NEW YORK — The Fox Network has put an exclusive lock on the network rights to Major League Baseball for a license fee of $2.5 billion for the six years beginning with the 2001 season.
The deal is a surprise because MLB, after insisting that NBC pay triple the current license fee of $80 million a year for a new contract, had recently come down from its demands, hoping to get NBC to sign a renewal. Fox owns exclusive rights to a weekly nationally televised regular-season MLB game; and Fox, NBC and ESPN share the telecast of a package of post-season games under a five-year contract that expires at the end of this season.
In the current deal, Fox and NBC alternate coverage of the World Series and the All-Star Game. Sources say MLB wanted to continue that arrangement to make sure that the post-season games were available to every home with a TV set.
NBC Sports prexy Ken Schanzer, who is in Sydney for the network’s coverage of the Olympic Games, said NBC has passed on renewing its deal with MLB, which had set a new-contract deadline of Sept. 26. Although ESPN — which had also put out a bid to share the games with Fox and NBC — had no comment on whether ESPN has also rejected baseball’s final demands, a reliable source said the network is out of the picture and that Fox is the sole rights-holder.
NBC bowed out, and ABC and CBS showed no interest in going after post-season baseball because ratings for the games have plunged in recent years. The games also come at an inconvenient time, because the broadcast networks are premiering many of their new primetime series during October. When low-rated divisional playoffs pre-empt these new series and elbow out fresh episodes of returning series, the disruption can end up costing millions of dollars in lost ad revenues and diminish the chances of success for promising rookie series.
One insider said both Fox and MLB will hold a news conference as early as today to announce the new deal. Fox will get the MLB package because it has delivered the best offer, ponying up an average of at least $417 million a year (based on the $2.5 billion total), which would be 45% more that the $290 million a year that Fox, NBC and ESPN together shelled out under the current deal.
For its license fee, the Fox Network gets all of the World Series games for the next six years and all of the All-Star games. The network will also continue its carriage of a weekly national game on Saturday afternoons and will share the televising of divisional playoffs with cable partner Fox Sports Net, which either owns or is affiliated with regional sports networks that reach about 72 million cable and satellite homes throughout the U.S.
MLB did not negotiate from a position of strength. Its Nielsen ratings consistently fall well below the average for games of the National Football League, the National Basketball Assn. and the NCAA basketball tournament. Another big rap against baseball is that, unlike pro football, pro basketball and most college sports, a disproportionate share of MLB’s viewership is 50 and older, a demographic that Madison Avenue tends to shy away from when it draws up its advertising budgets.
Reflecting that reality, the six-year, $2.5-billion baseball deal looks anorexic compared with the $17.6 billion in license fees that CBS, Fox, ABC and ESPN have agreed to pay the NFL over eight years, and the $11 billion CBS will pay for a six-year contract to the NCAA basketball tournament.