Major League Baseball may be stuck in yet another labor fight, the sport’s barons locking out players this offseason to force themselves to stop paying humongous contracts to washed-out sluggers, banjo-hitting infielders, and noodle-armed pitchers. Good luck with stopping that force of nature.
But the stoppage hasn’t held up other parts of the game from moving forward, most notably this week’s news that Apple TV Plus is in negotiations with MLB to take over the weekly package of regular-season telecasts that ESPN gave up in renewing its contract with the leagues.
The Apple-MLB negotiations for the Monday and Wednesday night games are said by the New York Post to be “serious,” which is, I suppose, a relief. But far more importantly, should the deal come together, it would mark Apple’s first move into live sports, opening a new front in its increasingly “serious” efforts to make Apple TV Plus more than a giveaway for iPhone buyers.
Certainly, Apple TV Plus has been giving viewers more reasons to stick around lately. Just this week, the movie CODA, and episodic series Ted Lasso and The Morning Show all snagged SAG Awards nominations. That suggests the best of TV Plus is resonating with fans and critics.
But one of baseball’s great advantages is that it creates a lot of content every season. There are 30 teams, playing 162 games a season, games that typically last between 2 1/2 and 4 hours each. Add in months of off-season hot-stove conversations, two months of spring training, and the post-season playoffs, and there’s a big programming footprint to be built even beyond the games themselves.
MLB is believed to be seeking as much as $350 million a year for the semi-exclusive rights to those games (as before, local services would still be able to show the hometown teams they have deals with).
That sounds expensive until you realize how much all the big streaming companies are paying for content more generally, and how little even those gargantuan sums impact what Apple is worth.
Wells Fargo just put out data estimating programming spending by the nine largest streaming services will jump 10% this year, to $140.5 billion, on the way to $175 billion collectively by 2025.
And Apple, the world’s most valuable public company, crested $3 trillion in market capitalization last week, before settling back on Wednesday to a mere $2.86 trillion.
Apple also has somewhere around $191 billion in cash in its back pocket, even as it keeps buying back stock and investing in R&D on new ventures like driverless cars and virtual-reality headsets. Simply put, a $350 million baseball contract for Apple is the corporate equivalent of walking-around money, what it found between the cushions of Tim Cook’s office couch.
Such a deal potentially sets up an expensive arms race with Amazon, which already is set to spend $1 billion a year for 15 NFL games per season beginning this fall. That deal, perhaps like the baseball package, is only semi-exclusive: local fans will still be able to watch their home teams play on Thursday nights with an over-the-air broadcast. Everybody else has to go online.
Expect more deals like this one that carve off a piece of the sports pie that traditional outlets can’t afford to do anymore.
Next up as a potential tech titan target: the NFL Sunday Ticket package that DirecTV is giving up after next season. It might look nice as a premium sell-through for Alphabet’s YouTube TV skinny bundle, a bookend to Amazon’s Thursday night programming, or, again, a newly sports-friendly Apple TV Plus.
Squaring off the tech titans in other rights deals would be both highly lucrative for sports leagues looking for their next sugar daddy, and potentially, ahem, game-changing for Hollywood media companies trying to protect legacy broadcast and cable operations as they evolve into streaming.
Live sports (and to a lesser extent, news) has been the bulwark sustaining the traditional pay-TV ecosystem amid continuing cord-cutting. This past year, NFL games comprised 75 of the top 100 highest-rated shows on TV, Sportico said.
Should that changeover happen, it will set up yet another self-reinforcing and vicious cycle of diminished broadcast/cable programming, with fewer people paying to watch whatever’s left, further eroding the networks’ ability to keep paying those amounts.
And don’t forget that the leagues themselves appear likely to create their own subscription streaming packages, cutting out middlemen like the networks, while still keeping local control over hometown telecasts on traditional outlets.
“We expect MLB and NBA to work toward league-specific streaming platforms carrying OTT feeds of local/regional games seamlessly integrated with their out-of-market streaming packages (likely in conjunction with a streaming partner and as many teams as possible),” according to this week’s 2022 predictions from LightShed Partners. “Lastly, there could be RSN-specific OTT strategies in large markets (who decline to be a part of the league-based offerings), such as MSGN and LA Sports Net.”
All of this signals yet more challenges for Sinclair, the broadcaster group turned NextGen TV cheerleader/AVOD operator/local news aggregator/nation’s largest regional sports network operator.
Despite formidable obstacles, Sinclair appears to be close to securing video rights to NBA teams that it needs to create its own streaming service to compete in some major markets with ESPN/ESPN Plus, with a debut perhaps as soon as April, when baseball’s season is putatively set to start.
If and when that service launches, it may give carriers such as Charter an excuse to put Sinclair’s sports networks on a premium tier, further reducing income and viewership for those networks.
That’s definitely a problem for Sinclair. But Apple’s newfound interest in live sports suggests another level of engagement by Cupertino in the future of streaming. For that, all the competitors should worry.
