company is acquiring a 49 percent stake in the New York Yankees cable station the YES Network, according to sources who were briefed by the network's board of directors, says ESPN.
ESPN first reported the news on Monday, while the New York Times reported last week about News Corp.'s interest in the deal.
The company is the parent to Fox Sports and owns media companies all around the world, including Fox News and the Wall Street Journal.
According to Darren Rovell at ESPN.com, the details of the deal are still being worked on, but News Corp. will be purchasing the shares from "the Yankees' holding company Yankees Global Enterprises as well as the other network investors, Goldman Sachs, Providence Equity and NJ Holdings, a group led by former Brooklyn Nets owners Louis Katz and Ray Chambers."
The company is taking advantage of a move by Goldman Sachs to sell its 40 percent share in the network. According to ESPN.com, Murdoch will buy those shares and will acquire another nine percent either from the Yankees' 34 percent share or from another area.
According to Rovell, the deal could change with negotiations, but currently states that the Yankees would sell nine percent of YES to News Corp. and decrease it's holdings to 25 percent.
He also writes: "Goldman and Providence will reduce its share to approximately 12 percent from 32 percent, as will NJ Holdings. A couple other small partners have the remaining two percent of the regional sports network."
The YES network currently broadcasts Yankees games, Nets games as well as a range of original programming and other college and professional sporting events. When it first was established in 2001 it was valued at $800 million, but has since increased to over $3 billion.
The Yankees will make at least $270 million by selling the shares, while the media rights agreement for the team's games will be subject to approval by Major League Baseball. According to the current deal, the Yankees will remain with YES for at least another 20 years past the 2021 season, which is where the current deal extends to.
According to Rovell, "in exchange for extending the rights, there is talk that the Yankees could be paid an additional $400 million to $500 million by News Corp separate from the rights agreement itself."
The New York Times speculated on Monday that Murdoch's purchase of the network could "aid in the formation of a new nationwide sports network to compete with ESPN."
Murdoch is developing Fox Sports 1 to be a national sports network and YES most likely will play a big part in the formation of that depending on what he decides to do with regional coverage.
The move also brings up questions about the future of the Yankees organization and the sale of the team.
News Corp. is known for moving into corporations and business entities with the future plan of eventually taking over the company. While it holds a 49 percent stake for now, it would not be a surprise if they attempt to take a majority stake in the network later down the line.
It would also not be a surprise if Murdoch tries to buy the team itself.
Although the Yankees and the Steinbrenner family have emphatically denied that it is not selling, the move raises questions that were never there before.
Speculation about the sale of the team has been rumbling around baseball for the past year, including last May when Hal Steinbrenner said to the Daily News: "Me and my family have no intention to sell the Yankees and expect it to be in the family for years to come."
Wallace Matthews brings up an interesting point at ESPNNewYork.com, writing: " The fact that the Yankees are not taking the opportunity to increase their own share of YES to 51 percent, to ensure they retain control of their own network, indicates that they are willing eventually to cede that to Murdoch -- who reportedly will have the option of increasing his share of YES to 80 percent within five years."
Moving along from there, Matthews says it would not be a surprise to see Murdoch attempt to move from YES to the entire organization.
Under the new Steinbrenner's, the team has moved away from its old philosophy and is trying to trim payroll as it moves along in the future.
In 2011, according to ESPN.com, Hal Steinbrenner said: "I'm a finance geek. I guess I always have been. That's my background; budgets matter and balance sheets matter. I just feel that if you do well on the player development side and you have a good farm system, you don't need a $220 million payroll. You can field every bit as good a team with young talent."
The idea of bringing down revenue, selling stakes in YES and allowing Murdoch in the door all could add up to a sale in the future for the franchise.
The Los Angeles Dodgers were sold this past year for $2.1 billion, making many in baseball wonder how much the Yankees would be worth. Television rights played a big part in the deal for the Dodgers and its taking center stage once again when it comes to the YES deal.
