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Update on Extra Innings Negotiations Print
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Written by Maury Brown   
Tuesday, 03 April 2007 04:54

Dish NetworkMore details have surfaced on where the negotiations are at on Extra Innings, the MLB television package for out-of-market games.

The Sports Business Daily reports that, “One of the holdups for EchoStar is the lack of a firm proposal on equity ownership of the MLB Channel, one Dish Network source said. It’s not clear how much ownership of the channel MLB and DirecTV is willing to give, or whether DirecTV's 20% stake would be diluted.”

Added MLB president and COO Bob DuPuy, “No deal is possible without the agreement of DirecTV. We have a contract with them and they have been fully engaged in the process, including any extensions.”

The Biz of Baseball is interested in your comments on this matter. Selecting any post on the site will allow you to do so. For this thread, you can also select this link for comments

 
Deadline Removed for Extra Innings Deal Print
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Written by Maury Brown   
Tuesday, 03 April 2007 01:16

MLB Extra InningsMLB's self-imposed deadline for the incumbents, iN Demand and DISH Network, has been lifted, according to Eric Fisher of the Sports Business Journal via the Sports Business Daily's "Morning Buzz". 

MLB President & COO Bob DuPuy said late yesterday, "We will continue discussions until we reach a deal or it becomes apparent we cannot."

In the interim, DirecTV becomes the exclusive provider of Extra Innings.

More details should be forthcoming via the Sports Business Daily when the expanded issue runs later today.

Look in the comments for more details until that time on The Biz of Baseball. 

 
Wall Street Journal on Extra Innings Deal Print
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Written by The Staff   
Monday, 02 April 2007 19:59

DirecTV and MLBAs the Extra Innings watch drifts into Day 4, the Wall Street Journal provides a "Review and Outlook" editorial entitled Water Boys (subscription required). "Water Boys" being a reference to Senators Kerry and Specter, who the WSJ believe are "carrying the water" for iN Demand and DISH.

In the editorial they write:

Last time we looked, access to every baseball game was not a human right. If it were, and if that were the Senators' true concern, they might have made a fuss about local games in Philadelphia (including the Eagles, Phillies and Flyers) being available only to customers of Comcast, from the Comcast Sports Network. Nor is cable some kind of weak sister in danger of being crushed by relatively small DirecTV. What we have here are the folks who only recently enjoyed a stranglehold -- and still do in many markets -- trying to fight off competition and real choice for consumers.

On the bright side, while baseball officials continued to talk with InDemand and Echostar yesterday, the League has stood firm so far -- asserting its right to do honest business without government interference, and pointing out that it has offered every interested party a fair bite of the pie. Perhaps that's why, for all the spotlights baseball attracts, most of Congress seems uninterested in butting into a private commercial deal.

Remember... You can add your comments on this article here on The Biz of Baseball  

 

 
Kerry Statement on Extra Innings: "We're Waiting on You" Print
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Written by Senator John Kerry   
Monday, 02 April 2007 09:54
Senator John KerrySen. John Kerry issued the following statement today, Opening Day, regarding the exclusive deal between Major League Baseball (MLB) and DirecTV. This lack of closure means that thousands of fans can not view the season's first game.

"It is opening day. The baseball season has begun and we're still waiting for the business guys to get the show on the road and meet their obligation to the fans. Many fans are now denied access to their favorite team because executives haven't resolved relatively minor business differences. That is wrong. I want to see an agreement that is good for fans and consumers. The parties must push ahead with discussions and must not abandon baseball's greatest fans, who have been thrown a curveball."

 
Day 3: Extra Innings Watch Goes into "Extra Innings" Print
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Written by Maury Brown   
Monday, 02 April 2007 02:59

MLB Extra InningsThe watch continues...

MLB's self-imposed deadline came and went at midnight on March 31st, and with that speculation as to whether MLB Extra Innings will be available on cable and DISH Networks continues. As The Biz of Baseball reported extensively through the weekend, the talks are on-going, and by all accounts, today will be the last day that any deal can be brokered to bring iN Demand and EchoStar's DISH Networks back into the picture.

