Out-of-market games available for seven years

Major League Baseball has engineered an eleventh-hour deal that will continue to make its out-of-market games available to cable for the next seven years, starting immediately.

The games were in jeopardy of disappearing from cable because baseball had struck a tentative $100-million-a-year exclusive seven-year deal with DirecTV, which would’ve seized exclusive rights to the out-of-market package, called Extra Innings.

But baseball fans rose up in anger over what they regarded as a greedy move by the league to give fans who don’t subscribe to DirecTV the Bronx cheer while harvesting bumper crops of cash from the satellite distributor. D.C. congressmen, led by Sen. John Kerry (D., Ma.), got into the act, holding a hearing last week in Washington to reprimand baseball executives and urge them to go back to the bargaining table with cable.

Talks began late last week with a March 31 deadline, but both sides worked past the deadline, finally reaching agreement late Wednesday. In Demand, the distributor of Extra Innings, negotiated the new contract for cable operators.

What’s unusual about the deal is that even though Extra Innings stirred up all the controversy, the major sticking point was cable carriage of the still-in-development MLB Channel, which has a launch date of January 2009. In Demand wanted to place the MLB Channel on a digital sports tier. Baseball’s negotiators balked, denouncing the tiers as total failures because they reach only about 10% of the digital-subscriber base.

In the new contract, the MLB Channel will avoid getting pitchforked into sports-tier Siberia. The league was euphoric, saying in a statement that its “partnerships with DirecTV and In Demand mean the MLB Channel is expected to launch in 40-million homes” when it opens for business in 20 months.

That would be a record carriage launch for a new cable network, particularly remarkable because the league has not said anything specific about the programming on the 24/7 network, or even whether there would be any live regular-season games.

If the MLB Channel reaches 40-million homes from day one, its asset value will dwarf whatever amount of money the league pockets from license fees for Extra Innings.

DirecTV’s $100-million-a-year offer came off the table when the In Demand contract was signed. So it’s unlikely that the league will get to that annual figure, even with a triple, non-exclusive combination of DirecTV, cable TV and — although the deal is not yet signed — of Echostar, the satellite competitor to DirecTV. All three have carried Extra Innings for a number of years.

Fronting the deal for baseball was Bob DuPuy, president and chief operating officer of MLB. For In Demand, Robert Jacobson, its president and CEO, did the heavy lifting.

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