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MLB Network Hits a Home Run
How baseball learned from football’s mistake and pulled off the biggest cable launch ever.
By Paul Smalera Posted Monday, April 6, 2009 - 4:08pm
For the past couple of weeks, Comcast cable customers have been receiving a message on their TV sets from the ghost in the machine known as the cable executive. The message tells them that the NFL Network will disappear from their service starting May 1. Nothing unusual about that: Every few months, most cable companies go through a refresh; channels move, marginal ones are dropped, and some lineup additions are made. So why is Comcast breaking out the trumpets for the dropping of a single-sport channel during the offseason? In a word, baseball.
For four years, the league-owned network has been battling to get into the living rooms of an America increasingly enamored with its bone-rattling game. But the network is continually forced to guard its flank from cable companies who hate carrying the pricey network. Rather than clamor for the channel, (which is, after all, dedicated to America's most popular sport), every major cable network has balked, playing a game the NFL isn't used to: hardball.
Indeed, six of the top 10 cable companies currently don't carry the channel at all. The result is that the network shows up in about 42 million homes, but in many cases, only on the expensive sports tier, alongside European Soccer League coverage. The NFL wants to be on the basic system, where Joe Six-Pack can tune in. The animosity stems from the NFL believing it's entitled to ESPN's flagship-level carriage fees, the price cable companies pay to carry a channel on their systems and pass on to their customers. The cable companies, meanwhile, see the NFL Network as bearing a closer resemblance to the single-sport Golf Channel than the 30-year-old premier omnibus sports network. Yet the Golf Channel is widely available on basic cable because of one major difference: Several of the major cable companies, including Comcast, have an ownership stake in the Golf Channel.
Contrast the NFL's Leviathan-like struggle for existence against the ease with which the MLB Network entered this world. On Jan. 1, Day 1, the house organ of America's pastime was available in 50 million homes on the basic digital tier, alongside ESPN, Comedy Central, MTV, and all the other name-brand cable channels. How'd they do it? MLB cut DirecTV, Comcast (CMCSA), Cox, and Time Warner Cable (TWC) in on partial ownership of the network. It gave them a vested interest in getting the product in front of as many viewers as possible.
Truth be told, baseball didn't plan to manage its game this way. In 2004, when baseball owners voted to create a network, they intended to create a niche product like the NFL's, not a channel that would end up hiring big-name broadcasters like Harold Reynolds and Bob Costas and have a chance at Year 1 profitability. Owners created the network mostly as part of a broader plan to copycat the NFL's popular Sunday Ticket service with its own Extra Innings package.
Sunday Ticket, long the bane of cable-subscriber NFL fans, is a DirecTV-only package that gives viewers access to every game played every week. Fans have long demanded the NFL open up Sunday Ticket to cable, but just last week, the sides announced an extension of the exclusive deal to 2014, locking cable fans out for three more years. Extra Innings was to be a similar beast, but as the cable networks got word of MLB's proposal, they revolted, threatening to banish its MLB Network to the sports tier, years before the network even existed.
Meanwhile, DirecTV, which thought it was getting Extra Innings all to itself, balked when it learned MLB was pitching Extra Innings to cable operators. Sunday Ticket is a cash cow for DirecTV thanks in part to its monopoly on the product. The satellite provider charges well more than $100 a season for access to the games, which are simulcast from the networks. But for Los Angeles Dodgers fans trapped in Cleveland, assuming they can get satellite service, that's a small price to pay.
MLB, seeing its strength based on the desirability of Extra Innings, pitted the cable and satellite operators against one another until both sides gave in. "We used the out-of-market package to leverage distribution, to be quite honest with you," MLB Vice President Tim Brosnan told reporters at the time the deals were announced. Cable companies would be allowed to carry the Extra Innings package, but DirecTV would keep the sweetest part of the ownership deal. (It owns one-sixth of the network, equal to the share of the three cable companies combined. The league owns the rest.) By cutting carriers a small but significant slice of the profits, MLB all but guaranteed itself the largest cable channel launch in history and, more importantly, peace with its carriers. Most pleasantly for viewers, the network makes no demands of their time or political energies. It's just showing baseball.
