Why Amazon Is Interested in YES Network


Mar. 18 2019, Updated 2:54 p.m. ET

Driving Prime membership uptake

Amazon (AMZN) teamed up with the Yankees and other investors to purchase the YES Network, Fox Business reported. YES is one of the nearly two dozen regional sports networks that 21st Century Fox (FOXA) and Walt Disney (DIS) must divest as a condition to be able to close their $71.3 billion asset sale transaction.

Amazon’s interest in owning a piece of YES Network can be linked to efforts to drive uptake of its Prime membership program. Video entertainment is one of the perks available to Prime subscribers. To enhance Prime’s entertainment appeal, Amazon has turned to sports programming. A few years ago, it beat Twitter (TWTR) to capture the rights to stream Thursday night NFL games. Google (GOOGL) and Facebook (FB) also are pursuing sports content for their digital video services. Google last year added more sports channels to its YouTube TV and raised the price of the service, Reuters reported. Facebook secured media broadcast rights to Spain’s La Liga soccer matches in India and beyond.

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Prime members are big spenders on Amazon purchases

Purchasing a stake in YES could place Amazon in a better position to secure exclusive sports content to enhance its sports programming for Prime members. The Prime membership program is an avenue for Amazon to build a loyal base of retail customers and generate subscription revenue. According to Consumer Intelligence Research Partners (or CIRP), Prime subscribers spend an average of $1,400 per year on Amazon retail purchases compared to $600 spent by regular Amazon shoppers. Amazon is estimated to have 101 million Prime subscribers in the United States alone.


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