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Senate hearings on Extra Innings - The five minute version
2007-03-27 09:43
by Bob Timmermann

Or maybe I can summarize it in even less time!

John Kerry starts off welcoming the witnesses and throws in two Yogi Berra quotes. And also says:

"I am concerned when fans lose access to their favorite team; or, as we will discover today, they are forced to change their TV service just to see games.  That is wrong.  That is a sign that the system is not working."

Rob Jacobson of INDemand is up next and apparently can speak only in form of a pdf file. Jacobson paints INDemand as the voice of the poor, oppressed baseball viewer and how his company never wanted an exclusive deal like DirecTV.

Then Stephen Ross, an antitrust law professor from Penn State comes to testify. He's not happy with the deal.

Ross nicely supplied an executive summary of his testimony:

1) Although exclusive dealing agreements with retailers whom consumers can access for free can often be pro-competitive, the MLB/DirecTV deal threatens to harm a wide variety of consumers
 Fans who, for other reasons, are unable or unwilling to switch to DirecTV
 Fans who would prefer to get out-of-market games other than the entire ExtraInningsTM package
2) The agreement exploits significant departures from the free market
 MLB clubs agree to only telecast games in assigned territories, contrary to a 50-year old antitrust precedent
 MVPDs face insufficient competition, allowing them excess profits for their basic premium service
3) Economic analysis shows that ordinarily, DirecTV would want to re-sell ExtraInnings to its cable and satellite rivals at a high per-subscriber charge; the exclusive deal reflects a sharing of additional excess profits DirecTV will obtain by forcing consumers to switch to its Choice or higher premium packages
4) Although the conduct is arguably illegal under the antitrust laws, a number of obstacles render litigation inadequate to protect consumers
5) Congress could, alternatively, consider:
Regulatory legislation to outlaw specific sports programming practices that harm consumers
 Amendments to the Sports Broadcasting Act to specifically outlaw anti-consumer practices

 “Strategic” legislation onerous to the industry that would facilitate voluntary compliance.

Next up, Bob DuPuy. He does not start his testimony by making an offering of a goat to Bud Selig, which I think might be in violation of his contract. DuPuy basically states that this is all just a matter of how the out-of-market games are delivered to the viewer, either via satellite or via cable or via internet. And MLB.TV will look really neat this year!

Then, the villain of the piece (because he's got the mustache for it), Chase Carey of DirecTV. He says pretty much the same thing DuPuy does except in a longer form and more business-ish. Carey thinks the bigger problem is that DirecTV isn't allowed to provide internet service, while cable companies can.

Finally, Carl Vogel of EchoStar speaks. Like Jacobson he can only speak in the form of a pdf. And he pretty much says the same thing as Jacobson.

So far just the statements are available online. The exciting give and take isn't anything I've seen so far, but judging from the opening statements, I think I may be more interested in seeing in waiting for Thursday when the Senate Commmitte on Environment and Public Works discussed the construction of a new Federal courthouse in Fresno. They will also discuss a courthouse project in Duluth!

2007-03-27 10:41:24
1.   kylepetterson
Man, if I ever get so worked up about TV that I feel that the Senate needs to step in, shoot me. Honestly, just put me out of my misery.
2007-03-27 10:44:04
2.   Bob Timmermann
Don't open the door for a while then.
2007-03-27 10:59:58
3.   OaklandAs
Does anyone know why MLB is opposed to allowing InDemand to carry Extra Innings along with DirecTV? I assume that the $700M that DirecTV offered is only for exclusive distribution, but will be reduced if not. But how much lower would it be? Right now, it seems like both sides are offering $700M, but MLB doesn't want to take InDemand's money. Would MLB lose significant money if both sides carry Extra Innings?
2007-03-27 11:01:33
4.   misterjohnny
I'm curious why they don't have Roger Goodell testifying since the NFL has had a similar arrangement with DIRECTV for 10 years or so.
2007-03-27 11:02:53
5.   kylepetterson
If anything, the senate should be investigating why Ricky Schroder is still sporting that same damn "Silver Spoons" haircut on 24. more train rides.
2007-03-27 11:10:17
6.   misterjohnny
3 MLB wants carriage of MLB channel on the basic tier, which DTV is willing to do. Cable is not willing to do that. DTV won't do it if they don't get an exclusive.
2007-03-27 11:47:54
7.   OaklandAs
6 But is that worth ignoring the $700M that InDemand is willing to pay?
2007-03-27 11:50:51
8.   Bama Yankee
Cable did offer to provide the MLB channel to 15 million homes (same number as DTV would be providing). Part of the problem is that MLB is offering DTV a 20% interest in the baseball channel. They want cable to agree to the same terms as DTV when it comes to providing the channel on the basic tier, but they are not willing to give cable the same equity in the channel.
2007-03-27 12:08:10
9.   rbj
Thanks for the summary, Bob.
A pox on Bud & Bob DuPuy (or Do Pay)
2007-03-27 12:20:02
10.   Bama Yankee
The following comment from Rob Jacobson shows that cable is willing to work with MLB to make an agreement:

