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Pete Toms Article Archive
Written by Pete Toms   
Tuesday, 17 January 2012 10:19

Last Week in Bizball by Pete Toms

This week in “Last Week in BizBall“, will BAM cooperate with “TV Everywhere”?, plus the tidbits.

MLBAM AND TV EVERYWHERE

In November, in light of World Series TV ratings, I examined the state of MLB national media rights. In a nutshell, the long term national TV ratings trends for MLB’s marquee events (WS, ASG) are down but demand for rights is robust because live sports remains one of the few TV genres still capable of drawing a mass audience. The next round of negotiations for MLB national TV rights will commence this year as the current deals with ESPN, Fox and Turner expire after the 13 season. Despite flat regular season ratings and the aforementioned declining ratings for the WS and ASG, the current rights holders are expected to bid aggressively with Fox and Turner looking for live sports to boost both distribution and subscriber fees for, respectively, FX and TruTV. In addition, the newly minted NBC Sports Network, backed by Comcast’s deep pockets, is in dire need of more popular programming if they are indeed serious about competing with ESPN. MLB’s current national TV deals bring in approximately $700 million annually. The next round of deals is expected to boost that number to approximately $1 billion annually.

The NFL recently concluded negotiations on extensions with ESPN and their over-the-air broadcast partners. A significant component to all those deals is the so-called “TV Everywhere” initiative which allows (or will eventually allow) the league’s media rights holders to deliver games to their customer’s TVs, tablets, PCs, phones and devices that have not yet been imagined. From my November post:

When MLB’s existing national media deals with ESPN, Fox and Turner were negotiated during the middle of the previous decade, they were largely about TV rights. This next round of national media rights negotiations will be about much more than TV as ESPN, TWC and Fox have rolled out “TV Everywhere” offerings. Tim Brosnan, Major League Baseball’s executive vice president of business operations, told the SportsBusiness Journal earlier this year that “TV Everywhere” is one of the factors in the rapidly escalating value of sports programming rights. “The TV Everywhere revolution that we see happening is part of the driver in this increase in sports rights,” “There is value added when content providers can go on a multiplatform basis.”

But, MLB is unique amongst the so-called “big 4” in that TV rights are controlled by MLB while digital rights are controlled by MLBAM. While MLB’s partners are accustomed to, if not irritated by, negotiating separate marketing and media deals for MLB’s TV and digital, this next round of “TV” negotiations will see this issue become much more contentious. The Sports Business Journal’s media reporter John Ourand wrote a column titled, ESPN and MLB are on a TV Everywhere collision course. John notes that MLB.com is booming, bringing in more than $500 million annually, much of that from online subscriptions (MLB.tv). Obviously, BAM doesn’t want to cannibalize their online video offerings. On the other hand, John notes:

But TV Everywhere has reached critical mass. ESPN now has TV Everywhere deals with companies that represent around 40 percent of the country’s pay-TV subscribers, including the two biggest cable operators (Comcast and Time Warner Cable) and the biggest telco (Verizon). More importantly, ESPN has TV Everywhere deals with all the sports leagues with which it does business.

In its upcoming media rights negotiation with MLB, sources say ESPN has made it clear that it plans to make one bid that wraps in linear TV and digital rights. Up until now, that hasn’t been the case. MLB’s current TV partners interested in TV Everywhere have had to cut separate deals with MLBAM to gain those rights, in addition to the bigger deals with MLB for linear TV rights.

MLB has been, far and away, the most successful amongst the “big 4” in capitalizing on digital media. While BAM has endured criticism on a number of fronts; opposition from some clubs with large equity stakes in RSNs over control of local digital rights, the failure to capitalize on “in market” streaming of live games, exerting too much control over club marketing initiatives on team websites, a secondary ticketing deal with StubHub which some clubs believe has cannibalized their primary sales, a monopoly over online video which ignores the reality of how many young fans consume media via blogs and social platforms….ultimately, BAM is worth a reported $ 2 - $3 billion, which contributes handsomely to the value of all 30 franchises. As well, as mentioned, BAM generates $500 million plus in annual revenues (how much of that is returned to the owners annually is a guessing game). The broadband delivered MLB.tv and At Bat mobile app are both hugely successful offerings. And BAM is unquestionably the industry leader in live online video, providing back end streaming and authentication technologies to the likes of MMOD and ESPN3.

But the upcoming negotiations between BAM and ESPN, and the role of digital rights in any resulting partnership, is a signature moment for MLB. The importance of this negotiation goes beyond the amount of dollars that ESPN is willing to pay MLB. As mentioned, there are many other suitors for MLB’s national TV rights. The bigger issue for MLB may be the loss of profile and status amongst sports fans if their games disappear from ESPN. After accepting OLN’s (subsequently Versus and now NBC Sports Net) offer over ESPN’s, the NHL subsequently received significantly less exposure on SportsCenter. Rightly or wrongly, ESPN has enormous influence over the interests and consumption of sports fans. And ESPN is, understandably, decidedly less motivated to provide exposure to a property that they do not own the rights to. Can MLB cut a deal with ESPN without crippling BAM? Can MLB afford to sever their relationship with ESPN over their “TV Everywhere” demands? The role of BAM in MLB remains as interesting as ever.

