MLB Net Faces First Round of Carriage Renewals

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(Sports Business Journal, March 18, 2013)  In the next nine months executives for the MLB Network will be busy traveling from Philadelphia, to El Segundo, and to New York.  Those are the homes to the biggest distributors that carry the MLB Network whose contracts with the network are due to expire in the next two years.  The major distributors include Comcast, DirecTV, and Time Warner Cable which all had signed five year deals with the MLB Network in January 2009.

Having all their contracts expire at the same time is a unique situation for the pay-tv business.  The more common practice is to stagger deals between distributors, so when the contracts do need to be negotiated they only have to deal with one at a time.  These strategies are used by companies like ESPN, Fox, and NBC.

According to SNL Kagan, a financial firm, states that the current deal gets the MLB Network 27 cents per subscriber a month.  The distribution executive accepts that the MLB Network will try to double that fee so that they could earn around 50 cents per subscriber.  If the MLB Network gets the 50 cents per subscriber, it would become the fourth most expensive sports channel behind ESPN at $5.47, NFL Network at 88 cents, and ESPN2 at 73 cents.

With the MLB Network asking for more, they will allow the distributors the rights to offer the Extra Innings out of market package to subscribers.  This will allow subscribers online access to view out of market games.  However, some cable operators have become to look like down on the Extra Innings because of viewer deterioration.  Distributors believe that the Extra Innings package, which costs $130, will undercut the price for potential subscribers.

With all the problems that follow the MLB Network, it does however receive high ratings from critics.  The MLB Tonight show on the channel has won two straight Sports Emmys.  The network will show more than 100 live games during the span of the season.  The MLB Network is now in over 71 million homes in the United States.