SBJ/September 3-9, 2012/MediaPrint All
News that Major League Baseball had reached a nearly $6 billion media deal with ESPN had not yet gone public when the league was again embroiled in round-the-clock negotiations for its next media package.
Last Monday, Fox Sports’ top executives — co-presidents Randy Freer and Eric Shanks and executive vice president Larry Jones — were in the midst of wall-to-wall meetings in New York City to try to retain a package with the league, with whom it has had a relationship since 1996.
Fox acted aggressively and told MLB that it wanted to maintain its current deal, which includes the World Series, one league championship series and the All-Star Game.
But there was a new element: MLB had told networks that it was considering merging the existing Fox and Turner packages. So, Fox’s new offer included Turner’s MLB package, which includes the rest of the playoffs. Instead of putting those games on Fox’s broadcast channel, it said it wanted to place those games on its planned all-sports channel, which it is calling Fox Sports 1, sources said.
MLB executives were intrigued. They listened as Fox Sports executives told MLB officials that they would switch Speed from a motorsports channel to an all-sports channel. But to do that, Fox needs programming, like MLB.
So Fox’s bid would be a mix. It would place the World Series and most of the league championship games on its broadcast network. The earlier playoff rounds and most regular-season games, including some Saturday “Game of the Week” telecasts, would be on the cable channel.
Sources close to the discussions said Fox’s initial offer last week was not high enough. The company was following ESPN, which set the market when it agreed to double the price of its package. That means that Fox would have to approach an average of $800 million a year for two available packages. Fox now pays $257.1 million for its package, while Turner pays $148.6 million for its package.
Fox executives flew back to Los Angeles without a deal late last week. It was unclear whether Fox would be able to reach a deal.
But one thing is certain: It is not the sole bidder.
Multiple sources said Turner Sports’ top executives were in close contact with MLB last week to try to not only maintain its package but possibly pick up Fox’s.
Turner executives discussed a structure that looks a lot like its March Madness partnership with CBS. Turner has told MLB that it would put baseball’s biggest events, like the All-Star Game, the World Series and some league championship series games, on CBS. The remaining programming would go to TBS. This would return CBS to covering baseball for the first time since 1993. Over the past couple of months CBS Sports executives have reached out to MLB about their interest in the package and desire to carry the World Series and All-Star Game on their broadcast network.
Both plans would combine the current Fox and Turner packages into one package.
As of late last week, MLB had some decisions to make. It had to decide whether it wanted to combine Fox’s and Turner’s existing packages into one, or keep them separate.
And it had to figure out what kind of package it would give to its own cable channel, MLB Network.
As of late last week, NBC Sports still was in the picture and potentially could bid on both packages, which it would place on NBC and NBC Sports Network. Last week, an NBC insider described the mood inside the network’s Manhattan offices as that of an underdog in the bidding process. NBC Sports has not met internally to discuss an MLB offer in at least a week.
Meanwhile, executives at ESPN, which will carry one wild card playoff game as part of the new deal but has no postseason rights now, have told MLB that it is willing to pick up more playoff games if available. MLB already rebuffed an ESPN offer for the MLB playoffs, though, and the network is not expected to be a significant player in these negotiations.
On Saturday, Aug. 4, most of the sports world’s eyes were focused on London, where the Olympics were setting U.S. television viewership records for NBC. That was also the day that Major League Baseball started negotiating in earnest to extend its media rights deal with one of NBC Sports’ biggest competitors, ESPN.
Tim Brosnan, MLB’s executive vice president of business, called ESPN President John Skipper and told him that the league was prepared to counter an offer the network had made months earlier, when the two were in the middle of an exclusive negotiating window.
MLB executives had expected NBC to be an aggressive bidder for ESPN’s package. But MLB Commissioner Bud Selig approved a plan that essentially set up a new and informal negotiating window for ESPN. If the league could agree to a deal with ESPN by the end of the week, which also marked the end of NBC’s Summer Olympics coverage, it would.
If it couldn’t, all bets were off.
Brosnan and Skipper agreed to meet on Tuesday, Aug. 7, at MLB’s Park Avenue offices. Chris Tully, MLB’s senior vice president of broadcasting; Norby Williamson, ESPN’s executive vice president of programming; Julie Sobieski, ESPN’s vice president of programming and acquisitions; and John Papa, ESPN’s vice president of programming and acquisitions, were part of the negotiating teams that day.
Brosnan outlined MLB’s counteroffer.
ESPN has long been frustrated by MLB’s dealmaking process. ESPN has four deals with MLB: one for TV, one for digital, one for international and one for radio. Each was negotiated separately.
ESPN also wanted more programming and more digital rights than it had previously.
MLB agreed to most of ESPN’s requests. It wrapped the network’s four existing MLB deals into one. And it decided to make more programming available on TV and digitally.
In return, MLB wanted to double the amount of money — from an average of around $350 million a year to $700 million a year. And, other than one wild card game, the package would not include any playoffs.
MLB knew ESPN wouldn’t be happy about the playoffs. In the preceding weeks, Disney’s Bob Iger personally called Selig to emphasize how much ESPN wanted to get back into the MLB playoffs. But ESPN felt MLB’s counter was close enough to begin round-the-clock negotiations.
In two days, the TV portion was virtually done. ESPN would keep “Sunday Night Baseball,” and get rid of most blackouts attached to Monday and Wednesday games. As important, ESPN gained the rights to more highlights and the ability to allow “SportsCenter” to do live look-ins.
On Friday, Skipper traveled to North Carolina and Brosnan went to spend the weekend with his family on Long Island. They stayed in close communication by phone and email and kept their bosses in the loop. Selig and Atlanta Braves Chairman Terry McGuirk were actively engaged in the negotiations. Skipper kept in regular contact with Iger and ESPN Executive Chairman George Bodenheimer.