SELECT READ MORE TO SEE THIS WEEK'S GREAT LIST OF TIDBITS

TIDBITS

  • Whether or not a city is home to professional baseball is inevitably linked to whether or not public dollars are available to construct/renovate a ballpark for the club. The number of cities vying for professional baseball always exceed the number of franchises, leaving owners and leagues in an advantageous position. Late last year, the CA Supreme Court upheld Governor Jerry Brown’s decision to abolish hundreds of redevelopment agencies. LWIB, Josh Leventhal of Baseball America wrote that the court’s ruling is likely to have a direct impact on minor league baseball in the Golden State:

Building a ballpark in California isn't impossible, but unearthing the dollars to get digging is going to require some creativity following the state's Supreme Court ruling just before the New Year.

The court upheld California Gov. Jerry Brown's earlier decision to abolish redevelopment agencies as part of a 2011 budget compromise, essentially wiping out state funding for local construction projects—like ballparks.

The Padres' Triple-A Tucson affiliate is the most immediate casualty of the ruling, as its plan to settle in the San Diego suburb of Escondido is now dead. But the decision also affects the California League, which is trying to find new or renovated ballparks for a pair of its clubs.

Josh goes on to speculate that the future of the Tucson franchise is uncertain. Last season the club had the worst average attendance in all of Triple A. Padres owner Jeff Moorad owns the Triple A franchise and is likely to sell it if Escondido does not construct a new ballpark. According to Josh, Moorad has stated that he has been contacted by 3 parties, all outside CA, expressing interest in the franchise. One of the potential new homes is reportedly El Paso. Josh also tells us that the 2 California League franchises most affected by the state’s abolition of redevelopment agencies are Bakersfield and High Desert. A transfer of those 2 franchises to the Carolina League is evidently an option.

  • I haven’t played fantasy baseball since the weekly photocopied updates were delivered via inter-office mail. My, how times have changed….Eric Fisher reported that MLBAM, in partnership with CBSSports.com, is endeavouring to make fantasy baseball a real time experience. A la Apple’s iTunes Store, CBSSports.com will soon allow “..outside developers full access to its fantasy sports games and underlying data to develop commercial products..” Eric adds:

MLBAM, already a business partner of CBSSports.com, is using the platform to develop an application in which subscribers to the MLB.TV online live game package will be automatically directed to the game most relevant to their specific fantasy team. Users of the application will also receive personalized live scoring updates in real time as they watch games online.

“We’re now giving people the chance to actually watch fantasy baseball live,” said Kenny Gersh, MLBAM senior vice president of business development. “We’ve always talked about this sort of thing, but we’re now bringing the idea to life.”

  • In December 09, Maury Brown detailed the baseball analytics products that Bloomberg Sports had just debuted. Bloomberg rolled out different offerings, targeting both fantasy players and MLB front offices. Bloomberg’s partnership with MLBAM allows them to access BAM’s real-time statistics and location-based data and video. Last year, Eric Fisher reported that 17 MLB teams were using Bloomberg’s baseball analytics tools. LWIB, Paul Sullivan reported that the Cubs announced they are partnering with Bloomberg to design customized analytics tools for the team. Not surprisingly, this move coincides with the hiring of GM Theo Epstein. Said Epstein, “For a baseball team these days, it’s usually software that helps you manage scouting reports, statistical information, medical information, contract information and incorporate video and have it at your fingertips. The quicker you can get the information, the better you can analyze it and the better you can do your job.”
  • MLB typically rewards franchise owners who succeed in getting a new ballpark constructed by awarding them the opportunity to host an ASG soon thereafter. LWIB, the speculation continued that it will be Minnesota’s turn in 14. See Joe Christensen.
  • YES Network continues to be the most-watched RSN in the country. And I don’t know if there is anything too petty for some Yanks and Red Sox fans to bicker over (not likely, this is the internet) so, “YES averaged 30,000 Total Day TV households in the New York DMA in the 2011 broadcast year. By comparison, NESN (Boston) was second in Total Day TV households with an average of 23,000.” Jason Dachman also reported that YES attracted more viewers last year than the three other NYC RSNs combined (including the Mets’ SNY). There are a bunch more measurements and metrics in the report if you want.
  • Is an Eastern League franchise relocating to Ottawa in 13? I sure hope so, because I live there. LWIB, Ottawa Mayor Jim Watson, responding to local press reports that stadium lease negotiations between the city and prospective franchise owners were stalled, reassured residents that prospects remain bright for the return of professional baseball. See David Reevely.
  • LWIB, Justin Verlander announced on “Conan” that MLB, with partner 2K Sports, will again this season present their “$1 Million Perfect Game Challenge” as part of MLB 2K12. An added twist this season will be the introduction of a final eight-person live tournament to decide the winner. See Hayley Tsukayama.

You can follow me on Twitter @PeteToms


Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.

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