SBJ/Aug. 26-Sept. 1, 2013/MediaPrint All
ESPN finalized a deal that ensures it will carry the Little League World Series through 2022.
As part of the deal with Little League International, which was first reported by SportsBusiness Journal in June, ESPN will pay around $60 million over the eight-year extension, around $7.5 million per year, sources said.
ESPN will pay about $60 million over eight years to broadcast Little League World Series games.
Photo by:AP IMAGES
ESPN executives have long valued Little League programming, and the new deal continues a 50-year relationship. ESPN has carried Little League World Series games every year since 1987, and it occupies large programming blocks in August — a time when there are few live events on air. ESPN’s ABC broadcast network started carrying Little League World Series games — mainly the championship game — in 1963.
“For us, it’s perfect timing to have a two-week tournament pre-football,” said Norby Williamson, ESPN’s executive vice president of programming and acquisitions, who said he coached Little League baseball teams for 10 years. “It delivers good ratings for us.”
Those ratings have remained consistent over the past several years, Williamson said. ESPN averaged 911,000 viewers for this year’s Little League World Series through Aug. 18, a viewership figure that’s up 12 percent over last year. Its 0.6 average rating is flat.
Under the new deal, ESPN will televise every game from the U.S. Regionals and World Series of each of Little League International’s divisions. Those include baseball and softball leagues (Intermediate, Junior League and Senior League) beyond the Little League World Series.
It also gives ESPN enhanced digital rights. This year, ESPN added 41 games to its broadband service ESPN3.
Little League has said that it did not enter into serious discussions with other networks.
It remains one of the most lopsided deals in sports TV history and bolsters Peter Angelos’ reputation as a shrewd negotiator.
In 2005, Major League Baseball gave the Orioles owner control of the media rights to his team’s closest geographic rival, the Washington Nationals. At the time, MLB wanted to relocate the Expos from Montreal to Washington, and MLB used this as a way to convince Angelos to cede rights to the D.C. market to the new club.
Former MLB President and CEO Bob DuPuy and Angelos at a congressional hearing on Nationals TV rights in 2006
Photo by:AP IMAGES
To mollify the Nationals’ owners, MLB allowed the team to open up the media rights deal every five years to make sure it was being paid the market rate. Nearly two years ago — five years into the deal — the Nats exercised their option and opened the deal for the first time. The team believes its $29 million-per-year rights fee that MASN pays is well below market value.
After nearly two years of on-again, off-again negotiations, a resolution still seems far away, as the two sides remain about $85 million apart.
Despite the difference, several sources are reporting some small steps that have been taken toward a resolution. Several sources say one scenario — where NBC Sports Group would buy the rights to the Nationals and Orioles from MASN — has emerged as the front-running scenario to break the impasse.
NBC Sports Group has been discussing a plan that would see the group operate two regional sports networks in the Baltimore-Washington market. Currently, three RSNs operate in the market: MASN, MASN2 and Comcast SportsNet Mid-Atlantic, which is run by NBC Sports Group and carries the NBA Wizards and NHL Capitals to both markets. NBC Sports Group uses an overflow channel when games run at the same time.
No deal is imminent, as talks between MASN and NBC have cooled, sources said.
Initially, Fox Sports also had been involved in talks to buy the teams’ rights from MASN. But sources said the initial price tag quickly got so high that Fox executives have not participated in talks since the spring.
It’s not known if NBC Sports Group is interested in buying MASN and MASN2, or just the rights to the Orioles and Nationals. Neither MASN channel features much original programming. The channels carry feeds from ESPNews when baseball games end. It’s conceivable that NBC Sports Group could shut down one of MASN’s channels if it got control of the rights.
These talks are occurring as the dispute over the Nationals’ rights approaches a two-year anniversary. In order to speed up the process, MLB hired Allen & Co.’s Steve Greenberg to try to arrive at a deal.
The Nationals are seeking a rights fee increase from around $29 million per year to as much as $120 million per year. The Nats believe such an increase is warranted given rights fee increases in Texas (the Rangers signed a 20-year, $3 billion deal last year) and San Diego (the Padres recently signed a 20-year, $1.2 billion deal).
MASN believes the Nationals’ fee should increase to $35 million per year, a 20 percent jump. MASN bases its figure on MLB’s “television formula” that takes into account local market size, geography, TV ratings and network revenue and expenses.
