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| ESPN’s other deals, for afternoon regular-season games and the playoffs, run through 2006. |
Major League Baseball has asked ESPN for a hefty fee increase for rights to Sunday and Wednesday night baseball games, while stripping out most ancillary new-media elements in an initial proposal the network is expected to reject.
The offer, which an ESPN source said was presented by the league last month, is considered merely an opening salvo in a complex negotiation that could see the sides extend and consolidate three separate contracts the network has with MLB.
ESPN inherited two deals from Fox when its corporate parent, Walt Disney Co., acquired the former Fox Family Channel, and those deals — for postseason games and weekday afternoon regular-season games — run through 2006.
But the $851 million ESPN deal that began in 2000 for Sunday and Wednesday night games ends after next season. The contract calls for MLB to make a renewal offer and give ESPN the right of first refusal.
“We’re obligated to make them an offer,” said Tim Brosnan, MLB’s executive vice president, business. “We complied with the terms of the agreement.”
An ESPN source said the network has not yet formally rejected the proposal but will almost certainly do so. While MLB, at that point, will be free to talk to other potential carriers, the rejection will more likely just mark a starting point for real negotiations between the two.
“We’re happy with our ESPN relationship and we assume they are the same,” Brosnan said.
An ESPN spokeswoman said, in a prepared statement, “We are very interested in an extension.”
Another company official said MLB’s offer, which included an “aggressive” rights fee increase, was viewed as unrealistic by ESPN and probably league officials as well. He predicted that both sides eventually will agree to a modest rights fee increase.
What could be more of a sticking point than the dollars is the stripped-down nature of the rights deal the league proposed, and the fact that MLB is unwilling, at least for now, to consolidate the Sunday and Wednesday night package with the postseason and weekday afternoon rights. Those rights reportedly cost an additional $100 million a year.
What ESPN wants now is a comprehensive, long-term deal that will do away with the separate contracts and also include ample broadband, video-on-demand and high-definition rights. What it got from MLB was a proposal that covered nothing but Sunday and Wednesday live television broadcasts. It did not include rights to show highlights over the Internet, as espn.com does now. It did not even include “Baseball Tonight,” the popular news show that is produced by ESPN under the auspices of its MLB rights agreement.
With MLB angling to start its own network, and already housing the semiautonomous new-media division that is streaming live games over the Internet, it comes as little surprise that the league would carve most ancillary rights out of any new deal with ESPN, experts say.
But ESPN’s mantra is to bundle rights whenever possible, and then leverage those rights across multiple platforms. Experts say the question is whether the league has enough leverage to fulfill its own agenda ahead of ESPN’s similar posture.
Sports TV consultant Ray Harmon said that, as tempting as it may be for MLB to hoard new-media rights, it may not be realistic.
“If they’re looking for an increase, they’ve got to give [ESPN] something,” Harmon said. “I question this idea that baseball can grow these ancillary things without the help of ESPN. It’s difficult to admit at times, but most of these guys really do need ESPN.”
