MLB, DirecTV strike deal
Seven-year agreement for Extra Innings worth $700M
Posted: Thursday March 8, 2007 1:30PM; Updated: Thursday March 8, 2007 5:13PM
Major League Baseball has announced an agreement that will give satellite giant DirecTV what looks to be exclusive rights to the sport's Extra Innings package of out-of-market games. The agreement, announced formally at a press conference Thursday afternoon, is reportedly worth $700 million over the next seven years and includes a provision in which DirecTV will become a minority partner and will work with baseball on the MLB Channel, scheduled to launch in 2009.
The proposed agreement has drawn criticisms from several corners, including from Sen. John Kerry (D-Mass.), who asked the Federal Communications Commission to look into the deal. "I am opposed to anything that deprives people of reasonable choices," Kerry said in a recent letter to FCC chairman Kevin Martin. "In this day and age, consumers should have more choices -- not fewer. A Red Sox fan ought to be able to watch their team without having to switch to DirecTV."
The Extra Innings package, which enables consumers to view up to 60 out-of-market games per week for a fee of around $179 a season, has been available on DirecTV, Dish Network (DirecTV's main satellite competitor) and cable television systems through In Demand. Under the deal, DirecTV will be the exclusive carrier of the Extra Innings package if Dish Network and In Demand, before the start of the season, do not match the rates and requirements to carry Extra Innings and the MLB Channel at the same level of commitment that DirecTV has agreed to in the deal. Baseball officials would not publicly disclose what terms that DirecTV has agreed to and what terms Dish and In Demand would have to meet.
Many consumers had complained about the inconvenience and cost of switching from cable or Dish Network to DirecTV. Estimates vary, but if the move ends up an exclusive for DirecTV, more than 200,000 of last year's approximately 500,000 Extra Innings subscribers will be forced to make the switch to DirecTV if they choose to keep the package this season. Some, because of restrictions in getting the satellite signal, may not be able to make the conversion.
Baseball commissioner Bud Selig has downplayed the controversy over the deal, calling it "ridiculous," and claiming that only a small number of consumers who previously received the Extra Innings package through cable will be unable to get a DirecTV satellite signal. Chase Carey, DirecTV's president and chief executive officer, put that number at about 5,000 users in a statement in the Los Angeles Times. Others estimate the number at far greater than that.
"Of course we're sensitive to our fans," MLB president and chief operating office Bob DuPuy said. "But we're happy with our arrangement with DirecTV."
Said Tim Brosnan, the executive vice president of MLB: "This has been [done] with months of open, competitive negotiations. That choice, to whether these ... end up on cable, will not be ours, but cable's."
Dish Network assailed the new agreement. "When our customers are suddenly cut off from watching their favorite sports teams on TV," the company said in a statement, "it is time to ask whether the market is working. This is both anti-competitive and anti-consumer."