NEW YORK (AP) -- News Corp. said Tuesday it was acquiring a 49 percent stake in the YES Network, the New York Yankees' regional cable sports channel.
Yankee Global Enterprises, Goldman Sachs and other investors will reduce their ownership as part of the transaction, and the team will receive a payment of $500 million for agreeing to the transaction.
"The Steinbrenner family expects to have a continuing, long-term ownership stake in the YES Network and we will continue our yearly commitment of fielding a championship caliber team for decades to come," Yankees managing partner Hal Steinbrenner said in a statement.
The agreement values the YES Network at $3 billion now and $3.8 billion when News Corp. decides in three years whether to increase its stake. The Yankees also committed to stay on YES Network through 2042, subject to approval of the deal from Major League Baseball. The Yankees' existing agreement with YES runs through 2021 and the network has three five-year options.
News Corp., which owns Fox, may acquire an additional stake in the YES Network after three years that could bring its ownership to 80 percent. Yankee Global Enterprises would retain a significant minority stake.
Fox will make a $500 million payment to the Yankees for extending their broadcast rights, of which $300 million will be paid when the deal with News Corp. closes and $200 million in about three years, a person familiar with the situation told The Associated Press, speaking on condition of anonymity because some details of the pact had not been made public.
YES's fee to the Yankees, which was $85 million this year, was due to compound at 4 percent annually under the options in the old contract. Under the new deal, the rate will increase gradually to 7 percent in the final years of the rights agreement, and YES's annual payment to the team will rise to about $300 million by 2042.
"We've long been a believer in the unique appeal of sports entertainment," News Corp. deputy chief operating officer James Murdoch said in a statement.
"This is a tremendous opportunity to enhance News Corporation's industry-leading portfolio of sports properties, while also strategically re-entering the New York market," he added.
YES currently is owned by the Yankees, Goldman Sachs, Providence Equity and NJ Holdings, the company controlled by former Nets owners Louis Katz and Ray Chambers. By closing the deal this year, they would avoid any possible increase in capital gains taxes in 2013.
Rupert Murdoch's News Corp. is emerging from the phone hacking scandal in Britain. The company is in the midst of a plan to split into two parts — one housing its newspapers, Australian operations and for-profit education business, and the other its more profitable TV and movie businesses.
Fox Sports Media Group already owns 20 U.S. regional sports networks. With Fox's investment in the Big Ten Network and Rutgers' plans to join the conference, this deal could help get the college sports channel into more homes in the New York area.
YES Network, which also broadcasts Brooklyn Nets games, launched in 2002. It has approximately 9 million subscribers in the New York area among about 15 million nationally.
AP Sports Writer Rachel Cohen contributed to this report.