Baseball TV deal goes through, with a twist
The long-anticipated announcement by Major League Baseball to shift its Extra Innings pay package to DirecTV came Thursday -- but with a twist that one high-ranking cable executive called a “sham.”
MLB President Bob DuPuy said the seven-year agreement with DirecTV -- first reported in January as an exclusive deal -- includes a new provision that would allow the package to remain on cable television and Dish Network if certain criteria are met. But the window to negotiate closes April 1.
For the record:
12:00 AM, Mar. 10, 2007 For The Record
Los Angeles Times Saturday March 10, 2007 Home Edition Main News Part A Page 2 National Desk 2 inches; 76 words Type of Material: Correction
DirecTV: An article in Friday’s Sports section about DirecTV’s deal with Major League Baseball said Time Warner was the nation’s largest cable provider, with 50 million subscribers. It is the second-largest, with 13.4 million. In total, there are 50 million digital cable subscribers nationwide. Also, the article said a carriage agreement equal to DirecTV’s would require the cable industry to distribute the planned Baseball Channel on a basic tier. It should have said digital basic tier.
It was DirecTV’s exclusivity that triggered fan protests and led to an inquiry by the Federal Communications Commission.
While financial terms of the deal were not disclosed Thursday, it was believed that DirecTV, which has 15 million subscribers, had agreed to pay $100 million a year -- if it retained exclusivity.
Until now, Extra Innings offered up to 60 regular-season, out-of-market games a week on cable, through the In Demand service, as well as on DirecTV and Dish Network.
“In response to the concerns of our fans,” DuPuy said, “baseball has negotiated with DirecTV to offer the package to incumbents In Demand and Dish, through the end of the month, until the start of the season on April 1. If they sign up at the same rates and carriage requirements [as DirecTV], they will get our out-of-market package and they will get the Baseball Channel.”
The Baseball Channel, which MLB plans to launch in 2009 with DirecTV as a minority partner, has been the key to the months-long talks. MLB wants cable to agree to carry the channel on a basic tier, not a premium tier.
Industry sources indicated that would never happen.
“Everyone sees this as the sham that it is,” the high-ranking source said.
Time Warner, the nation’s largest cable provider, has 50 million subscribers. A carriage agreement equal to DirecTV’s would require it to distribute the Baseball Channel on a basic tier and, the source said, subscribers could end up paying whether they watched or not.
“You’d be asking 50 million people to pay, say, $2.50 a month so that 200,000 could get Extra Innings,” the source said. “That’s not going to happen.”
EchoStar, which owns Dish Network, echoed that in a statement Thursday: “DirecTV and MLB, as owners of the package, should not be able to line their pockets at the expense of consumers who don’t want and won’t watch [baseball] content.”
In Demand President and Chief Executive Robert Jacobson said: “Major League Baseball has chosen to cut a de facto exclusive deal, which include conditions for carriage that MLB and DirecTV designed to be impossible for cable and Dish to meet,” he said. “This decision represents the height of disrespect and disregard for their loyal baseball fans.”
It was the protests by fans that drew the attention of Congress and Sen. John F. Kerry (D-Mass.), who last month asked the FCC to investigate. He also has asked the Senate Commerce Committee, of which he is a member, to hold a hearing on the matter.
On Thursday, Kerry said, “I will review this deal to ensure it benefits consumers.”
Asked whether the provision that gives cable a window to keep negotiating would satisfy federal scrutiny, DuPuy said, “Yes, we hope it will completely alleviate concerns in Washington.”