As Spring Games Begin, Local TV Issues Still Percolating

Spring training games kick off today with four tilts: two in the Grapefruit League and two in the Cactus League. All 30 teams will be in action in Saturday. Same for Sunday, when live television broadcasts start. That’s right. Major League Baseball, live on your television for the first time since October.

Well, if you live in the right place and have the right cable and satellite operators.

If you’ve been following my posts over the past several months, you know what I’m talking about. I wrote about every nook and cranny of the baseball-on-television landscape. I dissected the local TV contracts for all 30 teams. I analyzed the Dodgers’ proposed new TV deals. I examined News Corp.’s billion-dollar investment in the Yankees’ YES Network. I explained how the new revenue-sharing program in the collective bargaining agreement is flexible enough to capture the new local TV revenue. I talked about MLB’s blackout policy and the lawsuit trying to put a stop to it. I looked at the dispute between the Orioles and the Nationals over rights fees from MASN and the one between Fox Sports San Diego and several cable companies that kept the Padres off hundreds of thousands of televisions in San Diego last season.

As the 2013 spring season gets underway, many of these disputes remain unresolved and new ones are on the horizon. Plus, there’s a growing sense that the extraordinarily rich local TV deals we’ve seen in the past few years are reaching a tipping point. That is, that the live sports programming bubble may about to burst.

First, some updates:

Fox Sports San Diego reached agreements with all satellite and cable operators in the San Diego viewing area, except for Time Warner Cable. For the first time since the dispute arose, the Padres met with Time Warner earlier this month to seek a resolution. None was forthcoming. The parties remain at an impasse over the price Fox Sports San Diego seeks to charge Time Warner to carry the channel — which is known as a carriage fee. Unless a deal is struck soon, the 185,000 Time Warner customers in the San Diego area won’t be able to watch Padres games on TV this season. For a listing of cable and satellite operators that do carry Fox Sports San Diego, and on which channels, click here.

The Orioles and Nationals remain deadlocked in their dispute over the rights fees MASN must pay to the Nationals. Commissioner Bud Selig asked representatives from the Rays, the Pirates and the Mets to form a committee and recommend a solution. So far, nothing. In December, MLB retained investment bank Allen & Co. to seek a new owner for MASN. The idea would be to separate the Orioles from the Nationals and create an independent regional sports network. Then each team would separately negotiate a new local TV deal with the network.

This season brings the Astros to their new home on Comcast SportsNet Houston. But like the Padres, the Astros will not be seen in every home with cable or satellite service unless CSN Houston reaches a deal on carriage fees with DirectTV, DISH, AT&T U-Verse and other providers. For now, CSN Houston is available in Texas, Oklahoma, Louisiana, Arkansas and parts of New Mexico on Comcast Cable, EnTouch, Coastal Link Communications, Consolidated Communications and Phonoscope. The Astros own a significant equity stake in CSN Houston and, therefore, has every incentive to get a deal done.

Cubs games will be broadcast on WGN and Comcast SportsNet Chicago as they have been for many years, with half the games on each channel. But the WGN-Cubs relationship — which dates to 1948 — may be coming to an end soon when the contract expires at the end of the 2014 season. Currently, the Cubs receive about $60 million a year in rights fees from WGN and CSN Chicago. They see the exploding local TV deals and want a piece of the action. But it’s complicated. For one, the contract with CSN Chicago runs through the end of the 2019 season, making a superdeal with that network or any other unlikely for the 2015-2019 seasons. Second, there’s more than TV rights fees at stake. When WGN became a superstation in the 1980s, millions of baseball fans around the country became Cubs fans. Those folks can’t get CSN Chicago, and are blacked out on MLB.tv, making WGN their only option for watching Cubs games. If the Cubs walk away from WGN entirely, they will lose that segment of their fan base. It will be interesting to see which way the Cubs decide to go.

