San Francisco Giants Shortstop Brandon Crawford (35) tries his hand at the TV camera ahead of the Major League Baseball game between the San Diego Padres and San Francisco Giants on August 29, 2019 at Oracle Park in San Francisco, CA.
Bob Kupbens | Icon Sportswire | Getty Images)
Major League Baseball is at the negotiating table over media rights, and it has a wild card to play.
The league’s deal with Disney-owned ESPN is in renewal talks, and the outcome could change what baseball looks like on national television during the week. Some media experts believe that MLB’s Monday and Wednesday package is worth between $ 150 million and $ 200 million a year.
The chatter began to spread when The Athletic reported that ESPN was willing to participate in the baseball content. The story has led to predictions that MLB’s media rights costs could collapse.
“I think it will be sold, just not at the asking price of $ 350 million,” media expert Dan Cohen told CNBC. Cohen, the senior vice president of Octagon’s global media rights advisory division, said he believed MLB would drop its asking price on the package if that was the figure. But not much.
“MLB does not want to give these rights away for free,” Cohen said. “There is value for national television baseball matches on Mondays and Wednesdays.”
The thing is, it’s not exclusive value. And it makes MLB creative about its future, with permission around sports gambling as leverage.
Rhys Hoskins # 17 of the Philadelphia Phillies walks on Gio Urshela # 29 of the New York Yankees during a Summer Camp game at Yankee Stadium on July 20, 2020 in New York City.
Jim McIsaac | Getty Images
MLB’s doubles
To help its network partners overcome losses due to Covid-19, the league has given them permission to use restricted sports betting ad slots.
MLB determines which ads are broadcast during games, although there are still restrictions on sports betting ads. During its pandemic season, which featured networking games, MLB approved the ads and helped its partners.
According to the Wall Street Journal, the National Football League took a similar step earlier this month. The league gave its national media partners more advertising slots during its post-season games and Super Bowl LV.
Sports gambling companies like DraftKings and FanDuel spend millions on marketing. One of the best options for them is to buy sports content ads.
The spending must continue. This means that the MLB can again increase the number of advertising sites it offers to networks. The partners will collect their fees and pay a share to MLB. In a way, the league is protecting its media rights.
Nothing exclusive
ESPN has a reason to weaken the MLB package. And once again, the games on Monday and Wednesday are not exclusive.
In 2012, he agreed to pay the MLB $ 700 million annually in an eight-year, $ 5.6 billion deal. ESPN gets an exclusive Sunday game and rights to the Home Run Derby.
But on Monday and Wednesday, local sports networks also host the games, giving consumers in the market no incentive to watch ESPN’s broadcast.
“If the (New York) Yankees or (Philadelphia) Phillies games are available on a regional network, they get the most ratings, and ESPN is not doing so well with its national game,” said TV executive and former president. President of CBS Sports Neal Pilson.
“I always wondered why ESPN had the package in the first place,” Pilson added. “And if they give it up now, I think it’s a smart move.”
Octagon analysts have used 108 of the 114 games over the past three years to determine the average viewing time on the package from Monday to Wednesday on ESPN, excluding ESPN2 broadcasts. The findings: an average viewership of 761,434 in 2018, which dropped to about 632,000 in 2019.
Viewership dropped to an average of 358,947 in 2020, but sports viewers were also affected by the pandemic, social unrest and the US presidential race.
“I call them semi-exclusive,” Cohen added. “Sometimes you talk about the big markets – New York, LA, Chicago, Boston, Philly – but you still miss 90 percent of the rest of the country.”
But without exclusivity and other league rights, such as the National Hockey League being offered, MLB may have a new home for its package.
ESPN and an MLB declined to comment due to active negotiations.
MLB gets creative
ESPN reportedly wants to reduce its annual fee by about $ 150 million. Assuming MLB starts the price at the figure or more, he plans to be creative around the offer to justify the cost.
Gambling ads can attract networks. Another is the actual game, as MLB controls what can be displayed, it says about the marketing that networks can use on screen.
According to people with knowledge of negotiations, the league does not believe it should lower the value of the package and will use the broadcasting permissions to protect it.
Cohen suggested that Sinclair might be interested in a partnership.
The company owns 14 regional networks that broadcast MLB games. It plays a streaming play with Stadium, backed by Jerry Reinsdorf, owner of the Chicago White Sox, one of the most powerful owners in the MLB club.
Sinclair can pay for itself with the national package, by importing some of the content into the stadium and selling more advertising slots with the permission of MLB.
NBCUniversal is abandoning its sports network this year and moving media rights to the more accessible US network. The channel has a history in the sport and NBCUniversal has just made a play to wrestle with its Peacock service that has the rights to stream WWE matches in the United States, and with live entertainment, the main force driving the cable model protected, NBC Sports can a MLB play about the US and also get special advertising access.
“There’s a lot to consider,” Cohen said. “I think they can get pretty smart and creative.”
MLB also has partnerships with Twitter, Facebook and YouTube, which means it already has streaming options. Using the streaming model, MLB can get short-term offers similar to the Amazon package from NFL and create flexibility because it will not be locked up for a long-term partner.
And as ESPN steps away, MLB is still at the forefront of the media rights card game.
The league has already secured new legal costs with Turner Sports owned by Fox Sports WarnerMedia, the latter of which adds a Tuesday game to its coverage. The network will pay more than $ 3 billion to keep baseball.
Whatever the game, MLB apparently has its wildcard and ready to use. And don’t forget, there are still extra post-season games that can add to the deck. But for that, MLB will need permission from a top media rights partner – the players’ union.
Disclosure: Comcast owns NBCUniversal, which is the parent company of CNBC.