Sports TV
Baseball hits homer with MLB Network
By Kevin Downey
Jan 6, 2009 - 1:42:59 AM

When media people think of Major League Baseball they're inclined to think of its blunders, such as the 1994 players' strike that nearly destroyed the league, and more recently its ineffective handling of the doping scandal.

But MLB appears to have gotten something right: last Thursday's launch of the MLB Network. With 50 million subscribers, it's the biggest cable launch ever.

Having watched the NFL Network, which debuted in November 2003 but continues to struggle, MLB set about to avoid all of its mistakes by taking on important partners and getting the pricing right.

"They’re getting carriage deals with satellite and cable operators because they’re making it affordable,” says Brad Adgate, senior vice president and corporate research director at Horizon Media. “If you’re a baseball junkie, and there are many out there, this will help them get their fix.”

NFL Network launched with 11.5 million subscribers and in the five years since has grown to 42 million subscribers, but it's been a hard slog because of the steep fees it charges cable systems to carry it, about $0.88 per subscriber.

MLB Network is charging less than a third of that, $0.24, and it's free for subscribers if they have expanded basic or digital packages from cable providers Comcast, Cox, Time Warner, Charter, Cablevision, satellite service DirectTV and Verizon FiOS. NFL Network, by contrast, isn’t carried by Time Warner, and Comcast subscribers have to pay an extra fee to receive it.

The NFL Network is owned by the NFL whereas DirecTV, Comcast, Time Warner and Cox together own a third of MLB, with the league owning the remainder.

But MLB also learned from its own mistakes.

In 2007, the league signed an exclusive deal with DirecTV for its Extra Innings service, which gives viewers access to all games. This prompted howls of protest from competing cable providers as well as baseball fans who were not satellite subscribers. MLB gave in and made Extra Innings available to cable systems as well.

“They have learned not just by their own ways but they’ve watched the NFL Network and others navigate how to launch such a network,” says David Carter, principal at consulting firm Sports Business Group. “When you combine that with the demand for baseball products and that baseball, for many, is a 365-day-a-year pursuit, they found themselves in an enviable position.”

MLB Network is likely to be profitable in its first year, according to SNL Kagan, expected to generate $150 million from subscriber fees and an additional $50 million in ad revenue, having lined up advertisers such as Chevrolet, Pepsi and Anheuser-Busch.

“[MLB Network] is expected to take in more than $200 million from license fees and advertising by the end of 2009 – pretty successful batting for a rookie,” SNL Kagan analyst Adam Swanson writes in a new report.

Kagan is forecasting that MLB Network will have 67 million subscribers by 2012, when it’s expected to generate $306 million in licensing fees and advertising.

The network is airing several hours of original programming each night, along the lines of ESPN’s programming where sports commentators talk about games, stats and baseball news. It’s also airing classic games and has 26 live games scheduled for this year.

Rights to the great bulk of important MLB games, close to 5,000 in the regular season, are locked up on networks like Fox, TBS and ESPN until 2013. But Sports Business Group's Carter doesn't see that as a big drawback. “They have so much other programming and content they can feature,” says Carter. “It also gives them the opportunity to potentially move more games to the network over time.”