For those that followed the Extra Innings saga recently (see The Biz of Baseball Extra Innings/MLB Network article archive), you know that we kept saying that it wasn't really Extra Innings that was at the heart of reaching an agreement with the key players (DirecTV, iN Demand, DISH, Cablevision, Charter, etc.), it was how MLB wanted carriage of what is now called the MLB Network to be handled.
As we now know, it was the pressure of Extra Innings that drove the players on the opposite of the table from MLB to get the MLB Network on the basic tier, not the sports tier. By making carriage of the MLB Network integral to Extra Innings, when MLB launches the channel in 2009 it will make the largest cable channel launch in the history of television. Richard Sandomir of the NY Times has a very good retrospective of the Extra Innings/MLB Network deal, and within it, key information on it becomes available. As reported:
The lucrative deal will:
¶Pay M.L.B. an average of $80 million annually for Extra Innings.
¶Generate total cable subscriber fees of $112 million in 2009 and $152.7 million in 2015, according to a presentation made to owners on May 17 in Manhattan by the investment firm Allen & Company. Baseball must split those revenues with cable and DirecTV.
¶Produce advertising revenues that will rise to $65 million in 2015.
¶Create an asset in the new network that Allen estimates is worth $1.2 billion to baseball, based on its two-thirds ownership stake. DirecTV ended up with a 16.67 percent stake, Comcast with 8.34 percent, Time Warner 6.35 percent and Cox 1.98 percent, based on their proportional shares of subscribers in the network.
The figures cited by Sandomir are truly impressive.
As mentioned repeatedly, control of the channel as an asset is a key piece in why MLB was so focused on the channel. By controlling the asset, you remove the middle-man, and increase the value. MLB has always been very tight with film footage, charging high fees for rebroadcasting of nearly all of it. With that, they sit on a goldmine of material for the new network given MLB's longevity and frugal nature with the content.
Think of it... while the NFL has been a blip in time by comparison to MLB, NFL Films has been around since 1962. MLB has had no such outlet, thus holding their treasure trove of footage close to the vest. With that, footage that many have not seen since they aired live, may now be broadcast, and with that, interest will be fairly high for classic game footage.
It remains to be seen if the channel will hold the collective conscious of Cable Channel Nation. Given the fact that the channel will launch to 47 million households, it is bound to be a let down based purely on the gaudy number of cable households. MLB, however, gets the last laugh, upstaging the NFL, and more than that... bragging rights for being able to pull off a deal that at one point had consumers outraged, Congress breathing down their back, and cable operators in a tiff, and coming out smelling like pure green.