In order to bolster its position in regional sports television
) recently entered into a deal to acquire 49% stake in the
Yankees Entertainment and Sports Network (YES). The agreement
also provides an option to the diversified media conglomerate to
increase its stake up to 80% after three years.
However, News Corporation did not comment on the financial
details of the transaction that would result in the reduction of
ownership interest of Yankee Global Enterprises, Goldman Sachs
and other investors in the YES Network. YES also confirmed that
Yankees baseball will be aired on its network through 2042.
News Corporation believes that the acquisition would help
enhance its portfolio of regional sports channels. We believe
that the buyout will strengthen the company's Fox Sports Media
Group position in the lucrative sports entertainment business,
and would help woo advertisers, who are more interested in live
telecast of sports in order to reach mass viewers. On this front,
the company faces stiff competition from
Walt Disney Company
) sports coverage network, ESPN.
Fox Sports Media Group currently has 20 U.S. regional sports
networks in its kitty. Commenced in 2002, YES broadcasts live
coverage of New York Yankees baseball, Brooklyn Nets basketball
and other sports events.
News Corporation hit the headlines when it decided to split
into two separate publicly traded publishing and media and
entertainment entities. There has been immense pressure from
shareholders to divest the publishing arm, which has been
grappling with lower operating profit compared with the
The Publishing Company will comprise publishing businesses,
education unit and the integrated marketing services business. On
the other hand, Entertainment Company will include cable and
television assets, filmed entertainment, and direct satellite
We believe that the split will help News Corporation to lift
its image, which was tainted due to the phone hacking scandal
that resulted in the closure of the publication of 'The News of
the World' and abstinence from acquiring the remaining 61% stake
in the British Sky Broadcasting Group.
News Corporation recently reported first-quarter 2013 earnings
of 43 cents a share that beat the Zacks Consensus Estimate of 37
cents, and rose 34% from 32 cents earned in the prior-year
quarter on the back of double-digit growth across Cable
Currently, we have a long-term 'Neutral' recommendation on the
stock. Moreover, News Corporation, which competes with
Time Warner Inc.
), holds a Zacks #3 Rank that translates into a short-term 'Hold'
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