"Even now, we would enter into a deal for carriage of Extra Innings on the same terms as DIRECTV. If The Baseball Channel launches in 2009, we would give MLB the right to cancel the Extra Innings deal if it cannot reach a satisfactory agreement for carriage of the new channel with our owners. This would put off the issue of The Baseball Channel until it actually launches and ensure that for the next two years at least, all baseball fans will have access to the Extra Innings package. We think this is a fair compromise."

Why would MLB not take this deal unless they are more interested in giving DTV an exclusive?

2007-03-27 12:36:01
11.   Shaun P
10 "Why would MLB not take this deal unless they are more interested in giving DTV an exclusive?"

Because MLB's real interest here is in funneling more consumers to MLB.TV, which of course results in more direct money in MLB's pocket, which increases the value of MLBAM . . . and sweetens the IPO of MLBAM, which is going to happen at some point. The only question is when. I'm no economist, and I have no numbers I can point to, but I'm guessing that MLBAM's IPO will result in huge profit returns for the owners.

In other words, MLB is acting in its own best interests to make more money, which should surprise no one.

Will anyone (did anyone) bring this up during the hearing?

2007-03-27 13:04:25
12.   mintxcore
this is kinda a stupid question but i cant seem to figure out the answer...

the sports package on DTV has a whole bunch of FSN channels along with NESN and YES and Sun Sports, etc etc.

wouldn't having these pretty much be the same as Extra Innings or do they blackout the games?

2007-03-27 13:11:03
13.   Bama Yankee
12 The games are blacked out.
2007-03-27 13:12:38
14.   Shaun P
12 They black out the games, unfortunately.

That's another issue - why does EI offer only the home team's broadcast? Its not like they can't offer the away team broadcast - sometimes they do, if the home team has the game on a local channel. Why not do it all the time?

2007-03-27 13:21:52
15.   Bob Timmermann
EI sometimes shows road team broadcasts if the home team's broadcast isn't available. This happens when teams go to Philadelphia, San Diego, or Toronto, all of whom didn't participate in EI. Also some teams just don't broadcast a lot of games (relatively speaking), like Tampa Bay or Washington.
2007-03-27 13:25:40
16.   OaklandAs
11Even if all 200,000 of InDemand's customers move to, that's still only around $18M in revenue per season. Meanwhile, MLB could get $70M/year if they accept the cable offer. Usually the short-term revenue is all the owners think about, so I'm still not sure I understand their plan.
2007-03-27 13:31:31
17.   Bama Yankee
11 Exactly, Shaun. The MLB.TV component is something that does not usually get mentioned in the debate (at least the fact that this deal would make drive more people to MLB.TV and thus increase its value for MLB).

Mr. DuPuy did mention in the hearing that people who were losing access to EI could just go with MLB.TV (as if they were the same). Others pointed out that they wanted to watch games on their plasma screens instead of their laptops.

I actually subscribe to both EI (on cable) and MLB.TV. I have to do this to follow the Yankee games that are shown on My9 or are blacked out due to FOX. Even so, there is no solution for me that allows me to watch every Yankee game.

It just seems silly to me that MLB would not want to make their product available to the largest possible audience.

2007-03-27 13:38:11
18.   trainwreck
Great, I have to count on John Kerry. once again.

Give me my Dodgers!

2007-03-27 13:39:48
19.   Shaun P
17 "Even so, there is no solution for me that allows me to watch every Yankee game."

That ticks me off too, Bama. I won't pony up for both EI and MLB.TV, but I understand why you do. If they put every last game on EI, I'd probably pay $250/year for it. But they won't.

"It just seems silly to me that MLB would not want to make their product available to the largest possible audience."

Totally agree. Of course, MLB also thought broadcasting on radio and later TV would mean the end of the sport.

