The first domino has fallen in the expected broad realignment of MLB and regional sports networks (RSNs), as the New York Yankees, Amazon and Sinclair Broadcasting have reportedly reached a deal to buy the YES Network from Disney for $3.5 billion.
As part of its purchase of Twentieth Century Fox, Disney agreed to divest the 22 Fox regional sports networks. The YES Network sale was broken off from a bidding process after the Yankees exercised a right of first refusal to buy back the cable outlet, leaving the likes of MLB, Sinclair and Apollo Global Management to submit bids. The Yankees had retained 20 percent of YES Network ownership.
MLB is positioned to capitalize on direct-to-consumer streaming, and adding the RSNs could allow teams to offer a unique mix of access that could also include season tickets and more. But there’s no guarantee that as cable giants shrink, RSNs could lose a preferred place on basic cable and be relegated to a plus-fee sports tier. Right now MLB teams are beholden to RSNs, and buying the remaining 21 Disney RSNs would give them a level of control and an instant spot in the marketplace, instead of building a service from scratch as the Cubs are doing. As we wrote in December:
It doesn’t sound like MLB is looking to scrap game distribution on the traditional RSN model—far from it. But by centralizing rights and giving teams to set up their own streaming services, MLB foresees a rights model with one foot in the established present while also looking toward an all-digital future where all content is streaming.
The three major players all have differing reasons to be part of the deal. For the Yankees, buying back a controlling interest in the YES Network, which the team originally launched, is a way to generate additional revenues and have more of a say in programming and potential bundles. For Amazon, the purchase is a way to beef up Amazon Prime broadcasting with Yankees and Brooklyn Nets (NBA) streaming telecasts. For Sinclair Broadcasting, the deal is an entree into New York regional cable networks. Sinclair is already partnering with the Chicago Cubs on the Marquee Sports Network launching in 2020, Sinclair Broadcast Group is the largest operator of television stations in the United States, controlling 193 stations in over 100 markets.