INDEMAND will carry MLB EI? No so fast says MLB... How about E*?

[Peter Parker]

I did find this in the actual press release

Additionally, in keeping with MLB's desire to provide as much MLB programming to as many baseball fans as possible, MLB and DIRECTV have agreed to include a provision that allows MLB EXTRA INNINGS to be offered to other incumbents - In Demand and DISH Network - at consistent rates and carriage requirements with a deal to be concluded before the baseball season begins. The provision also requires the incumbents to agree to carriage rights to the MLB Channel proportionally equivalent to DIRECTV's commitment. Should the incumbents decide not to match DIRECTV's commitment, the MLB EXTRA INNINGS package will be exclusive to DIRECTV. All out of market games continue to be available on MLB.com.


That does not sound like the $100 million gets split among several payers. It would seem to say that everyone has to pay a proportional share. How that is determined I am not sure. But it sounds more like that if a second provider equal to D* comes along he must pay $100 million and if a third is equal to half he pays $50 million.


Are you seeing something else?

 

[cosmo_kramer]

It has been reported that DirecTV was prepared to pay $700 million for exclusive rights over the seven year deal, and Carey said that of course the non-exclusive price would be substantially lower.

http://broadcastingcable.com/article/CA6422877.html

MLB President Bob DuPuy said, in an offer good only until the end of March, any cable or satellite TV outlet could continue to carry Extra Innings if it's willing to pay "the same rates" DirecTV would pay if it is not the exclusive outlet.

http://www.usatoday.com/sports/baseball/2007-03-09-extra-innings-deal_N.htm

"We have an exclusive arrangement, if that's where it ends up. If these guys take it up in this window, we have a non-exclusive arrangement that works for us," Carey said. "It's significantly less money for the non-exclusive arrangement."

http://sportsline.com/mlb/story/10048260

MLB officials have not confirmed published details of the DirecTV exclusive offer, which reportedly are seven years for $700 million. DirecTV CEO Chase Carey also would not confirm the details or say by how much DirecTV's offer will drop if it no longer has exclusive rights to Extra Innings.

Carey, however, said non-exclusive rights fee for DirecTV would be a "significantly different number."

http://www.chron.com/disp/story.mpl/sports/bb/4613892.html


Think about it.

MLB signs a potentially exclusive deal with D* for $700m. But, if a deal is struck with InDemand and E* and it becomes non-exclusive, MLB will get $2.1b?? I don't think so....

 

[Greg Bimson]

The provision also requires the incumbents to agree to carriage rights to the MLB Channel proportionally equivalent to DIRECTV's commitment.

Geronimo, the "proportionally equivalent" statement is in regard to carriage of The Baseball Channel, not Extra Innings.

 

[Peter Parker]

Thanks Cosmo. I see where the $100 million a year figure no longer apples if it is not exclusve. But I don't see where that figure gets divided by the number of providers.

But thanks for catching that for me.

 

[dishcomm]

Wow, big news! I can't see E* staying out of the hunt now. They better get on the ball.

Based on E*'s history, I think Charlie will leave the EI package to others...

 

[ScoBuck]

MLB doesn't care how many providers buy the rights. There would be no additional revenue for MLB. They get the $100m, no matter how many providers join in paying it. Advertising revenue goes to those providers. Think of the NFL. NBC pays the league for the rights to broadcast SNF. The NFL gets that money, no matter how many people watch, and NBC gets the advertising revenue that it sells.

Wrong. First how would YOU know they don't care? The way that MLB and its teams get additional revenue from advertising happens in a few ways. For one, the RSN charges its sponsors based on VIEWERSHIP. The higher the audience and ratings - the higher the ad rates - many RSN's are owned or part owned by teams, thus they DO get additional revenues. And this can be a considerable amount of money. The RSN's pay the teams to show the games, when rights fees are re-negotiated, you better believe the size of the audience is very important in the price paid for those rights. if you are watching the games, during the games the teams and the RSN's are constantly plugging buying tickets and merchandise, etc. - you gotta believe they do it because people buy what they are plugging. If more people are watching - well guess what - yes they sell more, yes they collect more revenue. Size of audience is EVERYTHING.