2007-03-27 13:40:20
20.   Bob Timmermann
I've tried my best to "Swift Boat" Chase Carey, but to no avail.
2007-03-27 13:48:31
21.   Bama Yankee
18 I am certainly no John Kerry fan, but I'll have to say that he did a nice job during the hearing (I only caught the second half). Near the end he really seemed like he was trying to get them to make a deal before the season starts. He even tried to pin them down to an exact date during the next 24 to 48 hours when they could meet to resolve the issue.

My biggest fear was that the "Swiftboat Veterans for DirecTV" were going to disrupt the hearing... ;-)

2007-03-27 13:51:41
22.   Bama Yankee
20 You beat me to the "Swiftboat" joke, Bob (I gotta hit refresh more often).

Let me revise 21 to say:
My biggest fear was that Senator Kerry was going to say that he voted for the DirecTV deal before he voted against it.

2007-03-27 14:01:01
23.   Bama Yankee
19 "If they put every last game on EI, I'd probably pay $250/year for it."

Me too. I pay more than that now (EI and MLB.TV combined, not to mention XM radio).

If DirecTV gets exclusive rights for 7 years my guess is that you might be paying that $250/year for the same service that you currently have.

2007-03-27 14:49:35
24.   Sushirabbit
I don't really understand why I can't pay a premium for all the games of the ONE team I want to watch. WHEREEVER they are. Why doesn't that make sense? The FSN Hockey channel for the Predators is availble to me even while the Predators are trying to get more fans in the arena. Look at the Cubs and Braves... I mean people everywhere are watching that so market to them instead of just to Chicago and Atlanta. MLB is a time warp.
2007-03-27 14:51:27
25.   Bob Timmermann
You and Professor Ross are of one mind.
2007-03-27 15:13:51
26.   groucho
Great conversation -- very interesting and insightful. Clearly you know more than MLB gives us credit for.

I'll tell you what. Keep your extra innings. I'm a Yankee fan! So -- just let me contract with my provider for the Yes Network. MLB can keep the rest.

Of course -- who am I kidding. They'd never allow that!

2007-03-27 15:28:57
27.   Bama Yankee
26 I'm with you groucho. I would pay twice the current price of EI just to get the YES Network on my cable (with no blackouts and FOX/My9 exclusions, of course). It would be worth $1/day for me to get the YES Network if I could watch every Yankee game (what a novel concept).

HEY MR. SELIG, did you get that. Some people would actually pay more for fewer channels (or even just one channel). Run that one past your accountants and see if that helps your bottom line.

2007-03-27 16:01:30
28.   Eric Enders
Some interesting Dodger-related minutiae in Paul Lukas' latest "Uni Watch" column:

Uni Watch isn't usually in the habit of making preseason predictions, but let's just come out and say it: Jose Cruz Jr. for MVP.

One other thing about the new caps: Since they're made of synthetic fibers, they don't shrink. That could cause problems for Eric Gagné, who prefers a cap that's slightly too big and then lets it shrink to create a snug fit around his glasses (for full details, check out the "Dirty Laundry" section of this page). That's why his cap has traditionally been all sweat-stained -- once he's got one that's shrunk just right, he doesn't want the hassle of breaking in a new one. No surprise, then, that during spring training he's been wearing one of the old wool caps (note the telltale gray underbrim) instead of the newfangled polyester batting practice caps. Uni Watch is curious to see what he does once the regular season starts -- assuming he doesn't, you know, blow out his arm this weekend.

• Lots of small changes for the Dodgers: Player names, which had been missing from jerseys the past two seasons, have been restored (although they could use a refresher course on how to avoid loose threads); the blue piping and white outlining that used to be on the road jersey have been eliminated; the white outlining on the road jersey's uniform numbers is gone, too; the "Dodgers" patch on the road jersey's left sleeve is now an "LA" patch; and the gray outlining on the home jersey's "LA" patch has been eliminated.

2007-03-27 16:01:46
29.   Eric Enders
Damn, wrong blog. Sorry.
2007-03-27 17:02:51
30.   Bob Timmermann
Well, I cared anyway.
2007-03-27 17:18:49
31.   screwedbybaseball
This is a total mess, and I sure hope every baseball fan sees through this smoke screen for what it really is. I've been talking about this subject ever since the news about this broke on a "protest" site I set up. I'd love to have anyone who's ticked off about this come join us at
2007-03-27 18:49:19
32.   Voxter
Wait, don't these people have a country to run?
2007-03-27 19:27:43
33.   Bama Yankee
32 Actually, this is the kind of stuff I would rather them get involved in. When they try to run the country, they usually screw it up. ;-)
2007-03-27 19:58:14
34.   El Lay Dave
And when they try to run OTHER people's countries....

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