Major League Baseball Turns Down Cable Offer

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Includes: DISH, T
by: Judith Levy

Major League Baseball has turned down an offer from iN Demand, a cable consortium owned by Comcast, Time Warner and Cox, to match its seven-year, $700 million arrangement with satellite network DirecTV. This Tuesday, representatives of M.L.B. and DirecTV will testify before the Senate Commerce Committee about their deal regarding Extra Innings, M.L.B.'s package of out-of-market games. “M.L.B. must sit down with the carriers and come to an agreement that ensures all fans continue to have access to baseball,” said Senator John Kerry, who will chair the hearing. iN Demand claims it offered M.L.B. the same financial terms as DirecTV and guaranteed the same 15 million subscribers for the MLB Channel, which is to go on the air in 2009. Bob DuPuy, president of M.L.B., turned down iN Demand's offer in less than an hour, claiming it “falls short [of the DirecTV deal] in nearly all of the material conditions.” When M.L.B. announced the DirecTV deal, it invited the Dish Network and iN Demand to make offers “at consistent rates and carriage requirements,” apparently as a concession to the 75 million households that watch games on cable. M.L.B. asserts that to be thus "consistent,” the cable companies would have to guarantee that the MLB Channel be available to 80% of their digital customers. iN Demand President Robert D. Jacobson: “By rejecting this matching offer, M.L.B. has proven it never intended for iN Demand to have a fair and equal opportunity to bid for Extra Innings." iN Demand and Dish have until March 31 to meet M.L.B.'s terms. Shares of DirecTV rose 5% to close at $23.75.

Sources: Wall Sreet Journal, Bloomberg, Sports Illustrated, New York Times
Commentary: Play Ball! DirecTV and Major League Baseball Ink Non-Exclusive Broadcast DealDirecTV May Move For Major League BaseballSatellite TV: EchoStar No Cheaper than DirecTV
Stocks/ETFs to watch: DirecTV Group Inc. (NYSE:DTV), EchoStar Communications Corp. (NASDAQ:DISH), Comcast Corp. (NASDAQ:CMCSA), Time Warner Cable (TWC). ETFs: PowerShares Dynamic Media (NYSE:PBS), PowerShares Dynamic Telecom & Wireless (PTE), Vanguard Extended Market Index ETF (NYSEARCA:VXF)

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