In your example above its true also - the larger the ratings for the games, the more NBC charges for ads - and thus more revenue they get. The NFL also gets ad time on the games in case you didn't notice.

There have not been identical "negotiations" to these in recent memory. Please cite another instance where a league signs an agreement with a provider which includes an ownership stake of a broadcast channel, then offers other providers a chance to join in and become "partners" to mirror the same broadcasts.

Well, I think you're wrong again - at least in your interpretation of what I was getting at. What I am saying is that IMO it seems that 'hardball' (sic) is played by BOTH sides in each and every carriage contract negotiation. Examples Court-TV, Lifetime, etc. are what I was referring to. It doesn't have to be a sports league - I was just referrng to the way ALL contract negotiations seem to be. They seem to get settled at the last minute, they play it out in the media, etc.

 

[dishcomm]

Charlie doesn't care about negativity...heck, he doesn't care about you or me or any other of his customers, that's why he won't match...

The reason why E* won't be in the EI game is simple..Except in some cases(ESPN is one)If Charlie can't make money off programming, he won't offer it....

 

[dishcomm]

There's no requirement for cable companies to offer all digital signals. The requirement is for Over The Air Broadcasters to switch to a digital signal.

Cable companies would LOVE to switch over to an all digital signal and eliminate analog off their systems but this will be a long time out. People will still have old analog TV's hooked to analog cable for a time to come.

That's very intersting...Question ..If all tv broadcasts must be transmitted digitally by 2/17/09 then how is it that cable co's will still be able to deliver analog signals to their subs after that date?

 

[Claude Greiner]

2 things here...

#1 Cable and DISH Network almost need to shell out the 700 million, so this back fires in Directv's face. I guarantee if Directv gets exclusive rights, the next issue will begin late this summer when they start negotiating exclusive deals for the NBA Full Court package along with NHL Center ICE.

Let this thing back fire in Directv's face so what they are left with is an over priced baseball package that they have no exclusive rights for!

#2 I will get cable in my house before I get Directv because of all the crap they are putting everyone through.

 

[Greg Bimson]

Ahh, but DirecTV did offer the NHL to take Center Ice as an exclusive. It appears Bettman and company did not wish to offend Versus and their owner, Comcast, by taking more money from DirecTV and shutting CI off of Comcast.

 

[cforrest]

Claude, how does any of this backfire in D*'s face? It's the MLB's choice and decision to potentially have their product on one outlet. Your hate for D* is messing up your logic. NBA and NHL don't want to do exclusive agreements. Stern is not for that with the NBA and NHL was hurt by the lockout, they don't want to decrease exposure of their product. NHL can hardly get the money it once did for their national games. Get cable and enjoy, free world.

 

[cosmo_kramer]

ScoBuck,

My reference to MLB (when I stated they don't care how many providers buy the rights) is to the league entity who negotiates these broadcast contracts, not the individual teams themselves. Obviously, these teams, and the RSNs that broadcast their games are concerned about the size of the audience, but MLB is not. If they were, why would they enter into a potentially exclusive contract with a provider that would guarantee they would have less viewers than if it was non-exclusive??

About 540,000 subscribers got Extra Innings last season, with more than half getting it through DirecTV

http://www.usatoday.com/sports/baseball/2007-03-09-extra-innings-deal_N.htm

Say D* had 300k of those subs. You know that not all of the remaining 240k will move over to D*, some will, but most won't. This guarantees less viewers with an exclusive contract. If the league was concerned with expanding their viewership they would have looked to deal with the most providers possible. Instead, they went with the guaranteed money.

A friend pointed out another interesting point:

By shifting the Extra Innings package to DirecTV, MLB has now vastly expanded the market for its own offering. Fans like myself who have cable and no interest in switching to satellite television, are left with only one alternative to watch out-of-market games: MLB.TV.

