Scott's View and YOURS on the MLB Deal

[Greg Bimson]

I think I read somewhere in this forum that E* had about 50,000 subs last year for MLB. If accurate, it doesn't make any kind of sense to continue with the MLB package at these now exhorbatent prices. It seems to me that there is no way E* can charge subs what they need to just to break even.

Actually, I am now thinking the reverse.

Supposedly, there were 500,000 subscribers to EI, with 180,000 at cable. Dish Network could grab a large chunk of those subscribers if they signup for EI. They could also take away some from DirecTV.

Dish Network was happy to get the NFL Network in their lowest tier. If Dish Network wants to play in the arena, they should probably see what it takes to get EI so that CABLE is left out of it.

 

[Peter Parker]

Actually, I am now thinking the reverse.

Supposedly, there were 500,000 subscribers to EI, with 180,000 at cable. Dish Network could grab a large chunk of those subscribers if they signup for EI. They could also take away some from DirecTV.

Dish Network was happy to get the NFL Network in their lowest tier. If Dish Network wants to play in the arena, they should probably see what it takes to get EI so that CABLE is left out of it.

The problem with that is that if the cost of the package is really what is being said then the subscriber acquisition cost for those subs is pretty durned high.

 

[boston area dtv]

What I would like to know is how many E* subs, who are griping in this thread, actually subscribed to EI last year?

Or is this perhaps a lot ado about nothing.

 

[Scott Greczkowski]

Its not just Dish is cable TV as well.

 

[BobMurdoch]

What I would like to know is how many E* subs, who are griping in this thread, actually subscribed to EI last year?

Or is this perhaps a lot ado about nothing.

I did..... I'm a fantasy baseball fan, so it was worth it to me.....

 

[gjh3260]

Bingo. Screw MLB, save millions and pay the money to the local RSNs instead. Most of us will enjoy seeing our favorite teams.....

100% in agreement here......give my my RSN in HD and I will be happy. There is plenty of other baseball on ESPN, ESPN2, etc.........screw Extra Innings.

 

[RVD420]

Not exactly true, because they would collect revenue from other sources. First, you have to believe that they expect to add subs who want the package and thus they get increased MONTHLY revenue in addition to the EI revenue. Next, they get ad revenue, they also will be a part (minority) owner in the new MLB channel - thus, they collect from other sources also.

I keep reading in this thread how D* loses money on the NFL package. Just in case you missed the Bear Stearns D* analyst call this week - Chase Carey confirmed that DirecTV has 1.8 MILLION subs to NFL (and includes commerical establishments that pay BIG money). At the price last year (w/o SF) that brings them in OVER $400 million annually(and more than likely over $500m). It also attracts customers to them, and is a big part of their ability to RETAIN subs. Anyone really think they are losing money on this?

Well Concidering D* pays $700 mil a year for NFLST I would say by your numbers D* is losing about $200 mil a year on NFLST

 

[BobMurdoch]

The interesting omission here is Verizon. They didn't even give Fios a CHANCE to decide whether to play or not.....

 

[jpn]

Analog OTA gets its plug pulled in 2009---not analog cable.

I don't get it. Where is analog cable going to get analog feeds once the plug is pulled on analog OTA?

Sending analog streams down the wire is a total waste of bandwidth when the OTA source material is digital. Are you suggesting that cable ops are going to convert digital source material to analog for retransmission?

 

[bonscott87]

First I'll just say I don't care either way since I don't watch baseball.

Scott, I think you've got it wrong in what the terms are.

According to this news article

The deal has a window until the opening of the regular season for other providers like In Demand and DISH Network to match DirecTV's offer "at consistent rates and carriage requirements" to also continue offering MLB's Extra Innings package for the next seven years. In Demand and DISH have been a provider of the package in the past.

That means the other providers must match the non-exclusive rate DirecTV is paying MLB for the package, plus offer the new MLB Channel as part of their basic packages, said Bob DuPuy, MLB's president and chief operating officer, during a conference call on Thursday announcing the deal.

So Dish and InDemand must only match the non-exclusive *rate* that DirecTV is paying. This implies a *per subscriber* fee. So Dish being the smallest provider would pay the least amount, cable and DirecTV being the biggest would pay the biggest amount. But even if they split the cost 2 or 3 ways evenly, it's not that each one pays $100 million.

And Dish and cable must carry the MLB channel on basic packages.

Further we have

In the event the other providers do not match, DirecTV will have an exclusive deal for seven years to broadcast by subscription the Extra Innings package and the Baseball Channel as part of its basic package. The contract has been reported to pay MLB $700 million. Chase Carey, president and chief executive of DirecTV, declined to confirm that figure.

Carey did say that the total value of the payment to MLB would decrease if other providers matched and the deal became non-exclusive.

So in other words *if the other providers don't renew at the set rate* then DirecTV gets an exclusive at the 7 years for $700 million.

 

[bonscott87]

I don't get it. Where is analog cable going to get analog feeds once the plug is pulled on analog OTA?

