Sources: MLB, Turner Sports Close To Media-Rights Renewal

Major League Baseball has agreed to broad terms on a new rights deal with Turner Sports at around a 40% average annual increase, sources said.

Nothing has been signed formally, but this new deal will see Turner pay an average of around $470 million per year from 2022 through 2028 for a rough total of $3.29 billion. Its expiration will sync with a Fox deal signed in November 2018. Turner now pays an average of $325 million a year under an eight-year deal that expires after the 2021 season.

Turner’s 40% increase is in line with MLB expectations, especially considering that Fox agreed to a similar increase just 20 months earlier.

Live sports content has become even more valuable to TV networks during the pandemic when no sports are being played. The increasing popularity of streaming services such as Amazon Prime, Hulu and Netflix has siphoned away entertainment viewers from linear TV. That has left networks fighting for viewers who still watch traditional TV for sports and news, even as they face weakened balance sheets because of the current crisis.

News of the pending deal — and the significant increases associated with it — comes as MLB is in the middle of contentious return-to-play negotiations with the MLB Players Association. A central question of those negotiations: How much will owners suffer financially during a shortened season played in empty ballparks, and how much should players share in that financial pain?

Owners project to yield $2.9 billion in revenue this season and lose an average of $640,000 per game. One of the prime reasons baseball is able to stage a truncated season in 2020 is because of a lucrative postseason, which is expected to generate around $1 billion in television revenue with an expanded playoff structure that could include as many as 16 teams.

Like Turner’s current deal, the new one, which starts in 2022, will be heavily weighted toward the postseason. Turner will keep rights to one League Championship Series, two Division Series and one wild-card game, sources said. The expectation is that this deal does not include rights to any additional playoff games, which would have to be negotiated separately.

The most significant change will come with Turner’s regular- season package. TBS will move its weekly Sunday afternoon game to a weeknight, most likely on Tuesday, sources said. Both Turner and MLB have been disappointed with the viewership for TBS’s Sunday afternoon game, which is not exclusive and competes with the teams’ regional sports networks that also carry the games.

WarnerMedia News & Sports Chairman Jeff Zucker and Turner Sports President Lenny Daniels led the negotiations for Turner. Tony Petitti, MLB deputy commissioner of business and media, and Atlanta Braves Chairman Terry McGuirk led negotiations for the league.

Live sports have become the hottest programming genre on television over the past several years, which is one reason why MLB is seeing such big increases. Turner relies on three top sports — MLB, the NBA and March Madness — to bring viewers and ad dollars to its networks. Sources said Turner has been looking for a fourth sport to add to that portfolio.

Back in November 2019, MLB signed a seven-year extension with Fox that runs through 2028. Fox agreed to pay an average of 40% more per year for the rights. That $5.1 billion deal keeps the World Series and All-Star Game on Fox through at least 2028.

MLB has started talks with ESPN about renewing its eight-year, $5.6 billion deal. Those talks have been described as preliminary — the two sides still have not talked about specific increases. Judging by the Fox and Turner deals, it seems clear that MLB should expect at least a 40% increase.

ESPN has told MLB that it is interested in picking up some of the wild-card playoff games that MLB has considered adding. ESPN likes its signature “Sunday Night Baseball” series and wants to keep the rights to it. Sources expected ESPN to work out a deal eventually, but they did not provide a timetable for when that would happen.

The media money is flowing in at a time when MLB owners are unable to rely on ticket sales, concessions and other gate-related income in 2020. Gate-related income accounts for 40% of teams’ revenue, reinforcing the importance of national television revenue.

MLB views the economic forecast even for 2021 as so grim that it has not viewed deferrals of player salaries as a feasible possibility, according to a source close to the owners, who added, “The economics just don’t work for us.”

The union has maintained that some of MLB’s revenue and expense figures, some of which the league disclosed to the union in a 12-page financial disclosure document last month, are either inaccurate or inconsistent.

The union has requested additional financial documents from the league, including information related to revenue generated from RSNs and ballpark villages in addition to the nature of ongoing discussions with television partners. The union received only some information in return, and the league will not open its books.

MLB and the union have both presented economic proposals calling for an expansion of the postseason up to 16 teams (increased from 10) in 2020 and 2021. That playoff structure in October is an attractive element for television partners. But the union could change its stance.

If the two sides are unable to negotiate a deal and MLB Commissioner Rob Manfred mandates a shortened regular season in the vicinity of 50 games, the union is expected to oppose an expanded postseason, which could cost the league roughly $250 million in revenue. 

MLB projects its total global media revenue for an 82-game season played in empty ballparks to be $1.34 billion, including $411 million from Fox, $381 million from ESPN and $325 million from Turner.