It will also be interesting to see what options are available to the Cubs. As the Padres’ and Astros’ situations show, regional sports networks are locked in battle with the cable and satellite operators over carriage fees. The RSNs have agreed to pay tens of millions of dollars per year for the right to broadcast games, only to find that the operators won’t pay the demanded carriage fee. The RSNs are squeezed for revenue and fans are blacked out of their home team’s games. When the operators do agree to pay the rising carriage fees, then non-sports fan customers complain about the escalating costs of cable and satellite.

Some experts believe we’re at a tipping point, and the price of live sports programming cannot continue to rise at the current rate. But others note that we’ve heard these warnings before, and the system has remained essentially unchanged. Indeed, Forbes ran a story in November 2011 entitled “Sports TV Rights: The Next Bubble” and another one last month entitled “TV Sports A Spectacular Bubble.”  So the bubble’s either coming, or it’s here, or it’s been here and left or something else entirely.

For baseball, the huge local TV deals already in place, coupled with the new national TV contracts that will kick in next season, have led to a rise in player salaries. Whether future deals for the Cubs and other teams with expiring contracts will raise the bar even higher remains to be seen. In the meantime, Padres and Astros game remain to be un-seen.




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Wendy is also a contributing writer for Sports on Earth. Her writing has appeared on ESPN.com, Baseball Nation, Bay Area Sports Guy, The Score, The Classical and San Francisco Magazine. Wendy practiced law for 18 years before beginning her writing career. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.

32 Responses to “As Spring Games Begin, Local TV Issues Still Percolating”

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  1. Neil says:

    Whoever fixes the North Carolina black hole will be my hero. Blacked out from O’s/Nats on MLB.tv and no local cable companies carry MASN. I heard people last year claim the Orioles were winning but I couldn’t confirm it until they ended up on TBS in the playoffs.

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    • vivalajeter says:

      I’m moving from SF to NC this summer, and I was shocked when I saw the blackouts the other day. I expected the braves, but it looks like I won’t be able to see the Nats, Orioles or Reds. I’m not a fan of either team, but that’s another 20+ games of my favorite team that I can’t see (on top of any Braves games).

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      • Neil says:

        Yup, I’ve sent written and verbal complaints to every level of MLB/MLB.tv/etc. The response was either no response or “the policy is based on current contracts.” Other than this, NC is a great state!

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    • Mike C says:

      This is my 3rd year in Charlotte (from Boston) with the NC blackout. Halfway thru last season I couldn’t take Time Warner anymore…switched to DirecTV and I finally get the O’s and Nats.

      So yes, I’m still blacked out from all 4 NC teams on my MLB.tv, but at least I can get them all on my tv through DTV…it’s the only way to get around it.

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  2. John says:

    I grew up in Iowa and the only reason I am a Cubs fan is because of WGN. Games used to preempt The Transformers and GI Joe and ended up watching and liking the team, Harry Caray, etc. Now that I live in St. Louis I could get games with MLB.TV, but due to the blackout rules I’m not sure people in Iowa can. This is especially screwy since the AAA team is in Des Moines. So I definitely think they’ll alienate some fans if they leave WGN. They’ll also potentially lose future fans. Who would, having no prior experience, just up and buy MLB.TV and start watching a particular team? That’s a lot different than having 60 or so games available on a channel most people already receive.

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    • Dave says:

      Iowa is blacked out on MLB.TV from the Cubs, Cardinals, Brewers, White Sox, Twins, and Royals making it one of the worst places in the country as far a blackouts are concerned. Mediacom, the local cable provider for Des Moines, doesn’t carry CSN Chicago so if the WGN deal expires Des Moines residents with Mediacom will have no ability to watch Cubs games. The main reason I have Directv is to get CSN Chicago so I can watch Cubs games.

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    • CircleChange11 says:

      If the Cubs walk away from WGN entirely, they will lose that segment of their fan base.

      It may not seem like so initially Cubs fans … but by losing their fans, the Cubbies are actually doing those people a favor and increasing the happiness level in their lives.

      The Cubs were on NATIONALLY almost every day during the summer. I wonder how many people/kids watched some of those games just due to them being the only game on … well, and they were fun in 84 (even for a Cards fan).

