Amazon Investment in Yankees Network Could Threaten Sports TV Bundling

(Bloomberg) -- If Amazon.com Inc. provides the New York Yankees with capital support to acquire the remaining stake in its YES network, the move may mark the beginning of a new sports era.

In fact, the pairing of the two entities could be the "step towards unbundling regional sports networks," writes Morgan Stanley’s Benjamin Swinburne in a research note. While the investment itself is "somewhat unremarkable" -- particularly given Amazon’s massive amount of free cash flow -- the longer-term implications for the TV and sports business could be massive.

The Yankees owning their own network makes sense financially, Swinburne says, but a solo YES network would nix the upside it benefited from as a strong asset in a portfolio of regional sports networks (RSNs). Unbundled, it would have to negotiate as a standalone network with distributors.

The shifting of rights structure is ongoing for the sports TV business, but Morgan Stanley believes the long-term trend likely points to streaming while near-term specifics remain unclear.

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