Rapper Ice Cube. Image source: Wikimedia Commons.
O’Shea Jackson Sr. is better known as Ice Cube, the goateed hip-hop artist who shot to fame more than 30 years ago as a founding member of rap group N.W.A. But when he and Carolyn Rafaelian met at her airy, nautical-themed Venice Beach home last year, Rafaelian, the billionaire founder of Alex and Ani jewelry, thought up a different nickname for him.
“He gets up and gets his coffee and puts in three sugar cubes, maybe four. I said, You’re not an ice cube, you’re a sugar cube,” she says, laughing. “No pun intended, he is one of the sweetest and really most down-to-earth people. In the industry and environment he’s in, to be that sound is so refreshing. It was an instant connection.”
They are an unlikely pair: the spiritual, breezy New Englander and the actor and rapper from Los Angeles. But they have found a rhythm, and the odd duo may be the ones to tie up some of the final loose ends in Disney’s $71.3 billion mega-acquisition of 21st Century Fox, which was made official on March 20.
With money from investment bank Macquarie Group and private equity firm Centerbridge Partners, the pair plan to make a bid to purchase 21 of Fox’s regional sports networks for $10 billion. The bid has been put together by Ice Cube’s Big3, a 3-on-3 basketball league made up primarily of former NBA players in which Rafaelian is already an investor. According to Department of Justice rules, Disney, which owns ESPN, must divest these networks within 90 days of the deal closing later later this week.
Rafaelian, Macquarie and Centerbridge will each commit $1 billion, while Big3 will put in between $350 million and $500 million. The group will issue debt for the rest. Big3 reportedly faces competition from Rafaelian’s fellow billionaire John Malone, whose Liberty Media will reportedly partner with the Minnesota Twins’ owner John Pohlad and private equity billionaire Tom Gores in a bid. Major League Baseball is also in the process of bidding.
The 21 networks they are bidding for have broadcasting rights for 15 of 30 MLB teams, including including the Arizona Diamondbacks, the Detroit Tigers, the Milwaukee Brewers and the Miami Marlins. Initially Disney sought about $20 billion for a group of 22 networks, yet it is unlikely to get that number. (The 22nd network is the lucrative YES Network, which airs Yankees and Brooklyn Nets games, and is expected to be sold separately for about $3.5 billion.) Even though the cash flow of regional sports networks has grown over the past 19 years as they demand higher carriage fees from cable providers, any investment in linear television is risky in the age of streaming and cord-cutting.
Still, on paper, it’s a good deal for Rafaelian and Ice Cube. “If you buy it for $10 billion, and people thought it was worth about $15 billion, that’s not a bad deal,” says John Tinker, a senior media analyst at Gabelli & Company. “Disney is stuck between a rock and a hard place: They have to sell them. They can’t just take them off the market, so they don’t have as much leverage.”
But what are a rapper and a jewelry designer—both with next to no experience running a network—doing caught up in the bidding war?
It all started in 2018, when Rafaelian was approached by her business partner and lawyer Mark Geragos; he knew entertainment executive Jeff Kwatinetz, one of the cofounders of Big3 and a lawyer who Geragos had worked with on numerous civil rights cases, including Colin Kaepernick’s suit against the NFL. Geragos, already a backer of Big3, thought it could be a good investment opportunity for Rafaelian.
A lifelong basketball fan (she played in grammar school and roots for the Boston Celtics), Rafaelian’s Alex and Ani already had lucrative licensing deals with the NBA, NFL and MLB. The Big3—a professional three-on-three league with former NBA players including Glen Davis, Corey Maggette and Chris Anderson that plays at venues like the TD Garden and Barclays Center—fit in with Rafaelian’s brand and playful energy. It didn’t take long before she was in, investing an undisclosed amount and having Alex and Ani sponsor the league.
