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NO MAJOR LEAGUE BASEBALL DEAL YET ON SIRIUS
Courtesy
Sports Business Journal
(March 9, 2009) MLB is not quite ready to play ball with the merged Sirius XM Satellite Radio.
The league and the satellite radio service are sparring over whether to make MLB game broadcasts available to the entire spectrum of Sirius XM’s 19 million subscribers. Now, just three weeks before MLB’s opening day, nearly half — about 9 million Sirius subscribers — will not be able to listen to MLB game broadcasts this season unless a deal can be worked out. Baseball and Sirius XM executives have spent several months negotiating whether to expand access of live MLB games beyond just XM subscribers. The stalemate is certain to frustrate Sirius XM subscribers, who were expecting that last year’s merger of the two platforms would allow the entire satellite subscriber base to listen to all sports. In the past, as they competed for market share, XM and Sirius signed exclusive deals with various leagues. In 2004, for example, MLB signed an 11-year, $650 million deal to be carried exclusively on XM’s platform. Now, baseball executives want to maintain that platform exclusivity unless a new deal can be worked out. Since the merger of the two platforms passed regulatory hurdles last summer, Sirius XM executives have been pushing for the leagues, like the NFL, NBA, NASCAR and MLB, to give up that exclusivity and make their programming available to all 19 million subscribers under terms of existing deals. The NFL and NBA originally signed exclusive deals with Sirius, but once the satellite radio companies merged, they allowed their game programming to be broadcast on both for the same rights fee they had been getting, sources said. But MLB is holding out, unless it can work a better deal, which almost certainly means a higher rights fee. MLB already has the richest satellite radio contract of any sports league, getting, on average, $59 million a year. By comparison, the NFL’s deal with Sirius averages to $31 million a year and NASCAR’s Sirius deal averages $21 million a year. The NBA’s rights fee is not known. But baseball is taking a hard stance, believing that the volume of its game programming and its traditional appeal make it more valuable to satellite radio. Industry analysts also believe that this could be baseball’s last chance to have leverage with Sirius XM. Baseball’s deal ends in 2015. “There definitely won’t be any bidding wars for these sports rights next time,” said David Kestenbaum, an analyst with Morgan Joseph & Co. who covers satellite radio. Part of the reason is the lack of satellite radio competition. In July, federal regulators approved the merger after a 17-month review period, cutting the number of satellite radio companies from two to one. The merger takes away a rival bidder that could have driven up prices. Then there’s the precarious financial position of the satellite radio company, whose shares were trading at less than 15 cents last week. Last month, Liberty Media Corp. helped the company avoid bankruptcy when it agreed to pay $530 million in loans in return for a 40 percent stake. Kestenbaum said that the Sirius XM does not have the money to keep paying so much in rights fees. “I thought the original MLB deal was a foolish one for XM,” Kestenbaum said. “I don’t think enough new subscribers signed up to justify paying $60 million per year.” Despite the issues over financing, league partners still have gotten paid. As part of its MLB deal signed in 2004, XM put two years’ worth of rights fee payments — $120 million — into an escrow account to guard against pending bankruptcy, sources said. The NFL made a similar deal with Sirius, demanding that money be set aside in an escrow account. For its part, Sirius XM Satellite Radio remains optimistic that a deal can be worked out by Opening Day. “Discussions are ongoing with Major League Baseball and we remain hopeful that we will be able to reach an agreement that will allow Sirius subscribers to hear the games,” a Sirius XM spokesman said. Both XM and Sirius subscribers still will have access to MLB Home Plate, a 24/7 channel devoted to Major League Baseball. “As with any partner seeking to amend their deal terms, we would be open to negotiating new terms that were agreeable to both parties,” an MLB spokesman said. “As a practice, we do not discuss details of private negotiations in public.” |
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