The Sports Business Daily's "Morning Buzz" covers less than we are here at this time. The Sports Business Journal has not yet published its online edition for Monday, and it will remain to be seen whether any more details will be forthcoming there.

The Biz of Baseball will be glued to the news on this matter on what is now officially Opening Day.

For those of you that are just now joining The Biz of Baseball after the weekend, note the new feature added to the site which allows you to comment on a particular subject. We hope you will take advantage of this new feature today.

Reminder... If you register on The Biz of Baseball, you can receive notification by email of any original content, new features and breaking news.

  • UPDATE 2007-04-02 - 08:52:58 PDT: Multichannel News is reporting that, "A spokeswoman for In Demand said Rob Jacobson and other senior staff members continued talks on Sunday with MLB and the parties were still in engaged in discussions at presstime."

As of 4:25 p.m. [Monday], executives for the league and In Demand, which represents cable operators, were still hashing out a deal, In Demand spokeswoman Ellen Cooper said.

....

With five MLB games completed and two other games in progress as of [Monday] afternoon, DirecTV remains the exclusive provider of Extra Innings this season. The package had previously been available on DirecTV rival EchoStar’s Dish Network, along with cable operators that obtained the games through In Demand.
 
DuPuy on Extra Innings Talks: "It won't go on indefinitely" Print
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Written by Maury Brown   
Sunday, 01 April 2007 12:32

2007-04-01  18:35:27 PDT:

New, via the AP

Bob DuPuy, baseball's chief operating officer, had set a March 31 deadline but said Sunday that the parties were still negotiating.

"It won't go on indefinitely," he said of the talks.

The Hollywood Reporter adds:

"Talks are still ongoing," an MLB spokeswoman said mid-afternoon Sunday. She declined to detail the talks further.

Another source said the parties hoped to wrap up a deal by Monday but that there were "no assurances."

 
Day Two: Extra Innings Watch - Opening Day Print
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Written by Maury Brown   
Sunday, 01 April 2007 02:59

Welcome to Opening Day 2007!

As you sit down and get ready for the season, many a fan that has moved away from their beloved team is looking for any way they can to catch them on television. If you're on The Biz of Baseball, it's most likely because you have done so watching Extra Innings, MLB's package that allows you to watch out-of-market games.

As we reported yesterday, MLB extended the deadline with iN Demand and EchoStar to try and see if they can work a deal to keep Extra Innings on cable and DISH Networks. If they do not work out a deal, Extra Innings will be exclusively available on DirecTV as part of a 7-year, $700 million deal.

Biz of Baseball has been tracking the negotiations extensively, so much so that we have a dedicated section of the site, just for it. Selecting the link to this article, and looking at the navigation tier to the left will show DirecTV/Extra Innings as a sub-section under Media News.

If you don't want comb through the archive, here's a recap of where we stand:

  • One of the key sticking points prior was matching the same number of households that DirecTV has signed on to do. iN Demand has said it will meet that provision via 80% of their digital households.

    The sticking point now is the ownership equity component of The Baseball Channel. Recall that MLB has offered DirecTV a 20% ownership stake, but that is based on exclusivity. If iN Demand becomes a player, DirecTV's equity in ownership would need to be diluted.

  • EchoStar, who runs DISH Networks, appears to be in the same position, and last week it was reported by the Sports Business Daily, "EchoStar's Dish Network appears much closer than cable's InDemand to striking a deal with MLB to carry Extra Innings and the planned MLB Channel, marking a potentially significant breakthrough in the distribution logjam that has lasted for months."

    Like iN Demand, they too will not work a deal without ownership equity.

  • MLB will continue to keep the 80% ownership in The Baseball Channel, thus negotiations are now around splitting up the 20% stake between 3 parties (DirecTV, EchoStar, and iN Demand).

Stay tuned.

UPDATE: 17:03:33 PDT: Word is the sides are still talking at this hour. Stay tuned and let us know your thoughts via the comments.

