Baseball holds its ground
Baseball fans hoping lawmakers would charge in from the bullpen and save their ability to watch out-of-market games didn’t get much relief Tuesday.
Senators spent two hours urging Major League Baseball and TV executives not to let the Extra Innings pay package land exclusively on DirecTV’s satellite system. But despite congressional brush-back pitches -- warnings of legislation and even the oft-repeated threat to review baseball’s anti-trust exemption -- MLB President Bob DuPuy didn’t flinch.
Although he promised to continue negotiating through Saturday, the eve of opening day, DuPuy said baseball was willing to make an unpopular call -- inconvenience about 230,000 Extra Innings subscribers on cable and the Dish Network satellite system -- to get broad distribution of the league’s planned Baseball Channel on DirecTV in 2009.
But DuPuy would not agree to extend the negotiations into the season, allowing cable and the Dish Network to carry Extra Innings while talks continued.
“We as a business matter view the Baseball Channel as critical to our long-term survival and the interests of our fans who want more baseball,” he said during the two-hour hearing.
For that same reason, DuPuy also dismissed an offer made Tuesday by In Demand, a pay package provider owned by Comcast, Time Warner and Cox cable companies, that would allow Extra Innings to be on cable and Dish Network for two years. Questions about distributing the Baseball Channel could come closer to its launch.
Sen. John Kerry (D-Mass.), who convened the Commerce Committee hearing, supported the offer. DuPuy balked.
“We believe that DirecTV has the right to begin to help us build the channel,” DuPuy told Kerry.
As part of an exclusive seven-year, $700-million deal for Extra Innings, DirecTV has guaranteed to put the new 24-hour channel on its most popular tier, which reaches about 15 million subscribers.
The NFL and NBA have struggled to get cable companies to offer their channels as part of their basic subscriber package, and DuPuy said MLB wanted to avoid that problem.
Instead, baseball created a new problem -- fans outraged by the deal with DirecTV. Some who subscribed to Extra Innings last year on cable literally are unable to get DirecTV, either because of physical obstacles (trees, mountains) or tenant restrictions.
In hopes of reaching a compromise, Kerry had summoned top executives from DirecTV, Dish Network’s parent EchoStar Satellite, and In Demand.
“Baseball is an integral part of our culture,” he said. “Sports leagues have tremendous market power. What we need to do is make sure that market power works in the public interest.”
But while Kerry got the executives to agree to meet in the next 48 hours, he was unable to get much more.
The sides had trouble even agreeing on the facts.
DuPuy said In Demand and EchoStar had rejected his offer to continue carrying Extra Innings by matching DirecTV’s deal. But In Demand Chief Executive Robert D. Jacobson and EchoStar President Carl Vogel said MLB’s offer was missing a key component -- the same 20% equity stake in the Baseball Channel that DirecTV received.
DuPuy said only DirecTV deserved the stake because it had stepped up first with the best deal.
“It’s very common in the broadcast industry for the early movers to get a piece of the equity,” DuPuy said.
In Demand and Dish Network have balked at providing the Baseball Channel to 80% of their subscribers on a basic tier, as DirecTV has promised to do.
Kerry said that the problem could be resolved “if both parties have a serious intent to do it.” If not, he’ll consider legislation.
But Sen. Arlen Specter (R-Pa.) warned DuPuy and the TV executives they don’t want to risk that.
“When the fans react, Congress may react,” he said. “You may be well advised to act before we do.”