In contrast, if you don't get the NFL Network, the league offers a Web site for you to complain about that fact, at one point seemingly to everyone from your city council, Congress member, cable operator, and bartender. It also suggested, in past iterations, that you forget complaining and just switch to DirecTV (DTV). Its CEO penned an op-ed run by the Philadelphia Inquirer explaining to newspaper readers in what particular way Comcast is screwing them and how the NFL is not responsible for fans' misery at having to follow football on ESPN. Dallas Cowboys owner Jerry Jones, who is leading the effort to get the NFL Network adopted in his standard wildcatter style, has said, "Our fans don't deserve to be building equity for a distribution company." It stands to reason that Jones thinks fans do deserve to get caught up in the machinations of the league's cable carriage agreements? The NFL, then, is trying to play hardball with the cable companies, too, but rather than trust the unmistakable message of a high and tight fastball, they are pitching right for the batter's head.
This season, MLB Network will show only 26 in-season games, called Thursday Night Baseball, because of existing TV deals with ESPN and Fox. But as those deals come up for grabs, MLB will cut itself into the rights pie and become increasingly relevant to baseball fans in years to come.
Contrast this with NFL Networks' Thursday night games, which are mostly unwatched regional affairs. Except for unexpectedly hot late-season matchups with playoff implications—then, the NFL Network gets letters from Sen. John Kerry demanding it bend its rules and show the game to the noncable proletariat. And while MLB Network chief Tony Petitti thinks the network might one day show playoff baseball and even the World Series, the NFL has turned the Super Bowl into such a pop-cultural orgiastic display of advertising, media awareness, and even a little football that it can't possibly take its premier event away from the broadcast networks, let alone show it on the woeful sports tier. And since NFL teams have just 16 games compared with baseball's 162-per, clawing back more contests during future television-contract negotiations won't be a viable strategy either.
There's a simple business rule that says the customer is always right. With the baseball season starting this week, MLB Network is introducing a feature called Live Look Ins, where a few minutes of any game happening in the league can be shown on its network. It's likely that for a key at-bat, a record-breaking home run, or the last out of a no-hitter, fans will quickly memorize the MLB Network's local channel number to see history. This feature is the very definition of giving the customers what they want, despite the league's having to cut across complicated rights contracts to provide the feature.
But for the NFL, none of its customers are right. Not the cable companies, who should pay higher prices to carry the network. Nor its viewers, who should be writing letters to their Congress members rather than succumbing to the tyranny of their cable operators' business decisions. Cable customers who want Sunday Ticket are also wrong, as their years of clamoring have also fallen on deaf ears. Congress and the Justice Department are wrong for not stopping the cable companies from their dastardly plan to bankrupt the hard-bitten league by denying it from, well, unilaterally dictating the terms by which cable companies should carry it.
On Thursday, as those Comcast customers turn on their TV sets and digest the warning that the NFL Network will soon disappear, some will tune into the sight of a verdant grass diamond on which men will play a child's game. They should think about the vestiges of the NFL's previous television strategy, when all they had to bully were the broadcast networks. The strategy, still in effect today, is the local blackout. When a football game is not sold out, the NFL blocks the team's local market from seeing the game on TV at all. Often, the home team itself will buy up thousand of tickets that go unused just to meet the letter of the absurd rule.
Meanwhile, MLB is working on providing access to games through any and every device with a screen or a speaker. If you can believe cryptic Twitter messages, they are even working on providing access through Boxee, the computer-based media center that has dozens of early adopters canceling their cable subscriptions in favor of Internet-based TV. Fandom is not so fickle as to account for one league having a better cable deal than another, but the MLB Network is so far operating as if it needs its customers, rather than the other way around.
(Photo of baseball by Stockbyte/Getty Images; Photo of sky by Medioimages/Photodisc/Getty Images)
http://tbm.thebigmoney.com/articles/number-1/2009/04/06/mlb-network-hits-home-run?page=0,1
How baseball learned from football’s mistake and pulled off the biggest cable launch ever.