 
Extra Innings: Deadline Extended for Cable & DISH Print
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Written by Maury Brown   
Saturday, 31 March 2007 16:14

Extra InningsAs Biz of Baseball reported earlier this evening, the deadline for iN Demand and EchoStar will be pushed out till tomorrow in an effort to allow cable and DISH Networks to continue to show Extra Innings, MLB's out-of-market package for television. As reported by Richard Sandomir of the NY Times:

Tim Brosnan, M.L.B.’s executive vice president for business, said that the deadline would expire at the end of today.

“We continue to talk,” he said, “and we wouldn’t have extended the deadline if we didn’t think we could bring everybody in.”

If a deal cannot be reached, DirecTV will carry Extra Innings exclusively. DirecTV has agreed to make the MLB Channel available to 15 million subscribers in 2009; the league and InDemand have differed over the terms of making the network available to its digital cable subscribers.

InDemand and Dish would like a stake in the channel; for being the first to agree to carry it, DirecTV owns 20 percent.

The Biz of Baseball will be reporting on this matter till a deal is reached, one way or another.

Stay tuned, and comment. We thank all of you for swinging by today.

 
Confirmation of Sat. Meetings on Extra Innings Print
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Written by Maury Brown   
Saturday, 31 March 2007 12:52

Maury BrownI had the good fortune to work closely with Marc Narducci of the Philadelphia Inquirer for a column he ran yesterday on the Extra Innings deal. Within in it I mention how The Baseball Channel is a large part of MLB's long-term strategy, but beyond that, Narducci wrote:

Negotiations among MLB, Dish Network and iN Demand are continuing.

"We are trying to get everybody in," said Tim Brosnan, executive vice president of business for Major League Baseball. "That is our goal."

Mutichannel News also is backing Narducci's article by reporting:

Down to their last out, Major League Baseball and In Demand Friday were still trying to hammer out a last-minute deal for cable to distribute the league’s “MLB Extra Innings” out-of-market game package.

As further reported by Multichannel:

Meanwhile, DirecTV last week began a national marketing campaign surrounding its Extra Innings package despite uncertainty over the package’s exclusivity. The satellite company ran a full page ad in USA Today touting the package as well as a 20% discount if purchased before April 7. It was unclear at press time what other national publications the ad was scheduled to run. 

As I've reported before, the deal was setup with a poison pill provision for iN Demand. The fact that iN Demand members Time Warner and Cox refused to put The NFL Network on the basic tier sets up a no-win situation for the cable consortium. How can iN Demand work a deal for Extra Innings without raising the hair on the neck of the 800-pound gorilla in the corner, the NFL?

Would it make good business sense for cable and DISH to be on-board? Absolutely.

LATE UPDATE: Word is coming via a source close to the situation that the midnight deadline seems flexible and that the sides are still talking. Stay tuned.

Maury Brown is the founder and president of The Biz of Baseball and an author for Baseball Prospectus. He can be contacted here.

 
The Civil Rights Game & Extra Innings Deal Print
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Written by Maury Brown   
Saturday, 31 March 2007 11:15

MLB and DirecTVIf there seems to be a lull in news on the Extra Innings deal, it might be for a reason. MLB has customarily worked diligently to not upstage any major on-the-field events, and today sees the Inaugural Civil Rights Game currently now ranks as one of those.

With the game well underway, it seems that word won't be coming until at least the end of the game; most likely later still.

In a nod to our East Coast observers, I would not be surprised to see an announcement later this evening via one of the major papers, possibly from Chass or Sandomir of the NY Times, or possibly Blum via the AP. I'm still monitoring email, the wires, the phone—what have you—to try and get word out as soon as possible.

Stay tuned and post your comments. 

 
iN Demand Appears to Be Out on Extra Innings Print
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Written by Maury Brown   
Saturday, 31 March 2007 06:03

The following seems to point to iN Demand being out of the picture for MLB Extra Innings, thus setting the stage for the possible deal to be exclusive on DirecTV barring EchoStar stepping forward.

The notification also shows that MLB and cable will still be locked in a confrontational position due to bulk-buying of MLB.TV. As we reported earlier, Cox Communications is offering rebates to any subscribers of Extra Innings last season. MLB has said that this practice is not acceptable. 

