Comcast/OLN Eyes MLB Rights

NEW YORK Like a hungry shark circling its prey, Comcast and its Outdoor Life Network, now referred to as OLN, are continuing a low-key but determined move to take a bite out of cable sports kingpin ESPN.

Not only did Comcast/OLN snatch away cable rights for the National Hockey League for the next several years, but it now has set its sights on landing Major League Baseball’s Sunday and Wednesday night cable package, the rights to which expire at the end of the current season.

That package also includes the MLB All-Star Game home run derby telecast, which produced hefty one-night ratings for Bristol, Conn.-based ESPN this season.

“Baseball is the bedrock of ESPN’s summer programming,” said one rival sports network executive. “There is so much baseball and very little other programming to replace it with during the summer. Hockey can be replaced by running more college basketball, but Comcast could deliver a severe body blow to ESPN if it can steal away these baseball rights.”

ESPN does have the Tuesday and Thursday MLB TV rights through the end of the 2006 season, which also includes the MLB division playoff games that Fox does not air. That package was obtained when ESPN parent Disney acquired Fox Family Channel (now ABC Family), and is currently valued at $100 million. ESPN is also currently paying $141.5 million per year for the Sunday and Wednesday rights package.

Sources familiar with the negotiations believe they have been delayed and slowed by ESPN’s efforts to gain broadband and cellular phone rights, among other value-added, nontraditional rights, which MLB has been hesitant to give up.

“It’s late in the process for negotiations to still be going on” for the Sunday and Wednesday package, a competing network executive said. “It seems like ESPN was playing hardball with MLB and didn’t think there would be any other bidders. Now, they’ve put MLB in the driver’s seat.”

Another sports exec also questioned why ESPN decided in May to opt out of the final year of its NHL deal for which it would pay $60 million: “Even if ESPN were losing $40 million on the deal, it seems like a reasonable insurance policy to absorb it in order to keep the big bad wolf out of the hen house.”

Losing a sizable portion of its MLB rights would present problems for ESPN. In particular, it could cause cable operators to push for a reduction in their subscriber fees and would cost the network significant ad revenue. “ESPN doesn’t need to have coverage of every sport, but it cannot lose coverage of its jewels. Major League Baseball is one of its jewels,” said a rival sports net executive.

George Bodenheimer, chairman of ESPN and ABC Sports, acknowledged last week that Comcast and OLN “appear to be setting themselves up as a competitor,” but believes that the competition will push his network to get even better. “Our world is filled with competitors, but the prospects for ESPN have never looked brighter,” he added. “Our brand has never been stronger. We are comfortable with our position in the marketplace.”

Chris Tully, senior vp of broadcasting, MLB, also wouldn’t discuss the negotiations or why they have dragged out, but said, “Our challenge is to maximize the value of our national telecast packages from both an economic and promotional perspective. The sports marketplace is changing rapidly, and we’re taking a long-term strategic view. Obviously ESPN is not only a key player in that market but also a longstanding partner of MLB, and our continuing discussions with ESPN have been our primary focus to date.”

But sources at MLB said while approving a new deal with ESPN would be a reality if all terms were equal, should another party come in with a more attractive offer, the league would not hesitate to choose that alternative.

ESPN’s exclusive negotiating window expired in June, and sources inside and outside of MLB confirmed that TV rights discussions have taken place with Comcast/OLN.

Another factor in the negotiations is MLB’s plan to start its own Baseball Channel, possibly before the start of next season. Were Comcast to include a provision to carry the Baseball Channel in any rights offer it proposed, it could be a sweetener that might lure MLB.

For its part, Comcast and OLN officials are being careful not to rile ESPN, stating that their only goal is to “grow” OLN’s male audience base where it makes sense. But one sports league exec sees Comcast/OLN becoming a major factor in the sports TV world. “I think they can be a player,” he said. “Not necessarily on the ESPN level, but it doesn’t have to be to have an impact. If I were betting, I would bet that it will be a success story.”