But San Diego Radio Owner Looks to Congress for Help Fighting MLB Satellite Contract
As 2004 turned into 2005, and baseball fans began thinking about another spring training, it was hard to detect concern among radio rights holders about the XM baseball deal.
Every Major League Baseball game in every market will be accessible on XM radio receivers anywhere in the country – for a price, of course, for XM subscribers and perhaps for local broadcast rightsholders, as well, in more ways than one.
Despite XM Satellite Radio’s self-described “crown jewel” deal with MLB affecting all teams and baseball markets, most broadcast rights holders – who often stake their stations’ identities and branding on the exclusivity they enjoy with local clubs – weren’t making much of a fuss over this new “local vs. national, terrestrial vs. satellite” baseball scenario about to launch at a ballpark near you. At least not at the moment.
MLB may be hurt by steroid-induced controversy as coaches and players head into spring training, but the sport is hardly in pain when it comes to generating big-time cash from an electronic medium that didn’t even exist a few years ago.
Although it has yet to turn profit, XM has committed $650 million for an 11-year agreement with MLB for national broadcast rights to all 30 teams’ local broadcasts in the American and National Leagues. Each team plays 162 regular-season games, so there are more than 2,400 contests per season, and XM has national broadcast rights to each and every one of them.
Besides providing XM subscribers with access to local play-by-play coverage of any game during the regular season, XM also will provide at least one channel of live coverage in Spanish, and create an additional MLB channel to provide vintage play-by-play of classic games such as Don Larsen’s World Series perfect game in 1956.
Thus, on days when all 30 teams play, XM will feature up to 17 radio channels of MLB, in all.
Although XM did not respond to inquiries for this article about when, or how much, it would preempt local ads in local broadcast game feeds, it previously told Radio World it won’t preempt local ads, but would air local feeds in their entirety.
The satcaster and MLB are looking to create pre- and post-game programming that XM would sell national ads in and split the proceeds evenly with MLB (Radio World Nov. 17, page 7).
XM’s lone satellite competitor, Sirius, offers a similar subscriber sports package for football, featuring NFL games. On the television side, no such all-inclusive baseball deal exists in any form, although DirecTV provides a premium satellite package that includes all NFL football games.
XM’s national distribution of baseball’s prime product – live play-by-play – is great news for XM and its growing fan base of monthly subscribers, and maybe not so good news for local stations that have spent millions of dollars, perhaps over decades, branding themselves to their hometown teams.
Ads to come?
Rob Riggsbee, owner of Inside Media Inc., purchases time on behalf of more than a dozen advertisers for Cincinnati Reds games on flagship WLW(AM). He foresees no big changes in the way he does business, at least for the 2005 season, but said he expects WLW will be eager to renegotiate its current contract with MLB that Riggsbee says expires in 2007.
“But look, XM will be selling time in these games sooner or later, because they have to. There’s no way they would go into such an expensive, long-range deal and not be selling time to make their money back,” Riggsbee said. Generating new baseball-oriented subscribers alone, he said, probably won’t pay for it.
WLW(AM) Operations Director Darryl Parks said it’s his understanding that XM will not be preempting local ads in the 2005 season. And considering these are the start-up days for the young medium of satellite radio, he said WLW should have sufficient time to deal with any issues and potential conflicts as they arise.
XM’s subscriber numbers are growing steadily – 3.1 million, it said in December – but are hardly causing broadcasters like Parks to panic.
“We’ve done research on this and estimate that XM’s listener penetration in the Cincinnati market is under 3 percent right now,” Parks said. “I do not see all this having too much affect right now on our 54-station Reds network.”
He also does not see anything untoward in the XM deal cut with MLB.
“What baseball is doing is perfectly legal. They do have the legal right to do what they’re now doing with satellite radio. Baseball does own the rights to their games,” Parks said.
Not everyone agrees.
“I’m not so sure a lot of owners around the country will agree with that,” said John Lynch, president/CEO of Broadcast Company of the Americas in San Diego.
The flagship station for Padres games is Lynch’s XPRS(AM), about to start its second season under an MLB contract that runs until 2007. Lynch is attempting to gather support among fellow rights-holding station owners to fight the XM-MLB deal.
In December, he wrote to every member of Congress to air his grievances. Lynch contends that the XM deal is in direct violation of a station’s exclusivity agreement with MLB.
“At the very highest levels, I heard the belief that there’s a violation of this clause with this, ” Lynch said.
He is telling anyone who is willing to listen on Capitol Hill that the MLB arrangement goes well beyond the concept of XM’s original charter.
“Satellite radio was never devised in order to replace local radio. I think many of the stations with local broadcast rights are among the most important outlets in their respective markets, and that’s something that Congress will take notice of.”
Lynch said he and his fellow owners, as well as the Padres club itself, were not aware of the machinations of the MLB-XM deal until the day it was announced.
His argument rests in part on the impact in his market. When the Padres (or any team) play outside its own market, the opposing team’s away-game feed will be carried back into the San Diego market, since all XM channels provide national coverage. Lynch says that fact alone creates an additional signal – and unfair competition – in his local market.
“That is a violation of my exclusivity clause,” he said. “If it was Major League Baseball’s intention to piss off a lot of their partners, they’ve done it.”
Meanwhile, by the start of the season in early April, terrestrial and satellite listeners will hear the time-honored cry, “Play ball!” But the radio industry may be doing more watching than listening – trying to assess how the new kid on the block will do in its rookie year.