By Paul Smalera Posted Monday, April 6, 2009 - 4:08pm
For the past couple of weeks, Comcast cable customers have been receiving a message on their TV sets from the ghost in the machine known as the cable executive. The message tells them that the NFL Network will disappear from their service starting May 1. Nothing unusual about that: Every few months, most cable companies go through a refresh; channels move, marginal ones are dropped, and some lineup additions are made. So why is Comcast breaking out the trumpets for the dropping of a single-sport channel during the offseason? In a word, baseball.
For four years, the league-owned network has been battling to get into the living rooms of an America increasingly enamored with its bone-rattling game. But the network is continually forced to guard its flank from cable companies who hate carrying the pricey network. Rather than clamor for the channel, (which is, after all, dedicated to America's most popular sport), every major cable network has balked, playing a game the NFL isn't used to: hardball.
Indeed, six of the top 10 cable companies currently don't carry the channel at all. The result is that the network shows up in about 42 million homes, but in many cases, only on the expensive sports tier, alongside European Soccer League coverage. The NFL wants to be on the basic system, where Joe Six-Pack can tune in. The animosity stems from the NFL believing it's entitled to ESPN's flagship-level carriage fees, the price cable companies pay to carry a channel on their systems and pass on to their customers. The cable companies, meanwhile, see the NFL Network as bearing a closer resemblance to the single-sport Golf Channel than the 30-year-old premier omnibus sports network. Yet the Golf Channel is widely available on basic cable because of one major difference: Several of the major cable companies, including Comcast, have an ownership stake in the Golf Channel.
Contrast the NFL's Leviathan-like struggle for existence against the ease with which the MLB Network entered this world. On Jan. 1, Day 1, the house organ of America's pastime was available in 50 million homes on the basic digital tier, alongside ESPN, Comedy Central, MTV, and all the other name-brand cable channels. How'd they do it? MLB cut DirecTV, Comcast (CMCSA), Cox, and Time Warner Cable (TWC) in on partial ownership of the network. It gave them a vested interest in getting the product in front of as many viewers as possible.
Truth be told, baseball didn't plan to manage its game this way. In 2004, when baseball owners voted to create a network, they intended to create a niche product like the NFL's, not a channel that would end up hiring big-name broadcasters like Harold Reynolds and Bob Costas and have a chance at Year 1 profitability. Owners created the network mostly as part of a broader plan to copycat the NFL's popular Sunday Ticket service with its own Extra Innings package.
Sunday Ticket, long the bane of cable-subscriber NFL fans, is a DirecTV-only package that gives viewers access to every game played every week. Fans have long demanded the NFL open up Sunday Ticket to cable, but just last week, the sides announced an extension of the exclusive deal to 2014, locking cable fans out for three more years. Extra Innings was to be a similar beast, but as the cable networks got word of MLB's proposal, they revolted, threatening to banish its MLB Network to the sports tier, years before the network even existed.
Meanwhile, DirecTV, which thought it was getting Extra Innings all to itself, balked when it learned MLB was pitching Extra Innings to cable operators. Sunday Ticket is a cash cow for DirecTV thanks in part to its monopoly on the product. The satellite provider charges well more than $100 a season for access to the games, which are simulcast from the networks. But for Los Angeles Dodgers fans trapped in Cleveland, assuming they can get satellite service, that's a small price to pay.
MLB, seeing its strength based on the desirability of Extra Innings, pitted the cable and satellite operators against one another until both sides gave in. "We used the out-of-market package to leverage distribution, to be quite honest with you," MLB Vice President Tim Brosnan told reporters at the time the deals were announced. Cable companies would be allowed to carry the Extra Innings package, but DirecTV would keep the sweetest part of the ownership deal. (It owns one-sixth of the network, equal to the share of the three cable companies combined. The league owns the rest.) By cutting carriers a small but significant slice of the profits, MLB all but guaranteed itself the largest cable channel launch in history and, more importantly, peace with its carriers. Most pleasantly for viewers, the network makes no demands of their time or political energies. It's just showing baseball.
