On January 1, 2009, Major League Baseball launched its long-awaited Major League Baseball Network (MLBN) on major cable broadcast providers throughout U.S. television markets.
Hailed by MLB itself as a boon to its continued growth, the MLBN hopes to garner $150$200 million in additional revenue in just its first year of distribution.
And to that end, the MLBN starts right off the bat with a built-in cushion of an instant 50 million television household subscribers, or about one third of the cable market share. The MLBN sets itself apart from the oft-cited NFL Network, now in place in 42 million television households after four years of sometimes ugly legal wrangling and ongoing negotiations with cable broadcasters. And NBA TV, with 15 million subscribers to date, has seen primarily slow growth.
But the reason that the MLBN has been able to enjoy a compatible arrangement with cable broadcasters is that it gave up a share of its equity in order to reach that goal. The MLBN is a majority 67% stakeholder, while DirecTV has a 16.5% interest and Comcast, Time Warner Cable, and Cox Communications collectively own a 16.5% share.
The logic in sharing its equity according to MLB CEO and President Bob DuPuy is that, 'It would take an awfully long time to grow to the value that being in 50 million homes is immediately going to provide. It makes sense from an economic standpoint and plus, these companies are partners that will help grow the game, and at the end of the day, that's to everybody's benefit, as well.' But is it to the fans' benefit?
Initially attracting the eyeballs of potential viewers with access to the MLBN in the midst of winter, with the NFL playoffs in full throttle and with NCAA basketball heating up, will be its first challenge.
Until the MLB regular season gets underway, there will be no live game coverage on the MLBN, and the Hot Stove season thus far has been less than exciting. Moreover, ESPN has had a stranglehold over MLB coverage the past two decades. And the FOX Network, which airs live games and, more recently, MLB Advanced Media coverage, which provides live TV coverage over the Internet, will make the MLBN market penetration no easy task.
The template presently in place for the MLBN until the regular season gets underway will be talking heads and historic footage. The initial night featured recently recovered footage of Don Larsen's perfect game in the 1956 World Series. But the network will carry only 26 regular games for the entire 162-game season, given its broadcast contract commitments already in place.
But most importantly for the average baseball fan from a consumer's standpoint is the way in which the MLBN's advance marketing was portrayed. MLB repeatedly stated that it would be available to all expanded basic cable subscribers. But it depends upon how they defined the word 'basic.' Clearly, it was not defined before January 1st.
MLB Commissioner Bud Selig appeared on camera on the MLBN just prior to its initial 6:00 PM EST broadcast on January 1st. And he stated at that time that, 'As has been widely reported, the MLB Network is not carried as a specialized sports tier, but does require customers to subscribe to digital basic cable or the equivalent.'
Therefore, many customers with expanded basic cable who do not require set-top boxes currently and who do not subscribe to a far more expensive digital tier were less than enthused when they tried to tune to the MLBN on New Year's Day.
Meanwhile, the MLBN contentedly has made it publicly known that it is not charging cable providers the 85 cents per subscriber that the NFL Network demanded, as it is only charging broadcasters 25 cents per subscriber. However, in order for a fan to get the MLBN, it requires a new expensive digital tier package and rental of a set-top box, which costs an additional $7.00-$10.00 per month.
When MLB negotiated with TBS to air the entirety of all first-round MLB 2008 playoff series, it was the first time in MLB and television broadcasting history that postseason coverage was not available on over-the-air TV for fans. And it was just a harbinger of things to come.
Soon, over-the-air TV will no longer be accessible simply by turning on a set without a converter box accompanied by a newfangled co-axial roof antenna, come February 17, 2009. But, cable broadcaster Comcast is already taking it a step further. It had originally required, with no fair warning to its analog customers or those known as the real expanded basic cable customers, that they would be losing all television access unless they rented a digital set-top box by December 31, 2008. Fortunately, the FCC interceded and Comcast agreed to delay that deadline until March 1, 2009.
The cable industry is using the Digital Television Transition as a convenient excuse to either extort or confuse customers into paying for more expensive services in an economy which is seeing its most severe meltdown in 70 years. However, MLB is enjoying the ride.
It is not necessarily MLB's fault for not allowing the MLBN to air for analog basic expanded cable customers. However, they could have been less deceptive in their advertising and maybe even held back its launch to such time when they could offer a more full blown schedule. After all, true baseball fanatics may jeopardize their finances to upgrade their service at this time only to be disappointed by a network which is in its infancy and may be filled with a lot of fluff and advertising.
Another incidental to note in the business of cable broadcasting is that in addition to the current nearly 20 million subscribers to analog basic expanded cable, there are approximately an additional 80 million subscribers that have analog basic expanded cable in other rooms of the house, in addition to their digital packages, say in the living room.
The conclusion, therefore, is that a good ploy would have been for the MLBN to initially roll out on basic expanded cable as promised, and then ramp it up to a digital tier as either the season got going or in 2010 when more viewers would have had a better chance of making a more intelligent decision on what type of television service is indeed best for them. Unfortunately, MLB is simply piling on and taking advantage of the situation.
And although MLB always makes sure to say it acts in the best interest of its fans, most of us know differently.