Solid Start for MLB Net
Big Launch Platform For '09 Channel in Out-of-Market Pact
By Steve Donohue -- Multichannel News, 4/8/2007 6:00:00 PM MT
With 40 million subscribers already in the bag for the 2009 launch of its own cable channel, Major League Baseball managed to turn criticism of a lucrative agreement it cut with DirecTV into an even better deal that'll give it wide distribution through Comcast, Time Warner Cable and other major cable operators.
By tying distribution for MLB Channel to deals that would give distributors access to the league's “MLB Extra Innings” out-of-market subscription package, baseball is guaranteed immediate nationwide carriage when that network debuts in January 2009.
The deal excludes satellite-TV provider Dish Network and dozens of In Demand pay-per-view affiliates that used to sell Extra Innings to customers, such as Cablevision Systems, Charter Communications, Insight Communications and Mediacom Communications.
In Demand can't license Extra Innings to affiliates unless they first agree to launch MLB Channel, MLB senior vice president of public relations Richard Levin said.
| Deal Scorecard |
|---|
| Some key statistics from Major League Baseball's accord with cable operator-owned In Demand and DirecTV: |
| Source: The companies, MCN research |
| DirectTV, In Demand's owners to pay estimated $560-700 million combined. |
| In Demand affiliates must agree to carry MLB Channel to get Extra Innings out-of-market pay-per-view package. |
| DirecTV (10%), In Demand owners (10%) each get equity in MLB Channel. |
| Reported MLB Channel annual license-fee revenue of $120 million would be about 25 cents per subscriber. |
An Insight spokeswoman said Friday that company wouldn't carry MLB Channel or offer Extra Innings.
The seven-year deal with pay-per-view and on-demand content distributor In Demand requires owners Comcast, Time Warner Cable, Cox Communications and Advance/Newhouse Communications to offer the MLB Channel to their pay TV customers.
That, coupled with a deal the league signed with DirecTV last month, ensures MLB Channel will have at least 40 million subscribers at launch.
“We said we should be treated equitably and fairly, and we now feel like we've been able to do that; therefore we're happy,” In Demand president Rob Jacobson said Friday.
MLB vice president of communications Patrick Courtney said the specific tier MLB Channel will be distributed on will vary by operator. DirecTV plans to offer MLB Channel to at least 80% of customers that receive its basic-programming package.
Distributors can't position MLB Channel in a sports tier, Levin said.
DirecTV's original deal with baseball was valued at about $700 million by itself and would have given the satellite provider a 20% stake in the MLB Channel.
But with cable now in the mix, DirecTV and In Demand's owners will pay the league about $700 million combined, according to two individuals familiar with the agreement. The difference for DirecTV: no exclusivity.
Another source familiar with the agreement said MLB will only receive about $560 million combined from DirecTV and In Demand's owners over seven years.
DirecTV's equity goes down, though. DirecTV and In Demand's cable owners will divide that 20% stake in MLB Channel, with DirecTV getting about half and In Demand's owners splitting the other half, sources said.
Some cable operators have been offering to compensate cable customers who buy the league's MLB.TV online version of Extra Innings instead. Cablevision Systems, for example, is offering customers who bought Extra Innings last year $15 off their monthly cable bill to cover the cost of MLB.TV.
In Demand is letting distributors charge up to $199 annually for Extra Innings, up from last year's suggested price of $159.
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Received a VM from Charter promoting their MLB package, so it looks like it should be starting...
Greg Myers - 2007-15-4 11:45:00 -
I'm trying to find out the same thing regarding Cablevision ... and I WORK...
David Cohen - 2007-12-4 19:46:00 -
Anyone have any idea whether or not Charter will abide by the terms mlb has set? that is,...
ra - 2007-9-4 18:19:00
DirecTV Turns Up Heat
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02/29/2008In Demand Awaits Company
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04/04/2007
