Extra Innings Bidders Agree to Face-to-Face Negotiations
By John Eggerton -- Broadcasting & Cable, 3/27/2007 9:12:00 AM
The parties to the dispute over carriage of Major League Baseball's out-of-market Extra Innings package have agreed to face-to-face negotiations in the next 48 hours.
The last such meetings were held on March 9, and the topic was how to match DirecTV's deal to carry the package. The March 9 meeting was only held after the heads of Major League Baseball, DirecTV, In Demand and EchoStar took a trip to Washington for a meeting requested by the Senate Commerce Committee and Red Sox fan John Kerry (D-Mass.). At a SCC hearing on the deal on Tuesday--a hearing driven by fan complaints that they would lose access to baseball games if
if DirecTV gets exclusive rights
-- Senator Kerry said he recognized MLB and DirecTV had struck a business deal they thought was in their best interests. Kerry pointed to MLB Commissioner Bud Selig's acknowledgment of baseball's special relationship to the fans--one established in its anti-trust exemption--and Kerry said Congress needed to look at balancing that legitimate business interest with the public's interest in access to that "special" sports programming. He also said that the FCC had the power to regulate direct-to-home satellite in the public's interest and that the committee was trying to discern what the public interests might be. Incumbent Extra Innings carriers EchoStar and In Demand-- a consortium owned by Comcast, Cox and Time Warner--have four more days before the season starts. When it starts, DirecTV becomes the exclusive broadcaster and EchoStar and In Demand have to match DirecTV's terms. The hearing in the Senate Commerce Committee Tuesday was as much about trying to get a deal that would make the package nonexclusive as it was to collect information from the parties. Kerry, joined by Senator Frank Lautenberg (D-N.J.) and Arlen Specter (R-Pa.), all pressured them to come to the table and avoid a legislative solution. "Eventually, if it comes across this desk enough," said Lautenberg, "things happen that you don't like." Kerry pushed for the status quo for at least the next few weeks or until a deal might be reached. MLB President Robert DuPuy said the they were open to talking, but said that negotiations over the package had been going on for nine months and that DirecTV had to start marketing and pricing the package. That marketing would differ based on whether the package was exclusive or nonexclusive. The status quo would be all three--DirecTV, EchoStar and In Demand--delivering the games to some 61 million potential digital subscribers, rather than the 16 million DirecTV subscribers that would have access to the games if the package were exclusive. MLB and DirecTV CEO Chase Carey said that all the games were available over the Internet, but Kerry said that was not a reasonable alternative to the big, plasma-screen, friends-over experience of baseball game watching. The key sticking point in the negotiations over the Extra Innings package is the guarantee of carriage, on the more broadly viewed basic tier, of baseball's planned MLB cable channel, which launches in 2009. DirecTV committed to delivering the channel to 80% of its subscribers, which MLB says In Demand and EchoStar must do it they want to continue to share the package.
In Demand has made a counter offer, but it was rejected
. DuPuy conceded that getting a critical mass of carriage for that channel was driving the negotiations. DirecTV is getting a shot at a 20% stake in the channel not being offered to others, which has become a key bone of contention. Initially the deal was going to be exclusive to DirecTV, but after Kerry and others in Washington complained, it was modified to give the incumbents a chance to share it if they agreed
, though they have not even been able even to agree on what constitutes the same terms.
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