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March 21, 2007
MLB to Cable: "Strike 1!"
By Shirley Brady
Cable operators repped by In Demand agree to match DirecTV deal to carry Extra Innings and launch the MLB Channel in 2009—but not on basic. MLB rejected the offer; now In Demand's crying foul.
The major cable operators that own In Demand—Comcast, Cox and Time Warner—today agreed to match DirecTV's terms and price ($700 million) in order to offer the Extra Innings out-of-market subscription games package for seven years and launch MLB's The Baseball Channel in 2009.
MLB swiftly rejected the offer. The reason: In Demand isn't agreeing to carry the channel on basic like DirecTV; it only agrees to offer the channel to the same number of subscribers (about 15 million) as DirecTV, or as today's In demand announcement says, "distribution to at least the number of subscribers to which DirecTV launches the channel." Its offer also includes a "most favored nations" (MFN) clause.
MLB stated that In Demand's offer "falls short of nearly all of the material conditions (among them requirements for carriage of The Baseball Channel and their share of the rights fees for Extra Innings) set forth in the Major League Baseball offer made to them on March 9," the day after DirecTV and MLB announced their Extra Innings contract renewal and 2009 launch of the Baseball Channel.
In Demand president and CEO Rob Jacobson countered: "By rejecting this matching offer, MLB has proven it never intended for In Demand to have a fair and equal opportunity to bid for Extra Innings. We, like many, many others, question MLB’s commitment to its fans by limiting distribution of both Extra Innings and The Baseball Channel. We have offered to carry The Baseball Channel to the same number of subscribers as DirecTV and have offered the same compensation to MLB as DirectTV. Our offer was fully responsive to MLB's requirements and public statements."
In Demand and MLB have until Mar. 31 to reach a deal ahead of baseball's Apr. 1 regular season start. Cox Communications' San Diego division this week hedged its bets by offering its 3,000 subscribers who purchased the Extra Innings package last year a 100% rebate if they sign up for the package on MLB.TV instead.
The U.S. Senate Commerce Committee still plans to hold a hearing on Mar. 27 looking into the MLB/DirecTV Extra Innings deal. It will be chaired by Sen. John Kerry, whose complaint to the FCC about DirecTV possibly getting an exclusive on Extra Innings, pushed MLB to (reluctantly) extend the package to its other incumbents, Dish Network and In Demand.
Today's In Demand offer on behalf of its cable operator owners:
iN DEMAND Networks, the world’s leading PPV and VOD distributor, today offered, on behalf of the cable industry, to carry Major League Baseball’s (“MLB”) Extra Innings package and yet-to-be-launched MLB Channel on the same terms contained in the MLB and DirecTV agreement announced recently.
iN DEMAND’s offer follows MLB’s publicly announced position that it would allow MLB Extra Innings to be offered to other incumbents—iN DEMAND and DISH Network—at consistent rates and carriage requirements, which the League had agreed to with Direct TV. iN DEMAND’s offer includes use of a broad "most favored nations" provision to ensure the comparability of all terms.
Other essential terms of the offer include: a seven-year commitment to continue to carry the MLB Extra Innings package of out-of-market games; plus carriage of The Baseball Channel by the iN DEMAND partners starting in 2009, with distribution to at least the number of subscribers to which DirecTV launches the channel.
"As the current home for Extra Innings for more than 200,000 cable subscribers, we have extended ourselves to do our best to be able to continue to provide this package to baseball fans and our customers," said Robert D. Jacobson, President and CEO of iN DEMAND Networks.
"This offer meets all the conditions set forth by MLB last week. Throughout this entire process, our goal has always been to respect the wishes of baseball fans who currently subscribe to Extra Innings through their local cable provider, and we stand ready to execute an agreement before the beginning of the baseball season," Jacobson said.
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