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Senators Object to DirecTV Deal that Shuts Out Baseball Fans

By Joseph S. Enoch
ConsumerAffairs.com Congressional Correspondent

March 27, 2007

DirecTV • Billing Problems • Installation • Maintenance • Rebates • Sales Practices • Billing for "Adult" Shows • About those "Adult" Bills ... --- News • Major League Baseball, Cable Operators Reach Agreement • Major League Baseball Extends TV Deadline • Senators Object to DirecTV Deal that Shuts Out Baseball Fans • DirecTV Settles Do Not Call Charges • DirecTV Telemarketers To Pay $75,000 Penalty • Fired DirecTV Contractors Say They Refused To Lie To Customers • Outbreak of DirecTV Porn Charges Hits Philadelphia • DirecTV Fined $5 Million for Do-Not-Call Violations • DirecTV Will Reform Ad Practices, Pay Millions in Refunds • DirecTV Abandons Satellite Internet Plans

Senators warned Major League Baseball today that if they sign an exclusive programming package deal with DirecTV, Congress may step in and defend the hundreds of thousands of consumers who are just four days away from losing their ability to watch out of market baseball games.

Today's hearing comes three weeks after Major League Baseball (MLB) and DirecTV reached an agreement to carry MLB's popular Extra Innings package of out-of-market games. Although not exclusive, the deal will become so if DirecTV's rivals do not match DirecTV's terms before Opening Day, April 1.

"It works a real inconvenience with a lot of people," said Sen. John Kerry, (D-Mass.), who convened the hearing at the Senate Commerce Committee. "A lot of baseball fans are very disappointed and some are very angry."

The catch for DirecTV's rivals is that it will become very costly for them to match those terms. Although the exact terms of the deal have not been released, even to DirecTV's rivals, MLB spokespeople have said that these are the terms:

• Seven years at $100 million per year
• Carriage of MLB's 24-hour Baseball Channel, scheduled for launch in 2009, on at least 80 percent of all subscriber's basic package
• 20 percent minority ownership of The Baseball Channel

But at the Senate hearing today, it seemed Major League Baseball (MLB) is actively trying to prevent millions of fans from having access to their package of out of market games and The Baseball Channel.

DirecTV's rivals said they offered to match the terms, but MLB has rebuffed both offers.

At the hearing, Dish Network president Carl Vogel, revealed that Dish had offered to match the terms including an equal 20 percent ownership of The Baseball Channel. But MLB told them the 20 percent offer was only available to DirecTV.

Two weeks ago, iN DEMAND, a consortium of digital cable operators, offered to match the deal by promising to provide The Baseball Channel to as many customers as DirecTV and did not offer to become an owner of the channel. But MLB turned down that deal because iN DEMAND would only provide The Baseball Channel to the same number of customers as DirecTV, not the 80 percent.

Kerry, chairman of the committee, convinced all the parties to meet in the next 24 to 48 hours to attempt to come to terms that will be best for consumers, not the bottom line.

But MLB president Robert Dupuy did not seem hopeful a deal could be reached before the fast-approaching deadline.

If an agreement is not reached and Extra Innings becomes exclusive to DirecTV, Sen. Arlen Specter (R-Pa.) warned, "We are not entirely powerless."

A Contractual Catfight

MLB has offered Extra Innings on a non-exclusive basis since its inception in 2001.

MLB's Extra Innings is valuable to baseball's most devoted fans because it allows them to watch almost every game regardless of their location. For example, a Los Angeles Dodgers fan can watch almost all Dodgers games in Atlanta. The service is particularly popular with fantasy baseball players.

But over the winter, MLB began looking for an exclusive deal for the package after DirecTV began negotiating one in the fall, Dupuy told ConsumerAffairs.com.

MLB tried to generate a bidding war and went to DirecTV's rivals for counter offers. iN DEMAND would not negotiate an exclusive deal, potentially matching DirecTV's, but did offer to match DirecTV's financial terms of $100 million per year over seven years. But MLB was insistent in finding an exclusive partner, so it went forward with DirecTV, a company that has held the exclusive rights to NFL games among other sports partners.

When word got out that MLB was close to signing an exclusive deal with DirecTV in February, fans and newspaper opinion pages fumed.

The deal would cut out approximately 250,000 fans who had previously subscribed either through Dish Network or iN DEMAND. The deal would also cut out approximately 50 million potential consumers who subscribe to Dish and digital cable.

MLB and DirecTV responded by saying that cable customers have the option of switching to DirecTV or watching the games online.

But many fans, particularly those in urban neighborhoods cannot watch satellite TV because they cannot get a good view of the southern sky, where the satellite orbits, or, in even more cases, are not allowed to put a dish on their rental. Many homeowners simply do not want to devalue their investment -- or risk damaging their roof -- by placing a grey dish atop their homes.

As far as watching the games online, a very fast broadband connection is required and although it is an alternative, it is a rather pixilated one as the quality is less than half that of digital cable. It also costs $90-$120 per season compared to Extra Innings which costs $179.

As the angry letters piled into government offices, a handful of Congressmen, led by Sen. Kerry, began looking into the matter. Kerry asked the Federal Communications Commission to investigate the burgeoning deal in early March. The Commission has not released the results of the investigation, but Kerry said last week that the deal is "probably not" illegal.

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