Does Online Success Justify MLB/DirecTV Deal?

Posted on in Blog

The crack of the bat, the smell of the grass, the sound of another congressional hearing.

It’s spring, and that means it’s time for Major League Baseball to find its way into the Senate chambers again.

On Tuesday, Major League Baseball COO Bob DuPuy is scheduled to appear before a congressional committee to defend his organization’s right to enter into an exclusive partnership with DirecTV.

This year Major League Baseball entered into an agreement with DirecTV to be its sole provider of televised nationwide coverage. DirecTV, however, is unavailable to approximately 20 percent of the country, due to restrictions on where the company’s satellite dishes need to be directed.

Last week, Major League Baseball denied a bid by InDemand – a consortium of three major cable providers – to match DirecTV’s offer and provide additional nationwide television coverage. The deal with DirecTV does not affect local broadcast or cable outlets.

To me, the issue isn’t whether this is an illegal monopoly (it is). After all, MLB is simply following the lead of the NFL, who has granted this exclusive right to DirecTV for more than a decade. The issue isn’t why Major League Baseball had the gumption to alter a service provided to all cable and dish users for so many years. (Money, duh. $700 million of it.)

The issue is why now? Because of the success of Major League Baseball Advanced Media, the league’s internet arm.

MLBAM has become a major revenue source, as the league was the first to monetize internet radio, and has been the most successful among the major sports leagues in generating other sources of income for its teams. (MLBAM is, largely, the reason that the Royals’ Gil Meche is making an eight-figure salary this year. Middling pitchers everywhere thank you, MLBAM.)

With the world inching closer to the “internet as television” model, and with the MLB.TV service increasing in subscriptions and popularity, it’s not that much of a leap to claim that DirecTV in fact does not hold a monopoly over distribution – after all, these games are available to everyone online.

I’m not defending MLB here. However, I sense that this is their justification.

Me? For the 12th straight year, I’ll be more than satisfied with another summer of the Pat and Ron Show. (And, yes, I’ve already sent my $15 to MLBAM for the privilege.)

Play ball!

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