News Corp will acquire a 49 percent equity stake in the YES Network from the New York Yankees baseball club and its partners, giving the media company a major sports presence in the largest U.S. TV market.
After three years, News Corp would be able to acquire a larger stake that could bring its ownership to 80 percent, the company said in a joint statement with Yankee Global Enterprises, the parent company of the Yankees.
News Corp declined to disclose financial details. A person familiar with the matter told Reuters the deal would value the sports channel at $3 billion.
The source also said the Yankees' new stake in the network will be 25 percent, down from 34 percent, while Goldman Sachs and Providence Equity Partners' combined stake falls to 12 percent from 32 percent. Other investors will also reduce their investments as part of the transaction.
The deal would allow the regional sports network YES to raise the current $2.99 monthly fee per subscriber it charges cable and satellite operators to carry the channel, said a source familiar with the matter who spoke on condition of anonymity because these details were not yet public.
News Corp would negotiate on its behalf with operators as part of a larger package of sports channels, the source said. This could happen in the next year or so because YES's major carriage agreements with the largest cable operators, Time Warner Cable and Comcast expire in the next 18 months, according to the source.
YES currently has 15 million subscribers. The Yankees hold one of the strongest brands in sports and enjoy nationwide popularity that extends beyond the 7.4 million homes that make New York the largest U.S. TV market.
James Murdoch, News Corp's deputy chief operating officer said in a statement that the deal enhances News Corp's sports portfolio and it will take the YES Network "to even greater heights."
News Corp, the media company that owns Fox Broadcasting and The Wall Street Journal, owns or holds stakes in 20 regional sports networks, providing sports programming to more than 67 million subscribers.
(Reporting by Liana B. Baker; Editing by Lisa Von Ahn and Gunna Dickson)