Baseball Plays Hardball with ESPN

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Unwilling to take a reduction in subscriber levels by
moving to ESPN2, Major League Baseball will pull three of its Sunday-night games from
ESPN, distributing them on a regional basis instead.

The move marked an explosive end to a negotiation period
that began in January, after ESPN proposed moving those games to ESPN2 to make room for
its newly acquired National Football League Sunday-night telecasts.

ESPN in January obtained Turner Network Television's
half of the NFL Sunday-night package, which runs from September through late October, as
part of its eight-year, $600 million deal with the NFL.

But MLB, stating that its contract called for carriage on
ESPN, pulled the games last week for distribution in each team's local market.

The move stunned ESPN, and network executives were
"extremely disappointed" that MLB would take such a position. ESPN argued that
ESPN2, at 60 million homes, is well-distributed, and that it has already offered several
baseball games on ESPN2, with no problems in the past. Further, ESPN claimed that its
contract with MLB allows it to move games to ESPN2

"We are baffled by baseball's decision, which
provides less exposure to the games," an ESPN spokesman said. "This action
violates our contract, which expressly provides for pre-emption and distribution on ESPN2,
and, more important, it denies national distribution to a broader audience of 60 million
homes."

But Richard Levin, spokesman for MLB, said ESPN could only
move the games to ESPN2 with the league's approval, which MLB would not grant. Levin
added that the league wanted to maintain the maximum exposure for the Sunday-night games
that it's received throughout the season. ESPN has more than 70 million subscribers,
10 million more than ESPN2.

"We weren't very pleased that [ESPN] was giving
away our Sunday nights without asking us," Levin said. "We were going to lose a
lot of our viewing base for the games [on ESPN2], instead of staying on ESPN, where
we're supposed to be."

But on a ratings basis, it's easy to see why ESPN
wants to keep its NFL games on the main channel. Last year's NFL Sunday-night ratings
during September [on TNT] averaged a 9.1 Nielsen Media Research rating, compared with
ESPN's 1.7 rating for baseball.

However, ESPN's baseball ratings are up for the first
time in years. The network is averaging a 1.6 rating, up from a 1.5 last year. Its
Sunday-night telecasts are also up, from a 2.0 in 1997 to a 2.3 this year.

In an effort to appease the league over the ESPN2 move,
ESPN offered to augment its ESPN2 coverage with local, over-the-air telecasts in the
competing teams' markets.

Sources close to the situation also said ESPN was prepared
to add extra Tuesday-night and Friday-night telecasts to its weekly Wednesday-night
doubleheader telecasts.

ESPN has moved baseball games to ESPN2 in the past: In
1996, ESPN2 aired a playoff game that ran simultaneously with another playoff telecast on
ESPN. The ESPN2 game drew a very respectable 2.1 rating, the network said.

But Levin said such games were moved with MLB's
permission only. Also, to his knowledge, Levin said, the proposal for additional baseball
telecasts was floated earlier in the negotiations, but it had not been addressed recently.

Sources close to the situation said ESPN has not ruled out
taking legal action against MLB for violating its contract.

Levin, however, said he hopes that the situation
doesn't end up in court. He also held out hope that the two sides can come to an
agreement in the near future. "We hope to continue discussions and to reach a
resolution to this matter," he said.

Meanwhile, the telecast rights to the three Sunday-night
games -- San Francisco at Los Angeles Sept. 6; St. Louis at Houston Sept. 13; and the New
York Yankees at Baltimore Sept. 20 -- will be given back to the teams for local
distribution. Vince Wladika, spokesman for Fox Sports Net, said the network's
regional-sports network serving each respective city will "aggressively" attempt
to secure the rights to the games.

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