Thus, by contracting the market for Extra Innings, MLB would be expanding the market for its MLB.TV. It's addition by subtraction.

http://biz.yahoo.com/indie/070209/620_id.html?.v=1

Another reason I say to let D* assume the whole nut.

 

[ScoBuck]

cosmo_kramer;847565

I can say that some of your points COULD make sense, or that some of mine COULD make sense, but.......... the truth to me is, WE here speculate on this and that, hundreds of different opinions/thoughts, etc.

I do fully believe that BOTH D* and MLB have weighed this out, both believe that it makes GOOD sense to them, both believe it will help their organizations long term.

Remember, its NOT only about current subs switching over to D*. It is also about future subs in the next 7 years, the ones that DO want sports programming like this in the TOTALLY HD age coming by next year or so. If they can really have a no-doubt superior HD sports offering, you better believe that they will get a huge percentage of that 18-35 male (and now female) audience. They willl also get from this a huge COMMERCIAL account base, and those pay much more as you know.

My own experience is that people (no matter what they say) do NOT switch providers easily or often. And in my own case after having Cablevison for over 20 years (and HATING them for the whole time), it took their refusal to put YES on during its entire first season of showing the Yankees to switch - and once I did, I said I would NEVER go back. I can't believe I am anywhere near the only person that felt THAT way, or that will do a similar move when this sorts out.

 

[Greg Bimson]

Say D* had 300k of those subs. You know that not all of the remaining 240k will move over to D*, some will, but most won't. This guarantees less viewers with an exclusive contract. If the league was concerned with expanding their viewership they would have looked to deal with the most providers possible. Instead, they went with the guaranteed money.

As did the NFL, and they don't care about getting Sunday Ticket the most viewers.

This is not about "expanding viewership" on a premium package. This is about getting the most money for it. While supplying Extra Innings to everyone, MLB made about $60 million a year. Starting this year, MLB makes $100 million off their offering and will have between 17 and 18 million subscribers that have access to The Baseball Channel starting in 2009.

Obviously, these teams, and the RSNs that broadcast their games are concerned about the size of the audience, but MLB is not.

But the RSN's don't care about the advertising outside of their own market. YES doesn't care if people in Kansas are watching a Yankees game, and base any advertising rights off of it.

 

[cosmo_kramer]

This is not about "expanding viewership" on a premium package. This is about getting the most money for it.

I'm not arguing that point. If you go back and read prior posts, I was essentially saying the same thing while responding to this statement:

I can't see why MLB WOULDN'T want additional providers to buy the rights. After all, the more people that can receive it, the HIGHER the ad rates are - that is a HUGE amount of additional revenue for MLB and the different teams.

The deal makes perfect sense for MLB. More guaranteed money, even with 1/4 of the potential subs that were available last year. If D*'s fiscal analysis found that it's a good deal for them to handle it alone, good for them too.....

 

[jrbdmb]

DirecTV has been quoted (somewhere ) as saying that if MLB EI is not exclusive they will not be paying $100M. However, they never said what they would be paying. It is a big jump to assume the payment would be $100M / # of players.

 

[cosmo_kramer]

DirecTV has been quoted (somewhere ) as saying that if MLB EI is not exclusive they will not be paying $100M. However, they never said what they would be paying. It is a big jump to assume the payment would be $100M / # of players.

MLB and DirecTV announced the Extra Innings programming deal on March 8. MLB said at the time the deal was nonexclusive and it would allow MLB Extra Innings to be offered to incumbents iN Demand and EchoStar Communications Corp. (Charts) at consistent rates and carriage requirements as with DirecTV.

http://money.cnn.com/2007/03/21/news/companies/baseball_cable.reut/?postversion=2007032117

Maybe I'm wrong, but "consistent rates" to me in this case means "$100M / # of players". How else do you make it consistent??