“People who know about it are obsessed with it,” she says of the league. “We are still doing our thing getting it out there, but there has been nothing but success year-over-year so far. Now these wonderful players have a home, and people love watching them. The games are so fun and full of energy; it’s a whole different vibe.”
It was after she invested and at one of these games that she finally met Ice Cube—or Cube as she calls him—in person, and the pair hit it off immediately.
“We were sitting right in the front row, and they just kept bringing us food: There was steak and sandwiches. I don’t even know where they got it. They just kept bringing it! We eventually started giving it away to the people around us,” she recalls laughing, adding that their friendship and partnership has only grown since then.
The two even collaborated to design the diamond-and-ruby-encrusted white gold championship rings by Alex and Ani.
“I'd like to thank Alex and Ani for insisting on top quality during the design process and creating something so cool and meaningful for the players,” Ice Cube said of the process.
Fast forward to June 2018, when the Department of Justice announced that for the Disney-Fox deal to go through, Disney would have to divest from Fox’s regional sports networks within 90 days of the deal closing.
“I was paying attention only because I was watching the AT&T legislation,” says Geragos, Rafaelian’s business partner and fellow Big3 investor. “They said they wanted a divestment of the regional sports networks, and that sparked the discussion.”
Big3, at the time, was finishing up its two-year contract with national network Fox Sports and looking for other broadcasting options. The regional sports networks would provide a way to broadcast games, as well as a way to expand its brand.
“I believe there is no such thing as coincidences: Everything is strategically and divinely coordinated,” says Rafaelian, who was approached by Geragos, Kwatinetz, Ice Cube and others from Big3 soon after the idea to bid had come about. “It’s not a coincidence; it’s something we need to take advantage of and go for. ... This opportunity is one in a million, or should I say billion.”
That’s exactly how much she’s committing to the deal: $1 billion through a combination of cash and debt. She’s willing to leverage an absurd amount, nearly all of her net worth, on a strategy for the network that still seems pretty vague.
When describing what she and Ice Cube want to do, there are a lot of buzzwords and ideas floating around. In addition to airing local NBA, NHL and MLB games, as well as Big3 matches, they plan to create content that “puts more synergy in the world” and attracts a diverse and young audience with talk shows, series focusing on the intersection of sports, culture and politics, and a premium take on a shopping network. In general, they hope to make the networks a destination for more than just local sports, thereby attracting larger advertisers.
Typically, regional sports networks focus exclusively on the game—airing the local baseball, basketball or hockey matches, and filling the surrounding time with reruns of old games, interviews with coaches and extensive commentary. It’s a risk to venture so far from the traditional model of a regional sports network, but it’s one that could work.
“These guys have an aggressive strategy. They are stretching, and they’d have to grow it in a slightly nontraditional way. If they get it right it’s huge, but it’s definitely riskier,” analyst Tinker says, adding that their plan means the networks would not be in such direct competition with Disney’s ESPN, a move that could make the Big3 more appealing than its competitors during the bidding process.
Rafaelian believes they will be huge.
“I wouldn't be doing this if I didn’t think it was a smart business decision in every aspect,” she gushes excitedly, refusing to see the cord-cutting environment or her lack of media experience as too high of a hurdle for their strategy. “Business 10 years ago is nothing like it is today. There will be different avenues and relevancy.”
The games themselves provide a certain safety net, as live sporting events are still drawing television audiences. “The one thing you don’t cut is the network that gives you your local team,” says Tinker of fans.
She also believes in Ice Cube. Ice Cube’s experience in music, television, film and now, through Big3, live entertainment allows him to have a general grasp on the creative process and the next big thing, she says.
“People ask, ‘How did this crazy duo come together?’ But why not? That’s when the best stuff happens,” she says. “The coolest thing is when a bunch of people from different parts of life who all have something to bring to the table—an open heart, an open mind, an interesting background—come together to create something new and exciting.”
No matter what happens, Rafaelian radiates her signature positivity. “When you are flipping channels, it will be the the one you can’t flip off.”