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SBD/November 21, 2012/MediaPrint All
News Corp. will pay the Yankees $500M as part of the media company’s purchase of 49% of YES Network, a source said. The $500M, which was a separate inducement to get the Yankees to agree to sell the stake, is subject to MLB revenue sharing. The first $300M is due upon closing of the deal, which was announced Tuesday, and $200M in three years, the source said. The network is valued at $3B, but if News Corp. in three years exercises its option to increase its stake to as much as 80%, the valuation jumps to $3.8B, the source said. As part of the deal, the Yankees secured a rights extension through '42 that, due to accelerators in the contract, will pay the team $300M that final year, up from $85M this year. The Yankees’ stake in YES Network is declining from 34% to 25% as part of the deal, while private equity companies Goldman Sachs and Providence Equity will keep about 10% each. Former owners of the Nets will own the remainder. The source said even if News Corp. takes control of the channel, the Yankees will retain control over the broadcast of their own games (Daniel Kaplan, SportsBusiness Journal). A source said that News Corp. will "make a payment of $420 million to the Yankees that exercises" three five-year options and adds a five-year extension for YES to air Yankees games through '42 (N.Y. TIMES, 11/21).
SETTING THE TONE: In N.Y., Chozick & Sandomir note the acquisition "underscores the competitive and lucrative arena of televised sports." News Corp.’s Fox Sports division "already owns 19 regional sports networks nationwide." Adding YES Network would "strengthen that unit" as News Corp. prepares to "introduce 'Fox Sports 1,' a cable sports channel that would compete against ESPN." YES Network reaches "about 15 million homes" and is the most-watched RSN in the country. Even with Fox programming "that will eventually be added to YES, the Yankees will still control the channel’s content, so the pro-Yankees coverage is not likely to change over the next three years." When Fox "assumes the majority stake, it will run the business" (N.Y. TIMES, 11/21). CABLEFAX DAILY notes with News Corp. "expected to soon launch a national sports net, some see this as the programmer further flexing its muscle in sports" (CABLEFAX DAILY, 11/21). YES Network President & CEO Tracy Dolgin said, "Sports is unique. It's the only way you can get people to subscribe to a distributor -- a cable, satellite or telco operator. If you don't watch sports live, it's gone" (N.Y. POST, 11/21).
B1G OPPORTUNITIES AHEAD: USA TODAY's Michael Hiestand writes under the header, "Big Ten Expansion Boon For News Corp." With the announcements that the Univ. of Maryland and Rutgers Univ. will be moving to the Big Ten Conference, Fox' Big Ten Network will "try to turn Maryland and New Jersey into so-called footprint markets." BTN's business "right now isn't based on selling TV ratings to advertisers," but it does "get revenue through cable operators, from subscribers." In the net's "footprint states, cable operators pay about 80 cents per TV subscriber and give BTN broader exposure by including the channel on basic cable." In non-footprint states, operators "pay about 10 cents per subscriber and usually relegate the channel to a pay tier." Big Ten Commissioner Jim Delany said that BTN will move to "charge cable operators more in Maryland and New Jersey ... only that as current deals expire." He said, "We'll have discussions, and I'm sure those discussions will be constructive" (USA TODAY, 11/21). Delany also said that News Corp.'s purchase of the stake in YES Network was "a 'pure, unadulterated coincidence' with the pending addition of Rutgers, which craves attention from New Yorkers." In Chicago, Teddy Greenstein notes News Corp. "could try to bundle BTN with YES to get BTN distributed in New York" (CHICAGO TRIBUNE, 11/21).
LAWYER UP: Yankees COO Lonn Trost said that a "30-lawyer team advised various parties on the YES side of the transaction." Trost said that Yankees President Randy Levine, who also is senior counsel with Akin Gump in N.Y., "played a major role in the negotiations with News Corp." THE AM LAW DAILY's Brian Baxter noted Boies, Schiller & Flexner Partner Richard Birns is "leading a team from the firm representing YES on the News Corp. deal." Advising the Yankees and "their holding company Yankees Global Enterprises on the deal with News Corp. is Trost's former firm, Herrick, Feinstein." Skadden Arps M&A Partner Thomas Greenberg, Tax co-Head Matthew Rosen and Tax Partner Dean Schulman are "advising Goldman Sachs on the sale of most of its equity stake in YES." Weil, Gotshal & Manges M&A Partners David Duffell and Michael Weisser are "leading a team from the firm advising Providence Equity Partners on the sale of part of its stake." Fried, Frank, Harris, Shriver & Jacobson Senior Counsel Arthur Fleischer Jr. and Corporate Partner Peter Golden are "taking the lead representing YES' remaining stakeholder N.J. Holdings." News Corp. "turned to teams of lawyers" from Hogan Lovells and Jenner & Block (AMERICANLAWYER.com, 11/20).
NBC averaged a 2.8 rating and 4.4 million viewers for its seven Notre Dame home football games this season, marking the net’s best Notre Dame package since '05. NBC was also up 69% and 67%, respectively, from a 1.7 rating and 2.6 million viewers last season, which marked the net’s lowest Notre Dame package since it acquired rights in '91. The net’s best Notre Dame audience this season was the Sept. 22 game against Michigan (6.4 million viewers). That also marked NBC’s best ND game viewership since '05. Three Notre Dame games averaged over 5.0 million viewers this season, compared to zero last season (Austin Karp, THE DAILY). Notre Dame will clinch a spot in the BCS Championship game with a win against USC on Saturday, and in Indianapolis, Anthony Schoettle noted the school's "massive following ... is expected to push TV viewership to a high water mark" for the title game. Should Notre Dame meet current No. 2-ranked Alabama in the championship game, broadcast experts believe "more than 25 million households could tune in." That would "mean a 25-plus rating, which is higher than the record 21.7 rating" for the '06 Texas-USC title game (IBJ.com, 11/19).
