MLB Settles TV Lawsuit, Preserves Blackouts

Considering the potential ramifications of a victory by the plaintiffs in the Garber v. Office of the Commissioner of Baseball lawsuit, the odds always favored Major League Baseball eventually reaching a settlement in the case. Indeed, considering that the sport’s entire existing broadcast model was under attack – with the lawsuit alleging that MLB violates federal antitrust law by preventing its teams from competing in the local and national broadcast marketplaces – allowing the Garber case to proceed to trial would have been extremely risky for the league.

As a result, it was no great surprise to learn that MLB did in fact reach a tentative settlement agreement with the Garber plaintiffs on Tuesday morning, just minutes before a two-week trial was slated to begin in the lawsuit.

The terms of the deal will not be officially announced until after the attorneys have committed the tentative agreement to writing. Nevertheless, various media reports have revealed a number of details regarding the proposed settlement. In particular, it appears that by agreeing to create new viewing options for fans, and lowering the price for its MLB.TV package, the league has succeeded – at least for the time being – in preserving its oft-criticized blackout policy.

Let’s start with what the settlement reportedly accomplishes. According to a statement issued by the plaintiffs’ attorneys, MLB has agreed to offer single-team packages on MLB.TV for at least the next five years. As we first reported in December, the league had already suggested in court papers that it intended to create a single-team option in 2016. This settlement now makes that official, and locks the league into providing fans with this service through the 2020 season.

In addition, MLB has agreed to price these single-team packages at $84.99 in 2016, compared with the approximately $130 the league charged for the league-wide MLB.TV service last year. At the same time, MLB has also agreed to lower the price of the league-wide package to $109.99 for the upcoming season.

So for fans who have subscribed to MLB.TV in the past, the settlement will provide some significant cost savings in 2016, especially for those who opt to purchase the new, single-team service option.

That having been said, it is not yet clear whether the settlement will include any terms preventing MLB from raising these prices after this year. In a settlement reached by these same plaintiffs’ attorneys last year in an analogous case against the National Hockey League – discussed here – the lawyers similarly required the NHL to create single-team out-of-market packages, and included some restrictions on how much the league could raise the price of those packages in the future.

So while it’s too early to predict the long-term pricing ramifications of the Garber settlement, there may be some protections built into the deal to ensure that MLB maintains the relatively low price of its new single-team packages in the future. Of course, that would not necessarily stop MLB from raising the cost of the league-wide package in 2017 (a possibility that the NHL settlement did not appear to prevent).

It also isn’t immediately clear whether these new purchase and price options will apply only to the MLB.TV internet package, or will also apply to the MLB Extra Innings service offered by cable and satellite providers. While the NHL agreed to offer  single-team packages both over the internet and via cable and satellite television in its settlement, it’s unclear if MLB has agreed to do the same.

In the statement released by the plaintiffs’ attorneys on Tuesday, for instance, only the creation of single-team packages via the MLB.TV streaming service was referenced. Whether the failure to mention MLB Extra Innings was an accidental omission on the lawyers’ part, or an intentional one, remains to be seen.

Along with creating single-team packages and lowering the price of MLB.TV, Tuesday’s settlement announcement also introduced another new service option for fans: “Follow Your Team.” According to the announcement, beginning in July MLB.TV subscribers who purchase this new option for an additional $10 will be able to watch out-of-market broadcasts of games featuring in-market teams, so long as they subscribe to the local club’s regional sports network (RSN).

In other words, a Detroit Tigers fan living in New York City will now be able to watch the Detroit broadcast of a Tigers-Yankees game, so long as the fan also subscribes to the YES Network. While this option won’t help cord-cutters, it will enable cable subscribers to enjoy their favorite out-of-market team’s broadcast even when a game is being broadcast on a local team’s RSN.

Finally, although not mentioned in the plaintiffs’ attorneys’ statement, Eric Fisher of the Sports Business Journal is reporting that the settlement could also pave the way towards allowing subscribers of RSNs owned by Comcast and DirecTV to stream in-market games via MLB.TV. In particular, the settlement agreement will reportedly specify that MLB cannot raise the price of its MLB.TV service until both Comcast and DirecTV reach an in-market streaming deal with MLB for their RSN subscribers.

Should the two cable providers reach such an agreement with the league, it would put their subscribers on equal footing with those of the various Fox-owned RSNs. Back in August, MLB and Fox agreed to allow authenticated subscribers of 15 Fox RSNs to stream their local teams’ games in-market beginning in 2016.

While this agreement once again would not allow cord-cutters to watch their local teams’ games via MLB.TV, it would provide additional viewing options for existing cable subscribers. As a result, the settlement could provide more flexibility to local fans of the Chicago Cubs, Chicago White Sox, Colorado Rockies, Houston Astros, Oakland Athletics, Philadelphia Phillies, Pittsburgh Pirates, San Francisco Giants, and Seattle Mariners – all of which have signed regional television deals with a Comcast- or DirecTV-owned RSN – letting them stream their teams’ games in-market, so long as they subscribe to the applicable Comcast or Root Sports Network.

