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William Oscar Johnson
December 26, 1988
Two megabuck TV deals may change the face of baseball for good, or not so good
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December 26, 1988

A Whole New Game

Two megabuck TV deals may change the face of baseball for good, or not so good

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Two events of stunning proportion have rocked sports television in the past two weeks. On Dec. 13, CBS obtained exclusive network rights to major league baseball for four years, beginning in 1990, with a bid of $1.08 billion. Each season CBS will televise the All-Star Game, both league championship series and the World Series, as well as 12 regular-season games. On Dec. 9, New York Yankees owner George Steinbrenner closed a deal with a New York cable network that will pay the Yankees $500 million for the right to broadcast the team's games locally for the next 12 years.

First, the CBS deal. Don Ohlmeyer, a former producer at ABC Sports and now chairman of Ohlmeyer Communications, said last week, "This is an incredible change in the balance of power in TV sports. [Commissioner] Peter Ueberroth did a masterful job. He has left a tremendous legacy for the sport."

Said Sean McManus, a former vice-president at NBC Sports and now an executive at Trans World International, a Los Angeles production company, "Financial realities aside, this is an enormous programming and prestige coup for CBS. It now has got a virtual monopoly of major sports series." And Chuck Howard, formerly a vice-president at ABC Sports, concluded, "I don't think there has ever been a bigger surprise in the history of this business."

Before NBC, ABC and CBS submitted their bids to Ueberroth, almost everyone in television suspected that CBS would make only a token effort to gain the baseball rights. After all, it hadn't seriously sought baseball since 1964, the last year it televised the sport nationally. NBC and ABC have shared baseball since '76, with each carrying the World Series or the playoffs in alternate years. The current six-year contract, which expires after the '89 World Series, cost NBC $525 million and ABC $575 million. ABC says it has lost money on the deal—perhaps as much as $50 million a year—and NBC is believed to be doing no better than breaking even.

Most observers assumed that NBC would walk off with a hefty piece, if not all, of the new contract. NBC has been broadcasting baseball since 1947, and the sport is as integral to the network as the Today show. True, only two weeks earlier NBC had committed itself to paying $401 million for U.S. broadcast rights to the 1992 Summer Olympics in Barcelona, but no one figured that deal would make it sacrifice its connection with the national pastime. In addition, the bottom-line-oriented executives who run Capital Cities, which owns ABC, had led many to believe that their network might put in a low bid and let NBC take over completely.

What no one outside CBS knew was how much it coveted baseball. As Neal Pilson, president of CBS Sports, revealed after the news broke, "I can tell you now that baseball has been our Number 1 priority since 1984. We wanted it more than anything else, including either of the '92 Olympics."

In May, CBS won the U.S. rights to the 1992 Winter Games in Albertville, France, with a bid of $243 million, which was $68 million more than anyone else had offered. It then came up almost $40 million short in its bid for the Summer Games. After the baseball deal was announced, some skeptics surmised that CBS had lowballed the Barcelona bidding so that it would have at least $1 billion to spend on baseball. One competing executive summed up CBS's coup this way: "All the money left on the table in the Olympic bidding was chump change compared with what CBS dropped for baseball."

Kibitzers were quick to point out that if every postseason series were to go seven games, CBS would get no more than 34 games a year and thus would be paying about $8 million per game, which comes to almost $1 million an inning. But even if the network loses money on baseball, the deal could make sense. For starters, of the three networks, CBS possesses the best portfolio of sporting events (see box, pages 34-35). Not only does it have the premier pro-football package (the NFC, which includes most of the biggest markets), a good college-football contract, exclusive network rights to the booming NBA and a college-basketball deal that includes exclusive network rights to the immensely popular NCAA tournament, it also has the Masters golf tournament and tennis's U.S. Open. "CBS has cornered the marketplace," says McManus, "and that means it can leverage its advertisers because its advertisers are severely limited in the non-CBS alternatives they have on TV sports."

Meanwhile the cupboards of the other two networks are comparatively bare. Once the colossus of TV sports, ABC has a good college-football package, Monday Night Football (a so-so performer these days); a middling college-basketball contract; and a number of individual events, including the Triple Crown races, the Indianapolis 500, the Rose Bowl, the Sugar Bowl and golf's U.S. Open, British Open and PGA Championship. ABC's biggest shortcoming, at least in terms of prestige, is that for the first time since 1960 it doesn't have either a Winter or Summer Games in its lineup. Indeed, after losing the Barcelona Olympics, the network decided not to adorn a new truck, which it had recently ordered, with its traditional ABC Sports Olympic slogan.

Despite its Barcelona victory, NBC seems to be in worse shape than ABC. The network of the AFC, NBC gets lower NFL ratings than CBS, and it has the weakest college-basketball package of the three. The same goes for its golf package and anthology show. Without baseball, NBC will have to come up with programming for 26 regular-season Saturday afternoons, plus all the postseason dates. It has no regular-season college football and no pro basketball, and last year it let ABC scoop up the Rose Bowl. Says Howard, "All of this may not leave NBC in total darkness, but it certainly leaves it with the weakest year-round network schedule since the 1960s."

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