On Sports Media | MLB sets cable deal deadline

Posted: March 30, 2007

The Major League Baseball season will begin on Sunday, but the future of how out-of-market games will be carried via satellite and cable faces a crucial deadline tomorrow.

Major League Baseball recently cut a deal with DirecTV as the exclusive provider of the Extra Innings package of out-of-market games. These games were available last year on satellite and cable.

DirecTV reportedly signed an exclusive seven-year, $700 million deal. In addition to providing Extra Innings, it will also be a partner and carry the MLB Channel on 80 percent of its basic tier when the 24-hour baseball channel makes its debut in 2009. That means the MLB Channel can figure to reach more than 15 million homes where DirecTV is seen.

At the time of the announcement, MLB officials told people from Echo Star's Dish Network and iN Demand - a consortium owned by Comcast, Time Warner and Cox Cable - that each could also carry Extra Innings if they matched the offer of DirecTV.

Dish and iN Demand have until 11:59 p.m. tomorrow to come to an agreement. According to Sports Business Daily, Dish Network could be joining the deal. But one of the provisions would be that it be given equity in the MLB Channel. DirecTV has reportedly been given 20 percent equity in the MLB Channel.

An iN Demand source said that if DirecTV and Dish Network received equity, it should be presented the same offer.

Sen. John Kerry (D., Mass.) called for a hearing on the agreement before the Senate Commerce Committee last Tuesday.

"A major sticking point in the negotiations was MLB's insistence that cable could only carry Extra Innings if it also agreed to deliver the Baseball Channel to millions of customers regardless of whether they wanted to view and pay for the channel," iN Demand chief executive officer Robert Jacobson said during Tuesday's testimony.

"In late February, we made a proposal to MLB that ensured MLB would be guaranteed $100 million annually for Extra Innings and committed that iN Demand's owners would distribute the Baseball Channel to 15 million homes at MLB's requested price per subscriber - all on a non-exclusive basis. MLB never called us back."

An MLB source said yesterday that iN Demand hadn't made the same offer as DirecTV and that the sticking point is the percentage of households that would carry the MLB Channel. The channel can be carried only on digital cable. An iN Demand spokeswoman said yesterday that it has about 22 million digital customers. (Eighty percent of that would be about 17.6 million).

One of the problems in Kerry's opinion is that, if DirecTV remains the sole carrier, there will be a segment of the population that won't be able to get Extra Innings because satellite TV isn't available where they live.

"That would only affect about 5,000 of the current customers," a DirecTV source said.

Others have questioned how DirecTV can quantify those figures.

Last year, according to a person familiar with the figures, Extra Innings had 500,000 sales on cable and satellite, with about 180,000 from iN Demand, 50,000 from Dish Network, and 270,000 from DirecTV.

For those who can't receive the Extra Innings Package, there is still another way to view out-of-town games - on the computer.

Major League Baseball sells out-of-town games on the Internet via MLB.TV.

That doesn't appease people such as Kerry, who said the product shouldn't be exclusive to DirecTV.

And while iN Demand has complained about the exclusivity, the same charge could be applied to some of its entities, including Comcast SportsNet in Philadelphia. SportsNet is offered only to cable customers and isn't available on satellite TV.

"In Philadelphia alone, more than 400,000 satellite subscribers are denied the ability to watch their hometown Phillies [or Flyers or 76ers] because of Comcast," testified Bob Dupuy, president and chief operating officer of Major League Baseball. "That is more than twice the number of subscribers the entire iN Demand syndicate had nationally for the Extra Innings package last year."

While this may seem like an argument over carrying the Extra Innings package, the bigger component is the MLB Channel.

"The MLB Channel is a long-term vision for baseball," said Maury Brown, founder and president of BizOfBaseball.com and a sports business analyst for Baseball Prospectus. "They are placing a large amount of emphasis on it from a growth potential standpoint for Major League Baseball."

Negotiations among MLB, Dish Network and iN Demand are continuing.

"We are trying to get everybody in," said Tim Brosnan, executive vice president of business for Major League Baseball. "That is our goal."

It's probably a goal that would benefit all sides except DirecTV.

Contact staff writer Marc Narducci at 856-779-3225 or mnarducci@phillynews.com.

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