The following notification is being run on Comcast's website :

Due to a decision by Major League Baseball, Comcast, as well as many other cable operators will not be able to distribute the 2007 MLB Extra Innings out-of-market package.

If you are a current Comcast customer and subscribed to Comcast 2006 MLB Extra Innings, you should receive correspondence from Comcast no later than April 11, 2007 with an offer to help make up for the loss of MLB Extra Innings, with an opportunity to subscribe to MLB.TV. With MLB.TV you can use your computer to view all the same games you would see on TV with MLB Extra Innings.

If you do not receive notification by April 11, 2007, please call: 1-800-631-0258, and have your Comcast account number available for 2006 MLB Extra Innings subscription verification.

If you are a current Comcast customer and have subscribed to the 2007 MLB Extra Innings package, we will refund your payment in the form of a credit to your monthly bill.

In 2007, Comcast will be providing a great selection of up to 400 national, regional and local live televised baseball games, many in high-definition. We hope the combination of the MLB.TV offer and the large live televised schedule make up for the loss of MLB Extra Innings.

Again, should you need any assistance in signing up for MLB.TV after receiving your special offer in the mail, please contact: 1-800-631-0258.

 

 
D-Day for Extra Innings Deal - Update #1 Print
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Written by The Staff   
Saturday, 31 March 2007 01:41

Extra Innings2007-03-31 (06:56:26 PDT): Today is the final day for iN Demand and DISH Networks to try and reach an agreement to keep MLB Extra Innings as part of their content, keep thousands of fans from having to make the choice of possibly having to jump to DirecTV, watch out-of-market games on their computer via MLB.TV, or swear off watching out-of-market games all together, grab a book—or, if you can't break your MLB jones—opt for the radio.

The Biz of Baseball is going to track as many resources as possible during the day to try and break any news (if there is news) on the Extra Innings deal. As a note, Maury Brown is scheduled to interview Curt Schilling later this evening for Baseball Prospectus, and may not catch news at that time.

Stay tuned.

 
iN Demand and MLB Talks on Extra Innings “Serious” Print
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Written by Maury Brown   
Friday, 30 March 2007 05:55

iN DemandJohn Ourand and Eric Fisher of the Sports Business Journal are reporting via the Sports Business Daily that negotiations at the 11th hour between MLB and iN Demand to keep Extra Innings on cable are ongoing and “both sides are now characterizing the talks as extremely serious.”

Reportedly, MLB gives the odds of the deal occurring at 50-50 while cable representatives seem more pessimistic.

One of the key sticking points prior was matching the same number of households that DirecTV has signed on to do. iN Demand has said it will meet that provision via 80% of their digital households.

The sticking point now is the ownership equity component of The Baseball Channel. Recall that MLB has offered DirecTV a 20% ownership stake, but that is based on exclusivity. If iN Demand becomes a player, DirecTV's equity in ownership would need to be diluted.

 
Tick, Tick, Tick... Time Runs Short for MLB DirecTV Deal Print
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Written by Maury Brown   
Friday, 30 March 2007 02:20
DirecTV and MLB

With just over 36 hours till deadline for a deal to place MLB Extra Innings exclusively on DirecTV, time is running short for the incumbents—iN Demand (cable) and EchoStar (DISH Network)—to match DirecTV’s offer. MLB has asked the two to match the terms of distribution and financial considerations.

For those that have been looking for an update as to the state of these negotiations, meetings have reportedly been taking place between officials from MLB and executives with the incumbents, but no details have been forthcoming at this time. MLB has, in the past, been known to come down to the wire in negotiations, and it is possible that this deal may be no different.

There seems little doubt that MLB will not be granting an extension in the talks. Many consumers will make a decision to jump to DirecTV by Opening Day, and thus broaching a deal with iN Demand or DISH after that point would create difficulties with DirecTV, as well as upset consumers who might have stayed with their carrier otherwise.

News is still coming out in the media about the agreement, but nothing as yet about an agreement with DISH or iN Demand. As reported today in the Philadelphia Inquirer:

“In Philadelphia alone, more than 400,000 satellite subscribers are denied the ability to watch their hometown Phillies [or Flyers or 76ers] because of Comcast," testified Bob Dupuy, president and chief operating officer of Major League Baseball. "That is more than twice the number of subscribers the entire iN Demand syndicate had nationally for the Extra Innings package last year."