As a result, Tuesday’s settlement could pave the way for cable-subscribing fans of 25 of the 30 MLB teams to be able to enjoy in-market streaming. This would leave only those teams that own their own RSN – the Baltimore Orioles, Boston Red Sox, New York Mets, and Washington Nationals – along with the Los Angeles Dodgers (who have a local broadcasting agreement with Time Warner), as the only remaining outliers.

Unfortunately, while all of these apparent provisions in the settlement agreement are great for fans who currently subscribe to MLB.TV or a Comcast- or DirecTV-owned RSN, they will do little for fans who are presently unable to watch their favorite team play due to MLB’s blackout rules. Indeed, by all accounts it appears that Tuesday’s deal leaves the league’s existing local broadcast territories in place, meaning that the blackout policy will be unaffected by the settlement.

Consequently, those fans most seriously affected by blackouts – both cord-cutters and cable subscribers who are unable to gain access to their local team’s RSN – will not be helped by the Garber settlement. In this respect, then, Tuesday’s settlement is certainly somewhat underwhelming, as it failed to fundamentally address the most commonly criticized portion of MLB’s existing broadcast policies.

Moving forward, the proposed settlement in the Garber lawsuit won’t be finalized until it is approved by Judge Shira Scheindlin, the presiding judge in the case. As part of that approval process, the court will solicit comments regarding the sufficiency of the settlement from fans. So those dissatisfied with the proposed deal will have an opportunity to weigh in.

Of course, considering that both sides’ attorneys can argue that the tentative agreement provides a number of potentially valuable benefits to fans – along with the fact that there was no guarantee that the plaintiffs would have prevailed had the case gone to trial – it is probably unrealistic to expect Judge Scheindlin to reject the proposed deal.

So if any substantial changes are to be made to MLB’s blackout policy in the foreseeable future, it will likely require someone else to file a new lawsuit against the league, one that is pursued all the way through trial.

At the end of the day, then, the sufficiency of the Garber settlement likely varies depending upon one’s point of view. Those that were hoping the suit would spell the end of blackouts are likely to be disappointed. But for those who were already happy with MLB.TV – or subscribe to a Comcast- or DirecTV-owned RSN – Tuesday’s settlement appears to have delivered some important changes to the league’s existing broadcasting policies, changes that could expand your viewing options and/or save you some money in 2016.

UPDATE: The settlement agreement has now officially been released. Further details are available here.

We hoped you liked reading MLB Settles TV Lawsuit, Preserves Blackouts by Nathaniel Grow!

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Nathaniel Grow is an Associate Professor of Business Law and Ethics at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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statsnasty
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statsnasty

Is it too cynical to see this as the plaintiffs’ attorneys taking a deal that’s good for them at the potential expense of a major victory for the fans?

TKDC
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TKDC

Based on some irrational psuedoaxiom of “PLAINTIFF LAWYERS BAD!”, yes. Yes, it is.

d_i
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d_i

Completely agree. I feel they just didn’t want to risk losing at trial and not getting paid. This does nothing to address the real issue.

TKDC
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Member
TKDC

They would risk having the judge throw it out, being sued for malpractice, being disbarred, but sure, it’s possible. People on the Internet have endless imaginations.

d_i
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Member
d_i

Per his twitter, Keith Law seems to agree with people on the internet’s imaginations. They knew it worked with the NHL so it’s safe to say they were aware of those not being actual risks. You honestly think the original plaintiffs feel vindicated by a $10 discount settlement?

TKDC
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Member
TKDC

Keith Law is on the Internet. He agrees with his own imagination. I’m not sure when being a baseball writer made you a legal expert. He also offers no explanation and no substance. So in other words, he is continuing the long Internet tradition of talking out of one’s ass.

And the original plaintiffs, or the named plaintiffs, will get thousands of dollars. They’re probably happy. I’m saving $45 this year, and I didn’t lift a finger. Not sure how much going forward. I’m happy, too.

d_i
Member
Member
d_i

Whereas you’re offering explanation/substance, validating your stance that this is an acceptable settlement?

In Iowa you’re still paying the full price of the package when last year a full 1/3 of the games were unviewable (a good portion of which aren’t even available via the RSN). Forgive me for still seeing this as unfair.

TKDC
Member
Member
TKDC

First, I never said it was fair. I said there are mechanisms in place that are intended to prevent lawyers from mistreating clients. I named several of those things (thus, backing up my claim). I also answered the question about the named plaintiff. I was speculating, but in almost every case the named plaintiffs get a nice monetary gesture for their trouble.

That was of course playing along with your alternate reality in which the named plaintiffs actually were the impetus for the case. That is virtually never the case with class action suits. The lawyers are. But if in this alternate reality the named plaintiffs expected something else, they probably shouldn’t have signed up with a law firm that brought a nearly identical case against the NHL and got a nearly identical result. I didn’t hear anything about sanctions against the firm in that case (another bit of evidence it is unlikely in this case).

The place I agree with you is that the current situation sucks. That doesn’t necessarily mean it is illegal. If you’re in Iowa, you have access to Taco Johns. Where I live you don’t. I don’t think that’s fair. But it’s not illegal either.