 

[bagsy]

More detailed response by MLB: (link -- http://www.bizofbaseball.com/index.php )

Written by Maury Brown
Wednesday, 21 March 2007
As reported earlier, MLB has rejected a counter-offer by iN Demand to keep MLB's Extra Innings on cable this upcoming season. Officials from MLB responded further today as reported by Eric Fisher and John Ourand on Sports Business Daily:

"iN Demand's strategy of negotiation is a failed one," MLB Exec VP/Business Tim Brosnan said. "Our offer to them to match DirecTV remains open, but time is running short." Late Tuesday, iN Demand faxed Brosnan an offer that it said would match DirecTV's terms, guaranteeing the same rates and household distribution as the satellite operator over the next seven years. Brosnan bashed the offer, saying that it does not. "Time and again, we have given iN Demand an opportunity to respond to legitimate offers," he said. "And time and again, they have responded by making misleading statements."

As Fisher and Ourand further report, the key stumbling block is in the way iN Demand structured their offer compared to DirecTV, the carrier that MLB has initially agreed to a 7-year, $700 million agreement with to show Extra Innings exclusively.

DirecTV has agreed to place the upcoming MLB Channel in 80% of its homes according to a filing with the FCC sent today by MLB President and COO Bob DuPuy. MLB is demanding that cable match the offer of 80% of its homes, as well. Added to this issue is the fact that “iN Demand’s offer to pay for Extra Innings on an actual sub basis, rather than an upfront guarantee”, such as DirecTV has offered.

DuPuy added in the FCC filing that, "[They] will need to commit to a fair allocation of the total rights fees for Extra Innings, ... based on the number of digital households that they and DirecTV serve.”

 

[UpAllNight]

Charlie doesn't care about negativity...heck, he doesn't care about you or me or any other of his customers, that's why he won't match...

So tired of these 'blanket' statements about Charlie. I happen to disagree wholeheartedly, I think Charlie actually does much of his 'tough' negotiations directly because he DOES care about his customers.
Are all his 'tough' negotiations 'pro' consumer? ...no. He is afterall a very smart buisnessman, proven time and again over his fine career.

I personally think it's D* that doesn't care as much about their customers.
The MLB contract is a good example. While many people keep trying to break down the $700 million by dividing up the whole kit and kaboodle, down to the amount of subscribers who have/will sub to the package, it just doesn't work that way.
D* is paying roughly $100 million a year(actually it would probably start lower in the early years, then progress in yearly cost as the 7 years progress, but the total is $700m for 7 years no matter what) to provide their customers with the MLB EI package.
Now, here's where it gets interesting, D* knows they can't recoup all the money the package costs them each year by just signing current or potential EI subs. So they will recoup much of the $100 million each year by using the EI package as 'bait'. It will surely be used as a new sub incentive and then can be shown on the books as such. By using the EI package as an incentive, even if the new sub does NOT renew the package after the freebie period, D* gets to use this cost of the incentive in place of other incentives such as DVR upgrades, HD upgrades, Premium channel X month incentives etc. All those incentives cost money too to provide a new sub.

The bottom line, D* will be using the extra cost of the EI package for incentives, in ways that I believe Charlie either can not do, or is just plain not interested in doing.

D* customers better hope D* gets their monies worth out of the extra they are paying for the package... because if they don't, the customers will be the ones making up for it in the end, it sure ain't gonna be the shareholder.

If Charlie passes on the MLB EI package, I personally believe part of the decision will be because he DOES indeed care about his customers.

 

[IceRunner]

Dish alleges that it is trying. This is on the Dish Web site:

We are currently working very hard to bring the MLB Extra Innings out of market baseball package to Dish Network subscribers. We will post updated information as soon as it is available. As a reminder, this will not affect regularly scheduled baseball on ESPN, FOX, RSNs, Superstations, and Local Network channels.

Get complete information on sports packages currently available with
Dish Network Season Ticket.