Major League Baseball Plays Hardball

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Major League Baseball may have eased critics of its DirecTV agreement by striking a similar deal with In Demand Wednesday, but EchoStar Communications, Cablevision Systems, Charter Communications and dozens of other distributors won’t get access to the league’s MLB Extra Innings package unless they agree to launch a planned MLB Channel.

By tying distribution for MLB Channel to deals that would give distributors access to the league’s out-of-market subscription package, baseball is guaranteed immediate nationwide carriage with at least 40 million subscribers from DirecTV and In Demand’s cable owners when MLB Channel 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, Charter, 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.

An Insight spokeswoman said Friday that the 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 MLB Channel to their pay TV customers.

That, coupled with a deal the league signed with DirecTV last month, ensures that 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 who 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 DirecTV a 20% stake in 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 one-half and In Demand’s owners splitting the other half, sources said.

Some cable operators have been offering to compensate subscribers 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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