Back in New York, on Friday, Aug. 10, and Saturday, Aug. 11, MLBAM’s Bob Bowman and John Kosner, ESPN’s executive vice president of digital and print media, were left to hammer out the digital aspects of the deal. Last year, ESPN and MLBAM had worked out their own digital rights deal, so many of the biggest issues about what digital content ESPN had the rights to stream already had been worked out.
By Sunday, just before NBC broadcast the Games’ closing ceremony, the deal was completed. A week later, the two sides formally announced it.
Both Skipper and Brosnan said the negotiations went as smoothly as they could have expected. “Tim Brosnan was a standup guy here,” Skipper said. “We do not get this deal done without Tim’s attention to it, his hard work.”
For his part, Brosnan deflected most of the praise to Selig, who was intimately involved in the negotiations. “This was a flat-out team effort with the commissioner and the league,” Brosnan said. “This is the most involved that the commissioner has been on a media deal since we’ve been doing them.”
NBC Sports Radio launches Tuesday with three overnight shows. But the executive overseeing the new outfit has much grander designs for the fledgling radio network.
Rob Simmelkjaer, senior vice president of NBC Sports Ventures, expects to grow from three overnight shows to a full 24/7 network at some point next year. And he expects to simulcast planned afternoon shows on NBC Sports Network.
“The goal is to have a 24/7 destination for people that is right up there on the list of places where people tune in when they’re looking for audio content,” Simmelkjaer said. “When we start to simulcast on television, which we certainly will do, we want it to be right up there with the places that people consider when they are looking for information, when they are looking for opinion, when they are looking for debate.”
So far, 175 stations have agreed to carry some part of NBC Sports Radio. NBC Sports’ partner, Dial Global, is handling affiliate deals and signing up stations.
The first show to launch will be from Eric Kuselias, who hosts NBC Sports Network’s “SportsTalk” show. He will handle the 7-10 p.m. ET shift and plans to host the last segment of TV’s “SportsTalk” from the radio studio.
“We’ll be able to really do a nice job of cross pollinating between those two there,” Simmelkjaer said.
Eytan Shander and Amani Toomer will follow with the 10 p.m.-1 a.m. shift. And Dan Schwartzman will host the 1-4 a.m. shift.
NBC Sports Radio officially will launch before the Kuselias show with on-the-hour updates that start at 6 a.m. and run through midnight.
NBC Sports wants to make its radio shows an audio extension of NBC Sports’ brand. For example, Rodney Harrison will host an NFL show every Saturday.
“We want this to have an NBC sound and an NBC feel,” Simmelkjaer said. “When you listen in, you’ll hear Bob Costas’ voice. You’ll hear Al Michaels’ voice. You’ll hear a lot of talent that we’ll have in our universe. As time goes on, we’ll be folding more and more of them in.”
Big Ten Network President Mark Silverman sat down with SportsBusiness Journal media reporter John Ourand in New York last week and talked about ways the network can grow in the next five years.
■ What’s the Big Ten Network going to look like five years from now?
The network needs to broaden its BTN2Go streaming product, Silverman says.
Photo by:ICON SMI
■ Where else do you see growth potential?
SILVERMAN: We’re really focusing on growing internationally. BTN2Go is launching internationally. You can go to BTN2Go.com, and whatever country you’re in, you pay your fee and you’re watching 24 hours of BTN. It’s on your computer, your iPad, your iPhone, your Android. It’s fully there. We’re working with all the alumni associations of all the 12 schools to be able to promote this package. The way to get distributed internationally is different. You’re not going to get widespread international distribution on cable systems. What we can do now, via the Internet, is become available to hundreds of millions of people on whatever device they want. I think it can be a big moneymaker for us as more people get to know about it. We plan to have tens of thousands of subscribers to this by the end of our first year and to significantly grow it over the next two years.
■ As we talk, the Pac-12 has launched channels, the University of Texas has launched a channel, the SEC is looking into it. What is Big Ten Network’s legacy in this space?
SILVERMAN: Certain brands have a strong enough and a large enough fan base that can enable them to do it. With us, it was a marriage of two really strong partners in Fox and the Big Ten. The Big Ten brand is big enough. There are enough people that wanted it that made the difference to have distributors carry us. If you’re smaller or more narrow, it’s going to be much more difficult for you to be able to achieve what we were able to achieve. Perseverance is important. If you’re not willing to deal with some struggles and some challenges, you’re not going to be able to succeed. Jim Delany and Fox persevered with us and believed in it and were able to see it through.
■ Can a college conference exist today without a TV network?
SILVERMAN: I don’t think a television network is necessarily the right answer for every conference. Each conference has to do what’s in its own best interest. The Mountain West tried to do a network and it obviously didn’t work. It wasn’t the right idea for them to do a network. For the Big Ten, having a network is a great benefit. We’ll see what happens with the other major conferences.
■ What’s been the biggest surprise for you in the five years since launch?
SILVERMAN: I did not think that our network was going to end up having such an impact on realignment. Once we got the network done, a lot of the seismic change came from conferences thinking, “How can we maximize our value, either in television rights or launching a network.” The irony is that was never what the Big Ten was about. All these other conferences look to do that to maximize television dollars.
■ What will the college landscape look like five years from now?
SILVERMAN: I don’t believe the Big Ten is going to be any different from where we are currently. All of us realize that at some point, it can’t escalate at the rate that it has been escalating. It has to slow down at some point. I don’t know when that happens. It feels like we’re not done in this realignment.