Major League Baseball watched closely as the National
Football League renewed its TV rights deals, with the broadcast networks
agreeing to pay about a 60% increase over a nine-year extension, and ESPN
agreeing to a new eight-year deal at a 70%-plus increase over its current
agreement.
Now it's MLB's turn at the plate, and sources familiar with
its current network negotiations say that the league is looking to get similar
percentage increases via 10-year deals for its new TV rights packages,
which will take effect at the start of the 2014 season.
No one at MLB is commenting on the negotiations, nor are most
of the networks involved, except to issue or reiterate the cursory statements
expressing interest in MLB TV packages going forward.
Sources say ongoing negotiations have now wound down, with the
bids from each of the networks having been submitted to MLB. It's now up to the
league to determine whether the pricing is right and how the packages under the
new agreements would be divided.
"The ball is in MLB's hands," according to one source
with knowledge of the negotiations. "No one has any idea what MLB executives
are thinking about who they will award the rights to, but everything is up for
grabs."
Not only is everything up for grabs, but some of the
existing partners want a bigger slice of the postseason pie, and there are two
new players in the game -- NBC and CBS. According to sources, CBS wants to
partner with Turner on a package, much like it did with the NCAA Men's
Basketball Championship Tournament TV rights.
While observers have pointed out that NBC has Sunday Night Football on during the fall,
which would preclude it from televising Sunday night World Series games, and
that CBS has a solid primetime entertainment schedule it might not
want to disrupt in the fall, both have their own cable sports networks where
MLB games could be televised.
Sources say CBS could air some World Series and other
post-season games in primetime, with the bulk of a joint package's regular and
post-season games going to Turner. CBS would also get some games to put on its
CBS Sports Network.
Sources also say that MLB is adamant about not wanting the
World Series to appear anywhere but on a broadcast network. That's why if
Turner wants to expand its footprint in baseball significantly, it would be
beneficial to partner with CBS. One source said, "Turner needs more muscle" if
it wants to expand its MLB properties.
While NBC might have a conflict on Sunday nights between the
NFL and MLB, the rest of its primetime schedule could, for the most part (other
than The Voice), be pre-empted from a
ratings standpoint with no problem for MLB postseason games. Plus, NBC
would love to have MLB games to join its NHL telecasts on the cable NBC Sports
Network.
NBC has not held MLB rights since 2000, while CBS has not
held them since 1993.
Turner currently has a nonexclusive Sunday afternoon
package, along with the postseason American and National League Division Series
and one of the two League Championship Series. Fox at minimum is looking to
renew its current package which includes Saturday afternoon and night
games, one of the two League Championship Series, the All-Star game
and the World Series. But sources say that Fox could also be looking to get
more regular and postseason games to put on a still-in-the-planning-stage Fox
Sports Network, which could premiere before the start of the 2014 MLB season.
Meanwhile, sources say ESPN, which has an extensive
weeknight and Sunday night regular season package but no post-season, wants to
defend its cable turf in new deals going forward. That would mean
ESPN might want to try to knock Turner out of the cable box by
acquiring all MLB cable rights. That could be a reason why Turner is
partnering with CBS -- to blunt the ESPN-ABC combination of cable and
broadcast.
No one seems sure what MLB is planning for the MLB Network,
which it owns in partnership with several cable operators. MLB Network currently
carries some live regular season games and two daytime postseason division
playoff games.
Like MLB, CBS would not comment for this story. Regarding
the situation and the progress, a Fox spokesperson said, "Fox Sports has had a
tremendous, mutually beneficial relationship with MLB since 1996, and we're
actively engaged in negotiations to continue that relationship beyond the
conclusion of our current rights agreement."
Turner issued the same statement it had put out in May when
it secured the rights to this season's two additional Wild Card games, which
read in part: "We will continue to have private conversations with our MLB
partners discussing matters beyond 2013."
Chris McCloskey of NBC said, "As we've said before, we are
always interested in good properties," and ESPN issued a statement
that read, "We are in ongoing talks with Major League Baseball and hope to
expand upon our longstanding relationship."
Sources say a decision from MLB about these TV rights
agreements might not be made until around World Series time in October. One
network executive, speaking on condition of anonymity, said MLB officials had
indicated that a decision was going to be made by the All-Star game on July 10,
but that date has come and gone. The current rights deals expire after the 2013
season, so the league does have some time and sources indicate that league
officials seem to be in no rush.
Digital Is Part of
Conversation
Further complicating the decision-making process is digital
rights. The league in the past has negotiated digital rights separately but a
lot has changed since 2006 when the current deals were signed, and if these new
deals extend for up to 10 years, digital will become a major factor.
Would the networks be able to make money if they were to
each pay an average 6-7%-a-year price increase over the current deal for the
next 10 years? One network spokesperson said, "It depends on how each
season goes. Every year is different. Every season is different and so many
factors go into whether people watch the games."
What baseball has going for it this season and moving
forward in that regard is some young star players, such as 20-year-old Los
Angeles Angels rookie Mike Trout, who might not only win the American League's
Rookie of the Year Award but also Most Valuable player. And then there is
19-year-old Washington Nationals outfielder Bryce Harper, who is having a solid
first season after only one year in the minors. And as MLB commissioner Bud
Selig pointed out heading into the All-Star Game earlier this month, there are
a host of other young players, and baseball has benefited from the five
no-hitters that have already been thrown during this season.
Add to that the new Wild Card system that has opened up a
postseason spot in the playoffs for an additional team in both divisions, which
will keep viewer interest in the season pretty high right up until the end of
September. Currently, eight teams that are four games or fewer behind the Wild Card
team leader in the American League, and in the National League, there are five
teams that five games or fewer behind. So from an on-field perspective, the
timing is right for MLB to be doing this deal.
Will advertisers be willing to shell out hikes in ad rates
that the networks would have to charge to try to cover the costs of their new
MLB rights deals?
It will be hard for the networks to charge enough for
commercial advertising to totally cover the amounts they will be paying for
rights fees and a lot depends on the postseason and World Series matchups and
how many games those series go. Most networks concede some losses on sports TV
rights deals, but they can also use the telecasts to promote their primetime
entertainment schedules, and that value is a big, vital intangible.
Digital offerings can also be a factor in network
deals done with advertisers. Most media agencies and their advertiser
clients are looking for other platforms to reach consumers, particularly in the
younger demos. So how digital deals are structured and what kinds of
opportunities are granted to the networks by MLB in that area will be an important
part to the rights deals as well.
Media agencies and their clients are also sold on live
sports telecasts as a vehicle to reach consumers. Last week, in an interview
with MBPT, Christine Merrifield, president, video investment and activation,
for MediaVest -- which has a number of clients who advertise in sports -- called
TV sports, "comfort food for the advertiser."
Merrifield added her belief that, "Sports offers a universal
language. It unifies small towns. Men and women both watch. It generates
conversation. People are gravitating to sports because it is something that
takes their minds off the troubled economy. Every demo watches sports. It's a
great opportunity for advertisers. It's live. It's something they are talking
about the next day while getting a cup of coffee in their local 7-Eleven. The
ratings are good. It has a good community feel."
Other agencies and their clients have similar feelings. So
while every deal between advertisers and networks is a negotiation, going
forward there will be plenty of interest from marketers for live MLB games on
whatever networks are chosen to be the new TV partners.
In the end, MLB may not get the $43 billion that
the NFL got with its new deal, but it could get between $12-13 billion
and that would be more than the $4.9 billion it is getting under the terms of
its current seven-year deal. And that's a pretty good chunk of change.
