If marriage represents the triumph of imagination over intelligence, as Oscar Wilde once purportedly noted, and a second marriage demonstrates the triumph of hope over experience, then the corollary in the sports media business is a little more nuanced. In the era of massive platform disruption and cash optimization, a happy marriage could best be explained as not getting screwed by one partner while simultaneously kneecapping another. And this algebra of the heart perhaps best explains the modern kerfuffle that ESPN and Major League Baseball find themselves working through at this transitional moment in the media ecosystem.
ESPN, of course, pays around $550 million for its package of Sunday Night Baseball, wildcard playoff games, the Home Run Derby, and ESPN+ contests. So imagine the scorn that chairman Jimmy Pitaro might have felt, in 2022, when MLB sold a package of Friday night games to Apple for $85 million per year. Or, this spring, when MLB sold a package of Sunday morning games to Roku for $10 million a season. ESPN executives haven’t been shy about their plans to exercise an out in their contract at the end of next season and renegotiate a fairer deal.
Those talks have not started yet, but it appears likely that ESPN and MLB will start negotiating before ESPN can exercise its out. (For what it’s worth, viewership for the wild card round was up 25 percent this year.) And the executives in Bristol aren’t merely interested in national games. In fact, they’re just as focused on picking up local rights to MLB teams, which would provide a powerful lure for the company’s forthcoming streaming service, internally known as “Flagship.” Pitaro has said that he wants ESPN to be part of the local rights solution.“I could easily see a scenario where you have your national games on ESPN or ESPN2 or ESPN+, all of which will be made available as a part of Flagship,” Pitaro said a couple of weeks ago on The Varsity podcast. “I could easily see a scenario where we geotarget and make local in-market content available to the sports fan. But the leagues have to embrace that strategy.”
Let’s Deal
Major League Baseball, with its six-month schedule and constant hot-stove drama, was one of the true ballasts upon which the regional sports business was erected—all those games, all those months, the mythology around each team’s devoted fan base. Alas, in the end, it turns out that the affinity of baseball fandom isn’t quite enough to conquer the existential crisis of the late-stage linear business. And no entity knows this better than Major League Baseball, itself.
After being called in to support small-market teams in R.S.N. no-man’s-land, MLB has steadily come to the conclusion that its best hope is to bundle its clubs’ rights as their current deals expire. Of course, the league will not have a full complement of 29 U.S.-based teams by the end of next season. The Dodgers and the Yankees are unlikely to add their incredibly valuable rights to the mix, at least not right away. Other franchises, like the Braves, have their streaming rights tied up in their current R.S.N. deals. Regardless, pooled bargaining should offer the league an option better than the status quo.
If ESPN wants to bid on this package, as I’ve noted before, it will need to fend off other, larger companies that would also like to use local baseball rights as a subscription tool. MLB has already chatted with companies like Amazon and Google to gauge interest in that local rights package. It’s possible that Fox Sports would be interested in adding the Home Run Derby to its MLB All-Star Game coverage. (The NBA, under its expiring deal, sells its entire All-Star Weekend to Warner Bros. Discovery, which makes it easier for WBD to sell ads and sponsorships around it. ESPN and Fox ad sales executives often find themselves competing around the MLB All-Star Game, with Fox selling the game and ESPN selling the derby.)
So, as was the case with the NBA, Pitaro and his dealmakers will eagerly belly up to the trough. By reopening the negotiation early, ESPN may have an opportunity to demonstrate fealty, solve its own problem while also helping a partner. And, yes, they may have the added delight of fending off two multitrillion-dollar market cap companies, whose growing ambition and infinite balance sheets suggest that each forthcoming negotiation will be harder than the last.
