MLB's Squeeze Play: League Struggles to Renew TV Rights Deals

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February 13, 2006

NEW YORK -- By allowing the National Football League, Nascar and the FIFA World Cup to complete their new television rights deals before it had all of its deals renewed, Major League Baseball may have put itself in a position of being the league with which the broadcast networks draw a line in the sand. The league still has yet to close its biggest TV package that includes the World Series, and which expires after this coming season.

“It's never good to be the last one to do business in any negotiation,” said one TV network executive, alluding to the fact that billions have already been committed on the re-upping of TV rights contracts. One major media buyer added, “It's a bit of a witching hour for Major League Baseball.”

Fox, which airs virtually all of pro baseball's postseason games during the month of October, along with regular Saturday-afternoon games during the season, let its exclusive negotiating window lapse at the end of December. Since then, MLB has had discussion with NBC and ABC/ESPN, but neither programmer seems in a hurry to cut a deal. NBC Sports executives have been busy putting the final touches on coverage of the Winter Olympics, while ABC/ESPN has spent a ton of money on the NFL, Nascar and the World Cup (and even a lesser MLB package).

But the Fox package includes the All-Star game and the World Series, and is currently bringing in $417 million per year.
According to sources with knowledge of the discussions, MLB came to the table seeking a 20 percent hike and hasn't really budged. Fox, which has previously said it no longer cares to air the MLB divisional playoff games, doesn't want to pay any more if it renews.

What makes the situation a little tense for MLB is that the TV rights deal ends at the completion of the upcoming season, about seven months away. Rights deals are usually done well before the start of the season in which they expire, because otherwise it puts additional pressure on the league and gives the networks a negotiating advantage.

Fox insiders said if MLB won't budge on its price, and if neither ABC nor NBC wants to foot the bill alone for the broadcast portion (currently about $317 million annually), then Fox would consider splitting the broadcast package with one of those networks. In that case, each network would get some postseason playoff and World Series games. That, of course, mirrors the rights before 2001 when Fox brought all of the rights under one roof.

Since NBC spent $650 million a year on a long-term NFL Sunday-night deal, it is not expected to spend another $350 million on MLB, although with the struggles it is having with its prime-time schedule, putting postseason baseball on instead of scripted programming each October could provide a ratings injection. Even lower-rated MLB postseason games fare better than most regularly scheduled programming. “Baseball didn't hurt Fox prime time this past season,” said a Fox source. “It just didn't help us as much as it did the year before.” Fox averaged a 3.1 rating among adults 18-49 entering last October-the MLB postseason bumped it up to a 3.4. And that was without the New York Yankees or Boston Red Sox getting into the Championship Series and with only a four-game World Series.

ESPN last September reached an eight-year deal with MLB at close to $300 million per year to air games on Sunday, Monday and Wednesday nights.

It could, along with sister network ABC, make a bid for the broadcast and cable package that Fox had the rights to, in effect securing most of the MLB postseason games for ESPN and ESPN2 and having only the World Series air on ABC.
Insiders at MLB said all scenarios are in play, including one that would sell some type of package to Comcast's OLN.

Scott Haugenes, senior vp/group director, national broadcast at Initiative, said he would rather see all the postseason games on one network because it would reduce viewer confusion and improve potential ratings.

Putting all the postseason games on cable, except for the Championship Series, would mirror the agreement that the National Basketball Association did in its current TV rights deals with ESPN/ABC and Turner (that deal still has two years to go.) Many media buyers criticized that deal heavily when it was done several years back, and only some of that criticism has subsided since.

“I still don't believe it is good for the NBA, regardless of what they say,” said Ray Warren, president of Carat USA. “Fewer people are seeing the games. But the NBA took less of a risk than MLB would. Baseball is more ingrained in the culture. It'll do baseball more damage if it loses its postseason to cable.”

--John Consoli, Mediaweek