CQ TODAY
March 30, 2007 – 7:05 p.m.
Baseball’s New TV Deal Draws Hill Scrutiny

As baseball season dawns, many fans will find it harder to keep up with their favorite teams because of an exclusive deal between baseball and a satellite television provider.

In a rite of spring that has become almost as perennial as “America’s favorite pastime,” some in Congress are raising concerns about how Major League Baseball (MLB) conducts business in light of the deal.

Only one company — DirecTV — will be able to provide “out of market” baseball games to its subscribers. The service inked a deal in March that gives it exclusive rights to show, for example, local broadcasts of Boston Red Sox games to fans who live in Los Angeles.

Cable TV providers and EchoStar Communications’ Dish Network, DirecTV’s chief rival, argue that they were shut out of the deal. DirecTV says the other parties had months to negotiate and simply did not offer as attractive a package.

Fan outrage was loud and it quickly reached Capitol Hill, lawmakers said. At a hearing last week in the Senate Commerce, Science and Transportation Committee, members made clear that Congress could get involved if baseball will not rework the deal to be more inclusive.

“Baseball as we all know it is an integral part of our culture. Baseball has also benefited from an array of favorable government policies,” said Sen. John Kerry, D-Mass. “We should support baseball. I believe baseball also, however, ought to serve the public interest. It’s fair to expect that they would provide broad access to their games.”

Despite the rhetoric, lawmakers are unlikely to take legislative action for now. One solution — revisiting baseball’s unique antitrust immunity — would certainly inspire prolonged legislative fights. Another potential remedy — rewriting broadcast “carriage” rules — might require Congress to reclassify sports as a “public interest.”

Stephen F. Ross, director of Pennsylvania State University’s Institute for Sports Law, Policy and Research, said all of the possible legislative solutions raise “significant broader policy questions” that would be tough to sort out.

Although lawmakers might not have the will to take such drastic steps, a Democratic aide said that other major sports leagues should be paying attention. If exclusive agreements like the DirecTV deal become more common, Washington may have no choice but to get involved.

“The trend is increasing. That’s where we’re going with sports carriage in this country,” he said. “You’d better rest assured that the NBA is watching these hearings very closely.”

Indeed, DirecTV also has an exclusive deal with the National Football League to offer a similar premium package of out-of-network football games, known as NFL Sunday Ticket. And there have been many other thorny issues to navigate with sports broadcasting rights, including one recently with the Washington Nationals baseball franchise.

Under the DirecTV baseball deal, more than 200,000 cable and Dish Network subscribers who currently pay a premium to see “Extra Innings,” a package of out-of-network baseball games, will lose their access unless they subscribe to DirecTV, which uses a satellite dish.

Negotiations were expected to continue through the weekend to try to bring cable companies and the Dish Network into the deal before opening day, but an agreement seems unlikely.

At the hearing, Robert DuPuy, MLB’s chief executive officer, defended the deal, saying it was integral to baseball’s viability because of what it will receive in return: DirecTV has agreed to launch a Baseball Channel in 2009 as a premium network carried to 15 million subscribers. MLB would have a majority share of the network.

DuPuy said he hopes that the Dish Network and the cable companies will match DirecTV’s deal.

“Our desire is to have as much distribution of our games as possible,” DuPuy said, adding that fans may still watch out-of-network games by subscribing to streaming video on MLB’s Web site.

But representatives of Dish Network and cable have said they have offered the same deal as DirecTV, including its 20 percent equity in the new baseball channel. It has been rejected, they say, because DirecTV does not want to share ownership of the channel.

Baseball enjoys an exemption from antitrust challenges that is unique among businesses. Initially determined by the Supreme Court in 1922 in a case involving a player-signing dispute, it has since been expanded to many other areas, including broadcast rights. Teams can pool them to sell as a package to networks without fear of legal challenges. Other sports leagues have the same antitrust exemptions for broadcast rights, but are not protected in other areas.

If Congress revoked the protection for baseball, each team would have to negotiate its own contract with national broadcasters. An exclusive deal such as the DirecTV agreement would not be possible.

Ross, the law professor, said beyond the antitrust exemptions, baseball clubs have long preferred not to televise games outside of their local markets.

“The reason they’re not willing to do that historically has been that the owners can’t agree on how to divide up the profits, so they’d rather just not offer the product at all,” Ross said.

Congress also could revisit the carriage rules that require broadcasters to serve the public interest. Legislation could define sports broadcasting as content that should be widely available to all consumers.

In that case, the Democratic aide said Congress would have leverage to ask, “are enough people getting to see the games, are they serving the public interest?”

Source: CQ Today
Round-the-clock coverage of news from Capitol Hill.
© 2007 Congressional Quarterly Inc. All Rights Reserved.