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Volume 20 No. 42
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MLB and major distributors sign deals for network, Extra Innings

In the days leading up to Opening Day, MLB executives signed a bevy of carriage renewal deals for MLB Network and the league’s out-of-market package, Extra Innings, ending months of sometimes rancorous negotiations with the country’s biggest distribution companies.

Many of MLB Network’s deals ended at the beginning of the year, meaning that several distributors, including Comcast, Time Warner Cable and DirecTV, carried the network without a contract for at least three months. But since the beginning of the year, MLB said it has cut more than 200 total distribution deals in the U.S. and Puerto Rico. It also added 20 new distribution partners and launched in Canada on Rogers Cable.

The deals, which are described as multiyear, were completed late last month. Typically, these deals run for around four or five years. It puts MLB Network in 70 million U.S. homes, according to Nielsen’s April figures. By comparison, NFL Network is in 72 million homes, and NBA TV is in 59 million.

Distributors had paid MLB Network about 27 cents per month, according to SNL Kagan. Sources said the network received an increase from that rate, but the league is not getting the 50 cents per month it originally sought at the beginning of these renewal negotiations.

These deals, which were led by MLB executives Tim Brosnan, Tony Petitti and Chris Tully, mark MLB Network’s first carriage renewals since its January 2009 launch.

One of the sticking points during the carriage renegotiations dealt with streaming rights. Most distribution deals these days include some sort of authenticated streaming — something that is more complex with baseball given that MLB Advanced Media has operated MLB.TV as a stand-alone business for more than a decade. In their old deals, cable and satellite operators did not have the right to stream Extra Innings.

To cut through that logjam, MLB agreed to bundle its MLB.TV out-of-market streaming package with Extra Innings. Extra Innings subscribers will pay $195 and have access to both for the season. By itself, MLB.TV costs $130.

When it launched five years ago, MLB used Extra Innings as an enticement to get cable and satellite operators to carry the channel. It would not sell Extra Innings to distributors unless they also agreed to carry MLB Network.

Distributors seemed to sour on the out-of-market package, complaining that MLB.TV devalued the TV product by undercutting it in price. Two years ago, Time Warner Cable’s chief content officer, Melinda Witmer, said Extra Innings was performing below expectations on Time Warner Cable systems.

“We know today that a consumer can buy directly from baseball at a lower retail price than we can sell it at,” Witmer said at the time.

The network has received praise for its high-quality programming. But the channel has struggled with low ratings, though there are signs that its programming is starting to take hold. In 2013, the network averaged 141,000 viewers in prime time, a low figure, but still 33 percent higher than in 2012.