A Few Things to Know About the (Potential) Yankees/YES Deal

The New York Yankees are trying to buy the YES Network, a regional sports network (RSN) that airs Yankees games and other local sports programming, including Brooklyn Nets NBA games.

The deal seems likely to go through, according to The New York Times, which had the scoop. That's partly because the channel's current owner, Disney (NYSE: DIS) -- which picked up YES as part of its acquisition of Fox -- has to sell it; partly because the Yankees have special rights as buyers; and partly because deep-pocketed Amazon (NASDAQ: AMZN) has reportedly materialized as an investor.

Why is the YES Network up for sale in the first place?

The YES Network was founded through an agreement between the Yankees and the Nets (then in New Jersey) back in 1999. The Yankees took full control of the network in 2004, but subsequently sold most of it: Twenty-First Century Fox acquired 49% in 2012 and took a controlling interest in a second deal in 2014. The Yankees still own 20% of the network.

When Disney cut its massive $71.3 billion deal to acquire Twenty-First Century Fox, it probably would have liked to keep the latter's RSNs to bolster its live streaming content (something that we at The Fool mentioned in our coverage). But it was not to be; the Justice Department demanded that some of Twenty-First Century Fox's properties be sold off as a condition of the deal's regulatory approval. The must-sell properties include Fox's RSNs -- 22 of them in all, including the YES Network.

The Yankees have the inside track

Cord-cutting has really done a number on the value of TV channels, but sports broadcasts have held up better than most forms of TV. That has made RSNs like the ones Disney is selling quite appealing. Lots of companies, including streaming giants like Amazon, would like to get their hands on these channels and their broadcasts of MLB, NBA, and NHL games.

But YES isn't exactly on the open market. When the Yankees sold a controlling stake to Twenty-First Century Fox in that second deal, the team reportedly -- the details of the deal are private -- secured a right of first refusal if the network were ever sold again.

The Yankees, then, have the first crack at the channel. But they don't have enough money. The network is worth around $3.5 billion. For comparison, the Yankees franchise itself is worth around $4 billion, according to Forbes.

Enter Amazon. Jeff Bezos' tech giant, which has a heavy presence in streaming, has already broadcast sporting events like Thursday Night Football. (Amazon is not the only other company in on the bid -- Sinclair is reportedly involved, too, among others -- and it is unclear how much each party involved has agreed to contribute.) With its partners' financial firepower, the Yankees are reportedly poised to close the deal, though details aren't yet available.

YES, Amazon, and the future of streaming

It's easy to see why the Yankees want to own YES. Regional sports networks are among the most valuable live TV channels, and being able to keep the team's broadcast rights in-house will be nice. Amazon's motives are also clear. Amazon knows that live sports broadcasts draw viewers, and it will stand to benefit from YES Network's inclusion in skinny bundles.

But the streaming situation with MLB teams is set to grow a bit more complicated in the near future. Major League Baseball has a deal in place with 22 Fox RSNs -- the same ones Disney is selling off, including YES -- that includes streaming rights. But the deal expires at the end of this year, and MLB is reportedly mulling the idea of allowing teams to sell their streaming rights individually.

Of course, backing a Yankees-owned YES Network could put Amazon in prime position to get those streaming rights, either through YES or directly. That expectation is likely a part of why Amazon got on board with this deal. Amazon certainly hopes that its involvement in a potential YES deal will give it more muscle in the live sports streaming world.

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