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  3. TKDC says:

    I don’t actually have a solution, but baseball needs to do something about this. I know that perhaps they believe they are maximizing the bottom line, but it is short sighted. Between a) local fans not being able to watch on local TV, b) the absurd blackout policies for MLB.tv, and c) the Saturday Fox bullshit, they are turning off millions and millions of potential fans. If you can make 20% more by squeezing every dollar possible out of these deals, but you lose out on the opportunity to bring in millions of fans, is that really a good long term strategy?

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    • AC of DC says:

      Profit maximization is a short term gain strategy with no concern for the long term. It is also the rule in business today. We must always remember that when we speak of “baseball,” or any business, or government, or nation, or community, we are talking about a collection of individuals, most of whom will be purely self-interested. The individual businessman’s objective is rarely to create a sustainable product with a long lifespan of gradual appreciation. He aims to generate as much income in as short a timeframe as possible, and then sell out to some sucker who can’t foresee the coming crash.

      So will multibillion dollar broadcasting contracts intended to be offset by multibillion dollar advertising deals serve the sport and the fans in the sense of maintaining growth and preserving integrity? Not likely. But will a handful of people make lots and lots of money in the next few years? You bet. Maybe some are greedy, maybe some are shortsighted, maybe some truly believe that this is a viable longterm plan. Who can say? Few or none of the individuals with any theoretical capacity to change course have or has real incentive to do so.

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  4. Hurtlockertwo says:

    Not seeing Padres and Astros games may be a blessing in disguise. Go Giants!!

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  5. Sparkles Peterson says:

    The Cubs don’t make a whole lot of non-TV money from fans outside of their geographic area, so I doubt that they will put a lot of weight into that consideration.

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    • china_dave says:

      Next time you go to Wrigley, ask the Cubs fans sitting around you where they’re visiting from. You might be surprised.

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    • Antonio bananas says:

      I went to Wrigley last summer. Sat next to people from Houston, Michigan, New York, and St. Louis. It was a Cubs/Reds game. Wrigley and the Cubs are a national brand.

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  6. Billion Memes says:

    Cable companies and RSN’s are in for a rude awakening. My wife and I got rid of our cable $100+ a month bill (on the low side based on people I’ve talked to)almost two years ago and don’t really miss it at all. More and more people our age and younger have or will be doing the same thing. They are going to have to move to a la carte programming eventually so people can pay for what it is they actually consume or they will start seeing decling subscribers as more people make the switch away from cable.

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    • tyke says:

      this. i think i know of only one couple that my wife and i are friends with that actually have cable. everyone else either goes without a television, or does some combo of netflix/hulu/torrents/etc to get the shows and movies they want. we still have cable because my wife seems to be way down the ‘real housewives’ rabbit hole, but we have mlb.tv and have discussed ditching cable entirely (something i would be okay with). our bill for cable is around $60/month for semi-basic programming, fwiw.

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    • ComcastLove says:

      Broadcast TV is an antique and outmoded concept. DVRs are the bridge technology enablers that allow us to partly ignore how completely absurd it is that we pay for an entity to broadcast video content nonstop that we have no interest in watching, on the odd chance that they’ll occasionally broadcast something that we actually do want to watch. What, is this the ’50s when everyone gathered around the tube to watch Bonanza? The only reason this system still exists is from sheer stubbornness combined with viewer laziness/fear of technology.

      Televised sports may be the last reason for paid broadcast viewing for a good portion of the population. In baseball, we have MLB.tv which is a remarkable source of content from across the baseball spectrum. Yes, but I’m blacked out from watching my favorite team! This is the monopolistic Baseball/Television beast trying to control what you watch to ensure profits for themselves – nothing new there, nor is it likely to change anytime soon based upon the amount of money involved. Fortunately for the fans, an easy and affordable workaround applies (or at least applied last year – we’ll see about this year).

      Step 1 – figure out how to stream content to your screen of choice. MLB.tv works well in most modern web browsers and on mainstream mobile devices (apps for iPhone/iPad, Android, etc. are readily available.) You can stream to your TV with Roku or other streaming devices.