The Nationals are using Proskauer and Bevilacqua Helfant Ventures as advisers. MASN and the Orioles are using a law firm that’s long been tied to the team, Rifkin, Livingston, Levitan & Silver.
ESPN and Turner Sports are talking with NASCAR about getting out of their broadcast rights agreement a year early, a move that could allow Fox Sports and NBC Sports Group to become the sport’s broadcasters next year.
It’s unlikely that the four TV companies will be able to reach a deal, sources say. But the fact that these types of talks are occurring is precedent-setting in an industry where live sports rights are held sacred. For at least the past decade, no rights holder has exited a major media agreement with a property early.
ESPN and Turner executives told the series that they are interested in forgoing the final year of their contract. Fox and NBC executives told NASCAR that they are interested in picking up those rights. And sources say NASCAR executives are open to the switch.
But any deal faces significant hurdles. Sources said it would have to be a complete switch, not a partial one in which Turner exits its six Sprint Cup races or ESPN exits part of its Nationwide Series season. That means it would require an agreement between four competitors — ESPN, Turner, Fox and NBC — and one property, which would be difficult to structure.
ESPN and Turner Sports are willing to sell their rights back to NASCAR for some sort of compensation. Fox Sports and NBC Sports Group are willing to buy the rights from NASCAR, but they feel they should be compensated for letting ESPN and Turner Sports out of their deals early. As the middleman, NASCAR would have to navigate those opposing interests.
Representatives from the four media companies, as well as NASCAR, declined comment.
Such talks are exceedingly rare in sports media. Television companies that lose rights to a sport a year before their contract ends typically choose to ride out the final year of their agreement as a lame-duck rights holder. For example, Fox broadcast the BCS in 2009 and 2010 after ESPN outbid it for the rights in 2008. And ESPN is carrying the FIFA World Cup from Brazil next year, even though Fox outbid it for rights for 2018 and 2022. Later this week, CBS will broadcast the U.S. Open before the rights head over to ESPN in 2015.
NASCAR’s situation is a little different in that it will be dealing with two lame-duck partners that almost certainly will cut corners in promotion and production next season.
ESPN and Turner Sports have told NASCAR they are prepared to carry the races next year, but both would prefer avoiding that lame-duck status. Both opted not to submit final bids to retain NASCAR rights when the sport held TV negotiations last month, and they see upside in exiting their deals a year early.
ESPN has had financial pressures in some areas over the last year, causing it to lay off staff and look for ways to reduce expenses. By unloading NASCAR rights in 2014, ESPN would be able to eliminate production costs and shed its roughly $270 million annual rights fee.
NASCAR-related production costs are a concern for ESPN executives, particularly during the first half of the season when ESPN has rights only to the Nationwide Series.
Between February and July, ESPN spends a lot of money to bring production equipment and crews to 14 tracks for the Nationwide Series. From late July to November, it has the rights to broadcast Sprint Cup races, which typically take place the same weekend and at the same venue as Nationwide races. In the latter half of the year, ESPN can spread its production expenses across two races. For the first half, it spends the same amount on a single Nationwide race, and has had trouble balancing its books off that.
ESPN also has experienced a difficult ad sales environment around NASCAR, according to sources at the company. Next year promises to be especially tough for a lame-duck rights holder incapable of offering multiyear advertising deals around the sport.
Turner gradually has been unwinding its ties to NASCAR over the last two years. The company sold the rights to NASCAR.com back to the sport in early 2012. It still handles digital sales for the sport, but its executives no longer see the value in showing six Sprint Cup races in the middle of the summer, especially after ratings sunk this year to the lowest level in 29 years.
However, Fox and NBC see advantages in picking up their broadcast rights a year early. For Fox, the added 14 Nationwide Series races during the first part of the year would bolster programming and draw viewers to its new network Fox Sports 1. For NBC, the added 13 Sprint Cup and 19 Nationwide Series races would bring NASCAR’s big fan base to NBC Sports Network and give the cable network another asset to leverage in carriage negotiations with cable and satellite companies — both a year earlier than expected.
And even with a much shorter window, NBC still would have nearly a year to prepare to broadcast NASCAR.
The talks won’t change NASCAR’s long-term TV picture. Between 2015 and 2024, NASCAR will collect more than $8.2 billion in media rights from Fox and NBC, which signed 10-year, $3.8 billion and $4.4 billion deals, respectively. The networks together will pay an average of $820 million a year, a 46 percent increase from the $560 million that NASCAR currently receives annually from Fox, Turner Sports and ESPN.