XM to get MLB in $650M Deal

[Scott Greczkowski]

Just got this emailed to me... I have not verified it yet.

XM SATELLITE RADIO TEAMING WITH MLB IN $650M DEAL
By Terry Lefton, Editor-at-Large, The Sports Business Daily

XM Satellite Radio is close to taking the wraps off a deal with MLB that would be the largest in the brief history of satellite radio. Sources said the ten-year deal — expected to be unveiled sometime before the first game of the World Series this Saturday — is worth as much as $650M in cash and stock. They added that the agreement won’t begin until 2006.

The deal brings into sharp focus the competition between XM and Sirius Satellite Radio, the two heavyweights of the developing segment, each of which hopes that by signing big-name, big-dollar content deals, they will be able to grow what are now relatively small subscriber bases. XM has about 2.5 million subscribers; while Sirius has about 700,000. Steve Mather, a research analyst who follows satellite radio for Sanders Morris Harris, L.A., said, “I think it’s safe to say this has become an arms race with the money they are paying for talent. At these prices, they’d be better off selling consumers on (satellite radio) itself.”

Sirius execs have long said that the deal it signed with the NFL in December is as important as a branding device as it is for content. The addition of MLB to the its lineup helps XM level the playing field, since baseball has more than 10 times as many games and has been a staple of radio almost since the medium started. Sirius paid about $220M for its seven-year deal with the NFL, an interesting comparison to these latest MLB numbers. Nonetheless, the money is flowing. Sirius recently signed Howard Stern to a five-year, $500M deal. With the concomitant publicity, Sirius said it gained more than 69,000 new subscribers in September to pass the 700,000 mark. In the sports arena, Sirius has deals with the NHL, AVP and top-tier college basketball and football programs, including Notre Dame, Michigan, Oklahoma, USC and Nebraska. Its rights deal with the NBA is expected to be renewed shortly. XM’s sports offerings include an exclusive deal with NASCAR, and college conference deals with the Big Ten, the ACC and the Pac-10.

 

[minorthr]

650 million for 10 years of baseball. In comparison to Sirius paying 220 for 7 years of NFL I think they overpaid. If its free I guess I'll tune in but if you have to pay extra then I'm out.

 

[Neutron]

I can understand it costing more for MLB. There are a lot more MLB games than NFL. Makes sense to me.

 

[mikew]

IMO, football is a visual sport. Also, the games are only on Sundays, with a few games smattered here and there over the course of the season. It's not as if you can change to a football game at random when you feel like hearing a live sports game. Baseball games are played at varying times of the day and night all week long. If this rumor is true...I'll probably renew my Sirius sub for another year and switch to XM in '06 (as long as the sub for MLB isn't highly priced).

 

[Scott Greczkowski]

I don't know about you guys but I have been watching the games on TV but listening to the audio off the radio.

Of course XM has a 15 second delay so it may be hard to watch TV and listen to the game on the radio.

And yes if XM charges to listen to MLB on the radio I am not paying eaither.

 

[Sirius_Rich]

This is great news for XM and great news for satellite radio in general. More consumer awareness. My first question is how will they juggle the schedules and how much bandwidth?

 

[fredfa]

The XM press release from Wednesday:

XM SATELLITE RADIO TO BE THE OFFICIAL SATELLITE RADIO NETWORK OF MAJOR LEAGUE BASEBALL AND BEGIN BROADCASTS IN 2005

Washington D.C. , October 20, 2004 -- Major League Baseball and XM Satellite Radio [Nasdaq: XMSR] today announced an 11-year, $650 million agreement enabling XM to broadcast games of every Major League Baseball (MLB) team nationwide beginning with the 2005 regular season. XM, with more than 2.5 million subscribers nationwide, will be the official satellite radio network of MLB.

"This is the crown jewel - the deal that we've been waiting for," said Hugh Panero, CEO of XM Satellite Radio. "Major League Baseball is America's national pastime and a natural fit with XM, the national leader in satellite radio. MLB has the broadest appeal of any major sport. People of all ages are baseball fans, from children to grandparents. Baseball is also a sport ideally suited for radio, given its natural pace and the ability to vividly describe each play."

"This agreement between Major League Baseball and XM Satellite Radio is a significant step forward in providing baseball fans greater access to more games in more locations," said Baseball Commissioner Allan H. (Bud) Selig. "This is a wonderful opportunity for Major League Baseball given XM's ever-increasing national availability. Our fans will be able to listen to the local broadcasts of their favorite teams from anywhere in the country. This partnership will add to the continuing growth and popularity of our game. It is a further example of the renaissance that exists in baseball today."

As the official satellite radio network of Major League Baseball, XM will have rights to use the Major League Baseball silhouetted batter logo and the marks of the 30 MLB Clubs. XM also will develop specific programming content that showcases Major League Baseball, its teams, and its personalities.

XM to Create Major League Baseball Channel
In addition to broadcasting live games, XM will create a Major League Baseball radio channel featuring original content and classic Major League Baseball game broadcasts. As Major League Baseball enjoys strong support from its Hispanic fan base, XM also will broadcast select games in Spanish.

"Baseball has enormous appeal, not only to its millions of fans, but to automobile manufacturers as well, which will help further strengthen XM's leadership position in the automotive market," Panero concluded.