While this may seem like an argument over carrying the Extra Innings package, the bigger component is the MLB Channel.

"The MLB Channel is a long-term vision for baseball," said Maury Brown, founder and president of BizOfBaseball.com and a sports business analyst for Baseball Prospectus. "They are placing a large amount of emphasis on it from a growth potential standpoint for Major League Baseball."

Negotiations among MLB, Dish Network and iN Demand are continuing.

"We are trying to get everybody in," said Tim Brosnan, executive vice president of business for Major League Baseball. "That is our goal."

The Biz of Baseball will report any updates as soon as they are made available between now and the March 31st deadline

 
Stern Backs Selig & MLB on DirecTV Deal Print
Written by The Staff   
Thursday, 29 March 2007 17:44

 Selig, Stern and Jones

Major League Baseball Commissioner Bud Selig, center, flanked by Dallas
Cowboys owner Jerry Jones, left, and NBA Commissioner David Stern
takes part in apanel discussion at the 2007 ASNE convention in
Washington, Thursday, March 29, 2007.
(AP Photo/Lawrence Jackson)

Commissioner Selig got backing from a well known MLB ally, NBA Commissioner David Stern over MLB's proposed deal to make Extra Innings exclusively available on DirecTV. Selig and Stern spoke during a panel discussion sponsored by the American Society of Newspaper Editors. The panel also included NASCAR chief executive Brian France and Dallas Cowboys owner Jerry Jones. As reported by the AP :

Stern ridiculed Congress for holding a hearing on the deal this week.

"As a taxpayer, I think the most important thing the Senate should be doing is holding hearings on Bud's DirecTV package," Stern said sarcastically. "I don't care about health care or ... the war in Iraq."

The comments came during a broad discussion about the tension between sports and newspapers as leagues and teams often seek to announce news through exclusive deals with sponsors or on their own Web sites rather than the traditional media.

Jones said the disputes that flare up from time to time are "not about freedom of information. Our tension is there because we both have our eye on the same thing: to make exclusive certain content and sell it."
 
Extra Innings Deal Makes Poor Long-Term Business Sense Print
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Written by Maury Brown   
Wednesday, 28 March 2007 06:21

Maury BrownYesterday saw several principle players in the Extra Innings saga testify before the US Senate Committee on Commerce, Science, and Transportation at a hearing entitled Exclusive Sports Programming: Examining Competition and Consumer Choice. Rob Jacobson President and Chief Executive Officer for iN DEMAND Networks, Bob DuPuy President and Chief Operating Officer for Major League Baseball, Chase Carey Chief Executive Officer for DIRECTV Group, Inc., and Carl Vogel President & Vice Chairman EchoStar Satellite L.L.C. all had time at the microphone.

As the prepared statements provided here on The Biz of Baseball show, there are some key facets—namely the upcoming The Baseball Channel—that are creating the impasse on getting all the incumbents in a place to carry Extra Innings.

In a nutshell, DirecTV has offered to pay for the rights to show The Baseball Channel up-front, and now. Given the fact that ratings for NFL Network have not exactly been stellar (the heavily hyped debut game on the fledgling network pulled an averaged 4.2 million total viewers and a 2.3 household rating according to Nielsen, nearly one-third what Monday Night Football pulls on ESPN), you might understand why Robert Jacobson of iN Demand offered up a compromise deal in his opening statement. “If The Baseball Channel launches in 2009, we would give MLB the right to cancel the Extra Innings deal if it cannot reach a satisfactory agreement for carriage of the new channel with our owners,” Jacobson said. “This would put off the issue of The Baseball Channel until it actually launches and ensure that for the next two years at least, all baseball fans will have access to the Extra Innings package.”

After the statement was made, Sen. John Kerry (D-MA) asked Bob DuPuy, “"What's the matter with that?”

