Private equity firms are hot for a stake in MLB Advanced Media, but the company’s directors re-affirmed in a board meeting last week that they aren’t looking to sell, a source familiar with talks tells us.MLBAM is the wholly owned subsidiary of Major League Baseball that operates MLB.com, MLB.tv, and other digital properties. It’s very profitable on growing annual revenues that are already well above half a billion dollars.
It is one of the biggest and best digital companies you don’t know about. It’s not just the baseball content that drives the business, either. It’s the tech, too. There’s a reason MLBAM is running ESPN’s Web video.
MLBAM is viewed as “in-play” in private equity circles mostly because of its awkward cap structure; it’s owned in equal parts by all 30 MLB teams.
PE types figure those team owners – and MLBAM management – would like some liquidity. Their pitch is for the teams to give up some or even all of their ownership stake in exchange for perpetual revenue share. The new company would get a perpetual licence to show MLB games.
A source close to the talks tells us the company gets “call a day” from private equity firms, but that the company isn’t looking to sell a stake for a few reasons:
- It’s already loaded with cash.
- Owners are already getting a huge dividend.
- Selling a billion dollar stake in MLBAM any time soon would make it very hard for owners to argue that they’re broke in upcoming labour negotiations with players.
- Selling a stake could further complicate the ownership stake and perhaps even force a dreaded shotgun IPO.
Who’s calling MLBAM? A source close to PE circles speculates that it’s most of the biggies: TPG, Blackstone, Bain Capital, Elevation, Spectrum, and Quadrangle.
There’s too much money in private equity coffers right now, and firms are desperate to find places to put it.
That’s why we all heard so much noise about an AOL-Yahoo reverse merger the second half of last year, and it’s why we’re hearing so much noise about MLBAM now.
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