FEELING GREEN: ESPN’s Darren Rovell reported with Notre Dame currently the top-ranked team in the BCS standings, things "are greener than ever before for the Fighting Irish -- green as in money.” TiqIQ noted tickets for the BCS title game jumped from $1,829 last week to $2,201 on Tuesday with Notre Dame "in the driver’s seat.” Meanwhile, oddsmaker Jimmy Vaccaro indicated that a potential Alabama-Notre Dame championship game “will be the most-bet game in college football history” (“Money Talk,” ESPN.com, 11/19).
Showtime Wednesday night at 10:00pm ET will debut a six-week run of "Jim Rome On Showtime," and host Jim Rome said that the show "will be different" from the various daily talk shows he has hosted in his career, according to Michael Hiestand of USA TODAY. Rome said, "Rant, interview, panel, rant, then 'see you tomorrow.' It's what I've done for 20 years. I like doing it and will keep doing it every single day. But this won't be the daily topical grind. ... I'll have people I would never normally talk to." Wednesday's show will include actor Matthew Perry, Packers QB Aaron Rodgers, former NFLer Tiki Barber, Lakers G Kobe Bryant, NBPA President Derek Fisher and Warriors co-Owner Peter Guber. Rome, whose CBS deal "includes cameos on the broadcast network," suggests Showtime "will be sort of liberating." He said, "It's premium cable, as opposed to basic cable, so I can push the envelope and do some things I haven't been able to do in the past" (USA TODAY, 11/19). Rome compared the Showtime venture to his daily show on CBS Sports Network and said, "It's different in a lot of ways, far and away the most challenging show I've ever taken on ... there's nothing else like it on television." He added, "It's nice to know if I want to go to another place and push another envelope, I can do that. There'll be a crossover element. People in the arts, politicians, literary people ... who have an opinion on sports" (L.A. TIMES, 11/19). SI.com's Richard Deitsch noted the show is "part of CBS' using of Rome across multiple platforms." In addition to shows on Showtime and CBSSN, his radio show "will debut on CBS Radio in January 2013." CBSSN "hasn't gained much ratings traction," but Deitsch noted he has "long appreciated Rome's giving run to sports writers we don't often see on television" (SI.com, 11/19).
WELCOME TO THE JUNGLE: Rome said that his new radio show "will be similar to the show distributed for years by Clear Channel's Premier Radio Networks." He said, "I would be foolish not to take advantage of some of the resources that CBS offers. Looking at their plans, I can tell you that they are getting an extremely motivated host" (CHRON.com, 11/20). More Rome: "I could not have had a better partner than Premier Radio. They have been wonderful to me, and I will be forever grateful. But CBS Radio is launching in January, and they will be offering me a chance to be on in cities where I have not been before, which is exciting" (WASHINGTONEXAMINER.com, 11/19).
Mavericks Owner Mark Cuban in a special to the HUFFINGTON POST wrote under the header, "What I Really Think About Facebook." Cuban: "First, I'm not recommending to any of my companies that we leave Facebook. I am recommending that we de-emphasize pushing consumers or partners to Like us on Facebook and focus on building up our followings across all existing social media platforms and to evaluate those that we feel can grow a material following." In the past "we put Facebook first -- Twitter second." Facebook has been "moved to the bottom of a longer list." Facebook execs believe that their news feed "is an engaging information source," and they seem to "really, really want to make sure that you get the information that is most engaging to you." Cuban: "I honestly didn't know this." People go to Facebook "with the expectation that it is very likely they will stay on Facebook for an extended period of time." But, for some reason, Facebook "doesn't seem to want to accept that its best purpose in life is as a huge time-suck platform that we use to keep up with friends, interests and stuff." Cuban: "I think that they are overthinking what their network is all about." From a brand's perspective, "not having to try to fall within the parameters of the algorithm (Edgerank) allows us to post fun things, tidbits, information, anything knowing that there is at least a chance those who have a connection with us can see it and knowing that we won't reduce our chances of the algorithm showing our post." We should "know better than an algorithm what those who like us actually like." It may well be "that it's a passive relationship." Maybe they "just want to see the scores at the end of every quarter in a Mavs game?" Maybe they "want to know what show is playing right now on AXS TV?" No one expects them to "Like, comment or share any of this." It is "just an information source." And it is "really weird when Mavs end-of-quarter scores show up out of order." That is how "smart the algorithm is." Facebook is "overcomplicating a simple issue" (HUFFINGTONPOST.com, 11/19).
REACH OUT AND TOUCH SOMEONE: ALLFACEBOOK.com's David Cohen noted Cuban earlier this month "used the example of a Facebook post promoting" an upcoming Mavericks game, pointing out that the post "reached only about 27,000 of the nearly 2.36 million Facebook users who liked the team’s page." In an e-mail to ReadWrite, Cuban wrote, "We are moving far more aggressively into Twitter and reducing any and all emphasis on Facebook. We won't abandon Facebook, we will still use it, but our priority is to add followers that our brands can reach on non-Facebook platforms first" (ALLFACEBOOK.com, 11/19).