Well, here’s what’s the matter with that: If MLB re-negotiates with iN Demand, MLB has to renegotiate with DirecTV, and possibly EchoStar if they get onboard. The exclusive deal takes the risk off MLB and places it on DirecTV. As mentioned, if ratings for the NFL Network are not high by comparison to games shown on ESPN, how will MLB fair? After all, the NFL enjoys a vastly more popular product. Also, by DirecTV offering an up-front payment as opposed to iN Demand’s offer make The Baseball Channel available on a per subscriber basis, MLB has those funds available for any start-up costs involved in launching The Baseball Channel.

(Select Read More to view the rest of Maury Brown's article) 

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SBD: EchoStar Closer to Deal than iN Demand Print
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Written by The Staff   
Tuesday, 27 March 2007 13:19

Dish NetworkJohn Ourand and Eric Fisher of the Sports Business Journal report today on the Sports Business Daily that, "EchoStar's Dish Network appears much closer than cable's InDemand to striking a deal with MLB to carry Extra Innings and the planned MLB Channel, marking a potentially significant breakthrough in the distribution logjam that has lasted for months."

Further reporting by Ourand and Fisher indicate that MLB and DirecTV are considering EchoStar's offer, which most likely would ask for an equity stake in The MLB Channel as is currently the deal with MLB and DirecTV's agreement.

 
Video Archive of Hearing on DirecTV / Extra Inninngs Deal Print
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Written by The Staff   
Tuesday, 27 March 2007 07:48

DirecTV and MLBThe hearing on the proposed deal to make MLB Extra Innings exclusively available on DirecTV has concluded, and with that, a video archive is now available (Real Media format only).

Below, on The Biz of Baseball, are the opening statements of the witnesses at today's hearing, as well as Sen. John Kerry's opening statement.

Highlights of the hearing, as reported by the AP include:

Kerry, often playing the role of mediator, got behind the effort [offered by iN Demand to offer up Extra Innings for two years before the launch of The MLB Channel, should they not reach an agreement on the 24-hour baseball only channel].

"What's the matter with that?" he asked Bob DuPuy, baseball's chief operating officer.

"We believe that DirecTV has the right to begin to help us build the channel," DuPuy answered, adding that the cable industry had nine months to negotiate a deal.

Kerry pressed the issue, suggesting that the status quo be kept in place while the sides tried to work out a deal.

DuPuy wouldn't agree to that, although he said, "Our door remains open" for a resolution.

 

 
Opening Statement: Robert Jacobson of iN Demand Print
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Written by Robert D. Jacobson   
Tuesday, 27 March 2007 07:28
TESTIMONY OF ROBERT D. JACOBSON,
PRESIDENT AND CEO
iN DEMAND L.L.C.
before the
U.S. Senate Commerce, Science, and Transportation Committee


Hearing on Exclusive Sports Programming: Examining Competition and Consumer Choice
March 27, 2007


Mr. Chairman and Members of the Committee, my name is Rob Jacobson, and I am President and CEO of iN DEMAND.

iN DEMAND is a programming company owned by Comcast, Time Warner Cable, and Cox Cable. We provide sports, movies, and other entertainment programming through our INHD high-definition channel, pay-per-view, subscription video-on-demand, and out-of-market sports packages. We sell these services to a variety of distributors, including cable, overbuilders, telcos, and DBS. Our sports packages include NHL Center Ice, NBA League Pass, MLS Direct Kick, and until this season, MLB Extra Innings. We have been effectively frozen out of negotiations with the NFL Sunday Ticket by the NFL.

There has been a lot of controversy about DIRECTV's attempt to get exclusivity for MLB's "Extra Innings" package. MLB recently said it would offer that package to us, but for reasons I'll explain, that offer was unreasonable -- and clearly designed to protect the exclusive arrangement that had been previously been agreed to by DIRECTV and MLB.

In order to break the logjam and ensure customers across American have access to the games, last week we made a counter-offer. We agreed to carry Extra Innings and The Baseball Channel, a new MLB channel not projected to launch until sometime in 2009, on the same terms as DIRECTV -- which is what MLB publicly said they were looking for. Our offer was NOT exclusive. We're ready to execute an agreement by Opening Day. MLB immediately rejected that offer.