      Step 2. Buy MLB.tv for the current season. They will automatically renew your subscription after you buy it once as a ‘convenience’. Isn’t that nice of them? $124.99 a season, according to my bank records. I think they try to charge you more for the playoffs, but I don’t remember how much.

      Step 3. Set up a high speed VPN for the network connection to your screen of choice. I use UnblockUs but there are probably a dozen providers who offer equivalent service for about $5 a month. Best 5 bucks a month I spend.

      You need a basic understanding of computer networking to understand how this works, but essentially each network connected device has or inherits an IP address which is a string of numbers that uniquely identifies your device on the internet. It contains the location of your device, so MLB uses that location to block you. By using VPN, you change the location of your device to the location of the server you’re connecting to, which could be anywhere. After configuring this setup, I watched any game (including playoffs) at any time on MLB.tv with zero issues. It’s harder to make this work with mobile devices, but when using WiFi or Ethernet connections it’s pretty seamless and easy to manage.

      I have a fervent hope that the exclusive broadcast model soon collapses under its own obsolescent stupidity, but if not just know that you can easily get what you want without paying your cable provider for the privilege.

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      • vivalajeter says:

        I could see why they would block local teams. As you said, “Televised sports may be the last reason for paid broadcast viewing for a good portion of the population”. Given how much money MLB gets from the cable companies, I can understand why they won’t let me see Giants or A’s games on MLB.tv in San Francisco. I have the option of buying cable and seeing the games through comcast.

        I don’t understand why they would block an orioles game in North Carolina though (or any of other similar blackout). There’s no way to watch it via cable, and no way through mlb.tv (assuming you don’t want to go against their Terms of Service). That part just doesn’t make sense to me, and I don’t see how MLB benefits from it.

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      • Oasis says:

        TL;dr

        The bubble isn’t going to burst until the Boomers start dieing off

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      • Deelron says:

        “Step 2. Buy MLB.tv for the current season. They will automatically renew your subscription after you buy it once as a ‘convenience’. Isn’t that nice of them?”

        Since pretty much every other service does the same thing without warning and MLB.tv actually warned me a week in advance, yes it was nice of them. I’m just glad I don’t live in my favorite team’s market so I don’t have to put up/avoid via proxy all this junk.

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    • Me says:

      Until the cable companies put in bandwidth caps on people that do that

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    • DodgersKingsoftheGalaxy says:

      *Hats off* Tell my family it’s not worth it, Netflix for $8 is a heck of a deal for streaming only, double it for discs. They have trouble paying their bills but somehow iphones and satellite TV are necessary for survival.

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  7. Cass says:

    MLB needs to get their shit together. I live in San Diego, and where I live, Time Warner is the only cable I have access to. I follow a non-San Diego team within the division. We play the Padres 19 times this year, which means on MLB.tv I am blacked out of 19 of my team’s intra-division games (not counting their Fox weekend clusterfuck) which I have no ability to legally obtain because they’re not even carried on cable. This includes the last three games of the season and almost a quarter of the games in April and September, and is seriously affecting my decision as to whether it’s even worth it to renew MLB.tv at all.

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  8. joser says:

    You can tell how bad a bubble is by how long and often the sober folks predict it to burst: through the late 90s The Economist complained about the dotcom bubble pretty much every week. And although ultimately they were right, no one wanted to get out early leaving money on the table (and indeed for many that was the right strategy). Just because Forbes’ prediction is getting long in the tooth doesn’t mean it is wrong; it’s just premature, and lots of parties have an interest in keeping the inflation going even if the final burst is made far worse as a result.

    But I, as a cynical and long-suffering Mariners fan, can make a prediction of exactly when the burst will happen: right before the next Mariners TV deal is up for negotiation. Since the M’s can opt out of their current deal after the 2015 season, sometime before October 2015 the bubble will burst — leaving them (and the A’s) stuck looking up at the edifices of money the Rangers, Angels, and Axtros have erected with recent deals. (Of course, if the burst means those RSNs go bankrupt and have renegotiate the deals, who knows who comes out best — perhaps the M’s will get a huge deal, sign a bunch of free agents, and then the whole thing collapses, so that like all those folks stuck with balloon mortgages on unsellable houses, the Mariners will be on the hook for a payroll they can’t afford.)