Sending analog streams down the wire is a total waste of bandwidth when the OTA source material is digital. Are you suggesting that cable ops are going to convert digital source material to analog for retransmission?

They are already doing that in some places. Most cable systems in my area grab our CBS SD signal off a digital subchannel and then send it out on their systems. Analog of course.

But by 2009 most cable systems will probably have shut down the analog tier anyway, it's the only way they'll get anough bandwidth to add more HD channels to compete.

 

[bonscott87]

Well Concidering D* pays $700 mil a year for NFLST I would say by your numbers D* is losing about $200 mil a year on NFLST

Sunday Ticket is a loss leader. But they get all those subs paying $50 a month for the standard package in a 1-2 year commitment, many of which wouldn't be with DirecTV at all if not for ST.

And lets not forget the tens of thousands of bars and restaurants that pay thousands a year for Sunday Ticket. That adds up pretty quick to a few million. Even just 10,000 bars at $2500 each is 25 million. Not chump change by any means.

Sunday Ticket is usually a loss straight up but not as much as people might think.

 

[Drone35]

It's company's like D*** that are driving up all the price of the Sports packages, everyone see's what D*** is willing to pay and they will start asking more for their product, such as ESPN and others! Shame on D*** for even paying that much for any package! I understand that buisness is buisness, but look for all sports packages to start going up and yes so will our bill!

 

[bidger`]

but look for all sports packages to start going up and yes so will our bill!

And you thought that wouldn't happen if this deal didn't go through?

 

[bidger`]

First the MLB Owners are foolish with the extraordinary costs of players contracts, and now this. They didn't learn anything from the strike of '94.

Record breaking attendance in most MLB stadiums the last few years and you think it's MLB that hasn't learned a lesson from the 94 strike.

 

[Drone35]

And you thought that wouldn't happen if this deal didn't go through?

No not at all, we will have price increases, everything keeps going up, but the agreement on sports packages will diffently sky rocket and the price inceases will be asorbed by the consumer!

 

[Jim5506]

What if Dish pays the $100,000,000, gives MLB Extra Innings to ALL it's subs and raises prices $1 per month.

Yea, I know the baseball haters and indifferent would complain about the $1, but it would be a good way to burn DirecTV.

 

[Tom Bombadil]

Supposedly, there were 500,000 subscribers to EI, with 180,000 at cable. Dish Network could grab a large chunk of those subscribers if they signup for EI. They could also take away some from DirecTV.

I don't see how this deal would influence D* subs to come over to E*.

And I suspect D* would get the lion's share of whatever cable subs would switch to DBS. You are talking about 180,000 sports fans. They could go to the DBS provider that offers EI and NFL:ST, or the one that offers only EI.

Who knows how the cost would be split. D* might contend that it should be split 50-50 if it is only D* and E*. Even if E* doubled their EI subs to 100,000, the cost would still be $500 per sub per year.

But one never knows with Charlie. If he can find someway to pay only a proportional amount of the total, say D* had 270,000 subs last year to E*'s 50,000 so E* only pays 15% of the total. BTW, that split of 270K vs 50K likely reflects D*'s capture of the subscription-paying sports fan market because of NFL:ST.

It is hard to imagine anyway that E* could come out ahead in the deal, short of some super deal.

 

[Tower Guy]

Lets see if I got this correct... (The below is my OPINION)

Last year Dish paid $28 million for the MLB package (these numbers are from memory) and now DirecTV has this new deal reported to be at $700 million, which is for 7 years, so that $100 million a year.

So if my number of $28 million is correct that means it will cost Dish $71 million more to carry the package. Who pays this price increase? YOU GOT IT, the customers do.

because the only ball they know how to play is FOUL.

Your logic is wrong. You have ignored any payments for the new MLB channels. All subscribers will share in that cost, not just the EI buyers.

Because of this oversight, your other conclusions are not valid.

 

[jpn]

So in other words *if the other providers don't renew at the set rate* then DirecTV gets an exclusive at the 7 years for $700 million.

You could interpret it that way if you want, but that's not the only way to see it.

I saw the word "consistent" in the text, which isn't the same as "match". Also, "rate" does not necessarily apply to the $700M figure. That may include other fees, such as the minority stake in MLBTV, and rights-fees for the ability to distribute to E* and cable. Buried inside there is probably some per-subscriber number and I think that is what will be the starting point to negotiate a "consistent rate".

ALSO: It's only a negotiation if Cheapass Charlie and InDemand actually try to cut a deal, and don't go full-court-press to have the whole deal nullified. So far there is no indication that an attempt to negotiate will be made, and the lack of trying should piss-off fans more than anything else.

....

Yesterday afternoon I learned something on my drive home while listening to XM. Apparently the XM deal with MLB is 11 years for $650M. They are entering year 3, so that deal is not new. If the audio feeds sold for $650M/11 years, then a tv deal of $700M/7 years is not all that out-of-line; even more so if the $700M figure includes the stake in MLBTV etc.