Even now, we would enter into a deal for carriage of Extra Innings on the same terms of DIRECTV. If The Baseball Channel launches in 2009, we would give MLB the right to cancel the Extra Innings deal if it cannot reach a satisfactory agreement for carriage of the new channel with our owners. This would put off the issue of The Baseball Channel until it actually launches and ensure that for the next two years at least, all baseball fans will have  access to the Extra Innings package. We think this is a fair compromise.

Let me give you a little history and tell you why our offer is in the best interest of sports fans everywhere.

(Select Read More to view the rest of Jacobson's testimony) 

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Opening Statement: Stephen F. Ross on DirecTV Deal Print
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Written by Stephen F. Ross   
Tuesday, 27 March 2007 04:32
RESTORING THE MARKET FOR OUT-OF-MARKET BASEBALL
Testimony of Professor Stephen F. Ross
Director, Penn State Institute for Sports Law, Policy and Research
The Pennsylvania State University
Before the
Senate Committee on Commerce, Science and Transportation
March 27, 2007
 
Mr. Chairman and Members of the Committee:
 
          It is an honor and privilege to be invited to join a panel of industry leaders to offer an independent view, based on over two decades of scholarship and teaching concerning sports and competition policy, in discussing the impediments to the free flow of interstate commerce as millions of Americans seek ways to take advantage of technological advances to watch non-local Major League Baseball games in their homes.
 
General Thoughts on Exclusive Dealing
 
          The issue before the Committee today is whether the exclusive dealing arrangement between Major League Baseball (MLB) and DirecTV, whereby DirecTV becomes the only source for out-of-market games not shown on national networks, is in the public interest.  As the Supreme Court has recognized,1 exclusive dealing arrangements are both legitimate and indeed can have pro-competitive effects.  In traditional markets where consumers have free access to retail markets, the Court has declared that, as a matter of antitrust law (in my view, this reasoning also applies to sound regulatory policy), these arrangements should only be questioned when there is a serious risk that they will foreclose access to supply or outlet by other firms.2  Thus, an agreement by Sears to exclusively sell Levi’s blue jeans is unlikely to harm consumers; there are ample other retail outlets for Levi’s rivals, and ample other jean manufacturers for Sears’ competitors.  If there are efficiencies in exclusivity, the likely market response is for Lee to reach an exclusive deal with Macy’s, etc.   Consumers unhappy with Sears’ selection are only harmed to the extent they have to walk across the shopping mall.
 
Harm to baseball fans
 
          In contrast, baseball fans face significant harm because of various pre-existing agreements as well as the recently announced exclusive MLB/DirecTV deal.   Those who have other reasons to prefer DishNetwork or cable must either forego quality telecasts of out-of-market baseball games,3 or suffer exploitation by subscribing to multiple multi-channel video distribution platforms that require the purchase of duplicate programming and unnecessary equipment.  The exclusive deal reinforces the harm that already befalls the millions of Americans who do not live within the local media market of their favorite team, because of a horizontal market division agreement entered into by MLB owners that, in the context of football, has been illegal for over 50 years.4  There is no public interest justification in forcing consumers to purchase a distribution platform that is inferior for their needs, or duplicate platforms, just to watch their favorite teams.  These consumers include:
 
  • Residents in areas with heavy thunderstorm activity (such as Florida) who prefer cable because of concerns about weather-related interference with important sports broadcasts
  • Residents of local markets (like metropolitan Philadelphia and southern New Jersey) who are fans of local basketball and hockey teams but out-of-market baseball teams, and would under planned agreements be required to subscribe to cable for some teams and satellite for others
  • Virtually all residents of states without a local team (like Alaska, Hawaii, or Nevada) or states with many retirees from other states (like Florida, California, or Arizona): there is no reason that the only way they can watch games of their favorite teams is to acquire a single product, MLB ExtraInningsTM,  from a single retailer, DirecTV
  • Consumers in multi-residence dwellings who are not allowed to select their preferred retailer, and where the landlord, homeowners’ association, or other decision-maker is insufficiently interested in baseball to switch to DirecTV
 
(Select Read More to see the rest of Ross' opening statement)
 
Read more...
 
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