ESPN drops baseball deal for $13 mil

ESPN has thrown what may be the first major blow in the next round of big-league sports contracts, as the cable network has declined to exercise its $ 250 million option to televise Major League Baseball in 1994 and 1995 and instead chose to pay a $ 13 million buyout.

ESPN’s $ 390 million, four-year deal with baseball expires after the 1993 season.

ESPN, 80%-owned by Capital Cities/ABC, estimates it has lost roughly half of its investment in baseball on the deal and that to continue to play, the price would have to be lower.

Back in late 1988, ESPN and CBS inked deals that combined were worth more than $ 1.4 billion. Many industry insiders, especially their broadcast and cable competitors, said the deals were ridiculous and overpriced. CBS Chairman Laurence Tisch eventually agreed that the web overpaid. Time appears to have proved the rest of the naysayers correct.

According to industry estimates, CBS has lost more than $ 275 million before taxes on its baseball coverage and ESPN is in the $ 200 million range.

Once the deals were completed, both networks found themselves with very expensive programming and a depressed advertising marketplace, especially for sports properties. What also hurt was the proliferation of baseball product available to consumers and advertisers on a regional and local basis. Advertisers tended to choose local market buys over the more expensive, and ultimately less effective national time.

“We’re now free to negotiate with anyone,” deputy commissioner Steve Greenberg said over the weekend. Other cablers possibly interested in televising baseball include TNT and USA.

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