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  9. Antonio bananas says:

    Why aren’t teams with long term awful TV deals spotting the bubble and trying to jump on e next bandwagon? Some sort of team specific Internet viewing maybe. Or is that too much of a legal hassle with mlb.tv

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  10. Brian says:

    There is a solution that while extremely unlikely, would be an equitable one. One or two networks that broadcast every single non-nationally televised game, but fans in each designated area would have access to their local team only. The league and owners negotiate exclusively with that network or any others willing to compete for these rights such as the NFL does with FOX and CBS. It simplifies the discussion with cable/satellite operates, and it makes the distribution of TV revenue equitable to all 30 teams. Again, it’s extremely unlikely for a multitude of reasons and idealistic, but it’s a practical solution, and it still allows for MLB.TV to flourish. It’s even feasible that other leagues could piggyback on their own negotiations.

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  11. fergie348 says:

    Thanks for keeping us up to date, Wendy. For everyone who wishes MLB.tv had no blackouts, there’s a way to avoid those with little setup and a nominal monthly service fee..

    *Hint*, the acronym starts with ‘V’ and ends with ‘N’..

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  12. brendan says:

    wendy, you wrote:
    millions of baseball fans around the country became Cubs fans. Those folks can’t get CSN Chicago, and are blacked out on MLB.tv

    why would cubs games be blacked out on MLB.tv for fans that DONT live in the chicago region?

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    • Chickensoup says:

      The Cubs are blacked out for almost all of Illinois, all of Iowa, most of Indiana, and parts of SE Wisconsin (where like half the people in the state live). That’s a pretty sizable number of people who can only watch the Cubs on Cable or WGN.

      If you want to see why some people HATE MLB.tv look at this map

      http://en.wikipedia.org/wiki/File:MLB_Blackout_Areas.png

      Depending on where you live, on certain days you only have the option of even watching a couple of games due to so many blackouts. Iowa and South nevada (Las Vegas) are notoriously bad, but even where i live (north Central Illinois) I cannot watch a game with the Brewers, Cubs, White Sox, Minnesota, or Cardinals which is crazy to me.

      In all reality something major needs to be done to rework this. I can see blacking out the Cubs from where i live for instance, I have the option of Cable to watch those games. What I cant understand is not being able to watch my Brewers games without a workaround (I use slingbox set up at my mothers house personally, though using something to give a different IP would work).

      This kind of thing doesnt hurt the big population centers that much in all reality. Most of the major cities and their immediate surroundings have one blackout. But this affects future expansion of the league, especally to places without a team. Simply having a rule such as :if you can get the team on a cable provider, it’s blacked out on MLB.tv is sufficient to feed the dinosaur tv providers

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      • Breadbaker says:

        Thanks for the map. What it shows is that MLB abhors a vacuum. It assumes that no matter where you are (eastern Montana, which is a long way from nowhere, is apparently Mariners central), MLB has decided you are part of someone’s territory. This is so regardless of whether that team has done anything to market into where you live. If it were anything other than MLB, of course, it would violate the antitrust laws.

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  13. Seano says:

    There is a technical solution to the blackout issue. It costs money, but you can pay for a DNS service that will change your IP to one NOT in the blackout area. I have never used it, and I honestly don’t know the legality. It’s probably a grey area at the moment.

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  14. pft says:

    Why does not MLB simply offer reimburse the local team/RSN with revenues from mlb.tv for viewer watching the games within the blackout area on mlb.tv?

    Simply have reach an agreeable number. The consequences might be higher rates for mlb.tv, but maybe not as they may increase subscribers w/0 blackouts.

    If you live in a blackout area, you can still watch your local team, just not live. That’s what I am doing this year since I dropped my cable which has NESN since I watched the games mainly on DVR anyways and don’t watch anything else on cable (get about 20 free stations with a decent antenna, HD to boot)

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