SBJ/December 25 - 31, 2006/This Weeks News
DirecTV-only MLB package?
Published December 25, 2006
DirecTV is in advanced talks with Major League Baseball about acquiring exclusive access to baseball’s out-of-market Extra Innings package, a move that could be a huge blow to the cable industry and one that will certainly grab attention on Capitol Hill.
Sources from both the league and the satellite provider confirmed that the two have been talking but cautioned that there are a number of unspecified issues that need to be completed before any deal is signed.
A senior MLB executive said it was possible, but not likely, that a deal could be struck in the coming days. The executive added that baseball still was talking with other parties about the package.
Said a DirecTV executive, “If you look at what we’ve done with NASCAR and [NFL] Sunday Ticket, it would be a natural progression to look at other sports, like baseball.”
In the past several weeks, MLB has been shopping the exclusive package to both cable and satellite providers. DirecTV started offering the Extra Innings package exclusively in 1996; cable operators have been offering it since 2001, and Dish Network joined in 2004. Last season, most cable and satellite operators sold the full season for $179, with some offering discounts for early sign-ups.
Both MLB and cable executives have been frustrated with the slow growth of the Extra Innings package, which numbered about 750,000 subscribers last season, media sources said. MLB teams picked up individual payouts in the neighborhood of $2 million per team last season, a source added.
By comparison, the NFL’s Sunday Ticket package, which DirecTV offers exclusively, had close to 2 million subscribers this year, and DirecTV pays the league about $700 million per year through 2010.
Still, media executives with knowledge of the talks expressed surprise that MLB would go down this route given the current political climate. Congress has been particularly receptive to cable’s complaints about the NFL’s exclusive relationship with DirecTV. A little more than a month ago during a congressional hearing, Senate Judiciary Chairman Arlen Specter, R-Pa., harshly questioned DirecTV’s Dan Fawcett about Sunday Ticket, and even threatened to sponsor legislation that would eliminate the NFL’s antitrust exemption.
With the Democrats now in control of Congress, Specter will cede chairmanship of the powerful committee to Sen. Patrick Leahy, D-Vt. But Specter, who has represented Comcast’s home state of Pennsylvania since 1980, still wields heavy influence and could keep the issue on the docket. Political analysts believe Specter and other members of Congress would be keenly interested in any baseball programming deal that exclusively favors one carrier over another.
If MLB and DirecTV agree to the deal, it would mark a significant setback to the cable industry, as its satellite competitors would gain more exclusive sports programming. Cable has complained for years about DirecTV’s exclusive deal for Sunday Ticket. In the past few years, cable had access to MLB’s out-of-market games through In Demand, a company owned by Comcast, Time Warner and Cox that supplies video-on-demand and pay-per-view programming to cable operators.
MLB is interested in linking exclusively with DirecTV because of how the satellite operator has grown its platform through its exclusive sports offerings. In addition to talks with MLB, DirecTV has approached the NHL about its out-of-market package, media sources said. The NHL demurred, since it has a rights deal with Comcast-owned network Versus.
Earlier this month, DirecTV signed a deal to launch five channels per week dedicated to specific NASCAR Nextel Cup drivers, a feature called HotPass. It also offers exclusive interactive features on events such as the U.S. Open tennis tournament and New York Yankees games exclusively on DirecTV’s YES Network broadcasts.
Cable officials who spoke to SportsBusiness Journal on the condition of anonymity expressed disappointment in the buy rates for Extra Innings, but privately, they appeared unconcerned about losing the package to DirecTV. They point to the large number of national games available via ESPN, Fox and Turner as evidence that plenty of MLB games would still be available to cable subscribers.
It is unclear what connection exists, if any, between this potential deal and another in-the-works transaction for Time Warner to sell the Atlanta Braves to Liberty Media. Liberty is also in talks to acquire DirecTV from News Corp.