In contrast, if you don't get the NFL Network, the league offers a Web site for you to complain about that fact, at one point seemingly to everyone from your city council, Congress member, cable operator, and bartender. It also suggested, in past iterations, that you forget complaining and just switch to DirecTV (DTV). Its CEO penned an op-ed run by the Philadelphia Inquirer explaining to newspaper readers in what particular way Comcast is screwing them and how the NFL is not responsible for fans' misery at having to follow football on ESPN. Dallas Cowboys owner Jerry Jones, who is leading the effort to get the NFL Network adopted in his standard wildcatter style, has said, "Our fans don't deserve to be building equity for a distribution company." It stands to reason that Jones thinks fans do deserve to get caught up in the machinations of the league's cable carriage agreements? The NFL, then, is trying to play hardball with the cable companies, too, but rather than trust the unmistakable message of a high and tight fastball, they are pitching right for the batter's head.
This season, MLB Network will show only 26 in-season games, called Thursday Night Baseball, because of existing TV deals with ESPN and Fox. But as those deals come up for grabs, MLB will cut itself into the rights pie and become increasingly relevant to baseball fans in years to come.
Contrast this with NFL Networks' Thursday night games, which are mostly unwatched regional affairs. Except for unexpectedly hot late-season matchups with playoff implications—then, the NFL Network gets letters from Sen. John Kerry demanding it bend its rules and show the game to the noncable proletariat. And while MLB Network chief Tony Petitti thinks the network might one day show playoff baseball and even the World Series, the NFL has turned the Super Bowl into such a pop-cultural orgiastic display of advertising, media awareness, and even a little football that it can't possibly take its premier event away from the broadcast networks, let alone show it on the woeful sports tier. And since NFL teams have just 16 games compared with baseball's 162-per, clawing back more contests during future television-contract negotiations won't be a viable strategy either.
There's a simple business rule that says the customer is always right. With the baseball season starting this week, MLB Network is introducing a feature called Live Look Ins, where a few minutes of any game happening in the league can be shown on its network. It's likely that for a key at-bat, a record-breaking home run, or the last out of a no-hitter, fans will quickly memorize the MLB Network's local channel number to see history. This feature is the very definition of giving the customers what they want, despite the league's having to cut across complicated rights contracts to provide the feature.
But for the NFL, none of its customers are right. Not the cable companies, who should pay higher prices to carry the network. Nor its viewers, who should be writing letters to their Congress members rather than succumbing to the tyranny of their cable operators' business decisions. Cable customers who want Sunday Ticket are also wrong, as their years of clamoring have also fallen on deaf ears. Congress and the Justice Department are wrong for not stopping the cable companies from their dastardly plan to bankrupt the hard-bitten league by denying it from, well, unilaterally dictating the terms by which cable companies should carry it.
On Thursday, as those Comcast customers turn on their TV sets and digest the warning that the NFL Network will soon disappear, some will tune into the sight of a verdant grass diamond on which men will play a child's game. They should think about the vestiges of the NFL's previous television strategy, when all they had to bully were the broadcast networks. The strategy, still in effect today, is the local blackout. When a football game is not sold out, the NFL blocks the team's local market from seeing the game on TV at all. Often, the home team itself will buy up thousand of tickets that go unused just to meet the letter of the absurd rule.
Meanwhile, MLB is working on providing access to games through any and every device with a screen or a speaker. If you can believe cryptic Twitter messages, they are even working on providing access through Boxee, the computer-based media center that has dozens of early adopters canceling their cable subscriptions in favor of Internet-based TV. Fandom is not so fickle as to account for one league having a better cable deal than another, but the MLB Network is so far operating as if it needs its customers, rather than the other way around.
(Photo of baseball by Stockbyte/Getty Images; Photo of sky by Medioimages/Photodisc/Getty Images)
http://tbm.thebigmoney.com/articles/number-1/2009/04/06/mlb-network-hits-home-run?page=0,1
