SBJ/March 26 - April 1, 2007/IMG World Congress Of Sports

MLB finds some supporters

Tim Brosnan was fuming.

Major League Baseball’s executive vice president for business had just publicly skewered the cable industry and EchoStar’s Dish Network in front of more than 500 attendees at the IMG World Congress of Sports. It was the first time baseball attempted a serious public relations offensive on the rancorous negotiations surrounding its seven-year, $700 million deal with DirecTV for the out-of-market Extra Innings package and planned MLB Channel.

MLB’s Brosnan spoke out passionately
for baseball’s decision.

Now, he was holding court in the conference’s VIP room, still spewing invective about the “half truths,” “distortions” and “outright lies” he accused the “sour grapes” cable industry of making.

Brosnan became especially agitated when a reporter asked him about cable’s surprise counteroffer to match DirecTV’s terms to carry Extra Innings and the MLB Channel, targeted for a 2009 launch. Reading In Demand’s press release from the reporter’s BlackBerry, he noticed several phone calls come in from a PR executive representing the cable industry.

The sight of the calls popping up on the mobile screen launched Brosnan into another rant, where he bashed everything from cable and Dish to carriage of other league networks.

“Call me later, and I will give you a quote,” he said. The subsequent conversation, less than two hours later, found Brosnan barely cooled down.

“Time and again, we have given In Demand an opportunity to respond to legitimate offers,” he said. “And time and again, they have responded by making misleading statements.”

That, in a nutshell, shows the deep and bitter acrimony between the two sides, and offers a glimpse at how each camp plans to present at Tuesday’s U.S. Senate Commerce Committee hearing in Washington, D.C.

Sen. John Kerry, the Massachusetts Democrat who will chair the session, repeatedly has decried MLB’s alliance with the satellite operator. Last week, he said: “MLB must sit down with the carriers and come to an agreement that ensures all fans continue to have access to baseball as we begin the 2007 season.”

But in a rather striking and sudden turnabout, MLB now finds itself with a rising groundswell of industry support after being repeatedly bashed on the DirecTV alliance for three months by politicians, columnists, industry pundits, individual fans and bloggers.

Based on a wide collection of views expressed at the World Congress of Sports, unscientific poll data and overall industry buzz, MLB holds more support on the dispute from some of the biggest names and brands in sports than originally thought.

The conference’s opening panel, which featured Brosnan, set the tone for the next two days. John Skipper, ESPN’s executive vice president of content, said, “I find the deal to be pretty logical.” Dave Checketts, chairman of SCP Worldwide, said that he thought MLB “did the right deal.” NCAA President Myles Brand simply decried getting politicians involved in the deal at all, saying that regulation “will be unhealthy for the industry.”

An audience poll taken during that panel showed that 66 percent of attendees thought that MLB made the right decision by aligning with DirecTV.

The dispute currently rests on two key elements. DirecTV has agreed to place MLB’s new channel in 80 percent of its homes, according to a letter that MLB President Bob DuPuy sent to the FCC on Wednesday. For a deal to happen with In Demand, MLB is demanding that the cable consortium similarly commit to make the channel available in 80 percent of its digital basic homes, which is about 40 percent of cable’s overall subscriber base.

In Demand’s counteroffer last week revived a previously unsuccessful bid to match DirecTV on a household-for-household basis rather than the proportional equivalency MLB is seeking.

MLB also is balking at In Demand’s offer to pay for Extra Innings on a subscriber basis rather than an upfront guarantee.

In Demand argues that baseball is giving up a highly successfully launch of the new channel, one that would reach more than 30 million homes at the outset, which would make it one of the most successful channel launches in cable history.

By turning down cable’s counteroffer and giving Extra Innings exclusively to DirecTV, MLB now faces the likelihood of never getting carriage for the channel with them.

“We have 200,000 customers today on our digital platform,” said In Demand President and CEO Rob Jacobson. “Why would we not carry the incentive to market this package to as many customers as we can?”

Jacobson said he met with MLB officials Wednesday but had no further meetings scheduled by press time.

While most at the conference sided with baseball during the dispute, some still voiced their support for cable.

“A lot of these cable operators are looking at $70 [million] to $80 million hits by taking one of these networks,” HBO Sports President Ross Greenburg said. “These networks should just come on board, get distribution first and worry about the big bucks later.”

Terry Denson, vice president of content acquisition and strategy at Verizon FiOS, said that he would place the MLB Channel on a sports tier, if MLB would agree. “Sports tier carriage is a terrific area for that particular channel,” he said.

MLB executives have said they would not agree to put the channel on a sports tier.

“There was a meeting on March 9, in which the proper terms were outlined,” said MLB Commissioner Bud Selig. “Everybody knows what they are. … The ball is really in [In Demand and EchoStar’s] court.”

The sides have until Saturday to strike an agreement.

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