Providence seals 4.5x exit on sports channel

The firm will partially exit its investment in broadcasting company YES Network, which Providence created alongside a group of co-investors including Goldman Sachs in 2001.

Providence Equity Partners will sell the majority of its investment in US sports and entertainment channel YES Network to NASDAQ-listed News Corporation, which will buy a 49 percent stake in the business.

Terms of the transaction were not disclosed, but the deal will generate a 4.5x gross return multiple for both Providence and co-owner Goldman Sachs, according to a source with knowledge of the transaction. The source said the deal values YES at more than $3 billion. It is the first time Providence has sold any part of its investment in the company, which broadcasts sports-related programming to 15 million US subscribers.

Providence and Goldman created YES – The Yankees Entertainment and Sports Network – as a start-up television broadcasting company in 2001 alongside Major League Baseball franchise the New York Yankees and NJ Holdings, former owner of US professional basketball team the Nets. Providence and its co-investors plan to sell their remaining stakes in the company in 2015.

“From a start-up in 2001 to the largest regional sports network in the US, this has been a remarkable achievement,” chief executive officer of Providence Jonathan Nelson said in a statement.

Providence declined to comment on the transaction, which is expected to close before the end of the year.

The partial exit is Providence’s fifth of 2012 and second TV-related exit following the sale of its 10 percent stake in online television distribution company Hulu for $200 million last month. The firm also sold Chinese online video platform iQiyi.com, healthcare information services business Decision Resources and education software company Archipelago Learning.

Providence’s exits have brought the firm’s total distributions to limited partners to $4.3 billion since July of 2011. Providence is expected to wrap up fundraising for its seventh fund, which is set to close on roughly $5 billion in December, three people with knowledge of the firm previously told Private Equity International. The $5 billion figure is not set in stone, however, according to a source who attended the firm’s annual meeting last month.

Providence launched its seventh fund last year and had initially talked to LPs about targeting a range of $6 billion to $8 billion for the vehicle. Fund VII’s official goal on the private placement memorandum was set at $6 billion.

Providence focuses on investing in media, communications, education and information companies and manages funds with $27 billion in commitments. In September, the firm sold a minority interest in itself to the Florida State Board of Administration, one of the firm’s LPs, and another Providence investor.