Thu. Dec 13th, 2018
YES Network

Amazon Teaming With Yankees On YES Purchase

Amazon’s initial bid for those 22 regional sports networks Disney acquired in its purchase of 21st Century Fox’s entertainment assets may not have been all it was initially reported to be. According to a report from Fox Business Channel, the company did not enter a bid on a package that includes all 22 networks Disney is being forced by the Justice Department to divest. Instead, Amazon is working with the New York Yankees to buy back controlling interest in the YES Network.

Charles Gasparino and Lydia Moynihan of FBC cite “people directly involved with the process” that say that what Amazon is interested in is being able to stream Yankees games through its Prime Video subscription service. It doesn’t mean that Amazon won’t put in a bid on the other 21 networks. It just hasn’t done that yet.

The partnership of the Yankees and Amazon could allow Amazon to stream Yankees games on its Amazon Prime subscription service, but initial press reports cited Amazon as a first-round bidder on all the RSNs as well as YES — signifying a major new corporate strategy for the online retail giant as it seeks to develop more sports programming (Amazon already streams Thursday Night Football).

But people with direct knowledge of the process say Amazon is only weighing a larger bid for the other RSNs that may come as the second round progresses while it is actively negotiating with the Yankees. One reason that Amazon may scale back its ambitions is that its CEO Jeff Bezos may want proceed cautiously in a business that he’s relatively new at, according to a person with knowledge of the matter. 

Another wrinkle reported by Gasparino and Moynihan is the confusion over what purchasing the networks means for the streaming rights of the teams involved. Apparently Major League Baseball Commissioner felt the need to make it clear that a winning bid didn’t mean controlling teams’ digital futures.

MLB Commissioner Rob Manfred then took the unusual step of inserting himself in the multi-billion-dollar auction process, telling bankers in charge that they need to alert potential buyers that any purchase of these entities doesn’t include digital rights to baseball games that remain the property of the leagues and its teams — a move that could lower the price of the networks as the auction process proceeds, according to four people with direct knowledge of the matter.

How some of the bidders came to believe they would own, rather than lease from the league and the teams those rights and baseball’s response has not been reported. The reason for the confusion is unclear. Bankers didn’t “drill down” on the exact nature of the digital rights in conversations with potential buyers in the first round of the bidding process but planned to do so later, said one person with direct knowledge of the matter.

What effect both of these developments mean to the second round of bidding remains to be seen. Could Manfred’s statement drive down the price? Could the price skyrocket if and when Amazon does decide to throw its hat in the ring on the other 21 networks? Were the current bidders aware that their bids were for a package that wouldn’t include the YES Network?

There are six bidders so far, and it is possible for other entities like Fox or Major League Baseball to get involved in the next round of bidding. It looks like we won’t get answers to any of those questions until then.