Baseball Hearing

[TayTay]

Statement from Sen. Kerry.

http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=1838

Kerry Tells Parties in Baseball Deal to Put Fans First

WASHINGTON D.C. – Senator John Kerry will chair a Full Committee Hearing called “Exclusive Sports Programming: Examining Competition and Consumer Choice,” today at 10:00 a.m., in room 253 of the Russell Senate Office Building.
http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=1838

Below is Senator Kerry’s statement, as prepared for delivery:

I would like to welcome our witnesses. We are conducting this hearing today to discuss sports programming in general -- and baseball in particular – a very popular topic this time of year in Massachusetts and all over the country.

Last year, baseball fans were able to buy what are called “out of market games” through their cable and satellite providers. The package of games is called “Extra Innings,” and allows fans to follow their home team. So Red Sox’s fans living in Washington or California could still get access to most Red Sox games for about what it costs a family of four to attend a game.

Press reports indicated that Major League Baseball was close to announcing an exclusive deal with DirecTV for carriage of these games. We will evaluate this deal.

Yogi Berra was once heard to say, "You've got to be very careful if you don't know where you are going -- because you might not get there."

That sentiment is as timely now as ever. We want to examine where the parties are going - and whether this deal will get them there. Is this type of deal in the best interest of consumers? Does it serve the sports fans? These are legitimate questions.

Baseball is an integral part of American culture. Commissioner Selig himself has said that baseball is a social institution with enormous social responsibility. I agree with him.

Recognizing that, baseball has benefited from an array of favorable Government policies. The sport enjoys a broad antitrust exemption. It allows them to negotiate carriage deals, and gives them tremendous market power.

They receive Billions of hard earned tax dollars to support stadium construction. Right now, only a few blocks away from here, the new Washington Nationals stadium is being built. One Economist estimates that between 1989- 2001 16 baseball-only stadiums were constructs at a total cost of $4.9 billion. $3.7 billion of that cost borne by public revenues -- taxpayer money.

We should support baseball, and in return, I believe baseball should serve the public interest. It is fair to expect baseball to provide broad access to their games.

Last year, it cost a family of four almost $180 to attend a Major League Baseball game. For too many families and people living on fixed incomes, the cost of attending a game is getting out of reach. Still, a record total of 76 million fans attended Major League Baseball games last year.

We are now less than a week away from the baseball season and over 250,000 people will lose access to their team’s games.

Let me say at the outset, I am concerned about exclusive carriage deals in the sports industry. These deals may be good for the short-term financial interests of the sports leagues; they may improve the competitive position of the cable or satellite firms that get the rights -- I have no doubt that there are business advantages --

But we need to discuss the impact of these business changes on baseball fans as well. 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.

The sports leagues have tremendous market power. We need to ensure that the deals that are cut serve the public interest.

Yogi Berra also was heard saying, "You can observe a lot just by watching."

Well, the American people are watching, and fans are watching, and they have not been shy to express their feelings about this deal. Truth be told, baseball fans all over this country are disappointed and some are outraged.

As we stand here today, approximately 260,000 baseball fans that currently pay a premium to see their team will lose access to those games – unless they switch to DirecTV.

Baseball is important to America. I believe that baseball fans living outside the state of their favorite team should continue to have access to Major League games without having to cancel their current service.

Why should fans have to do that? We have heard from many fans that do not have the ability to switch to satellite if they want to. That is not fair, and I’m not sure it is in the long term interest of the sport.

With today’s hearing, we will get the facts on the record. And I urge the parties to work together, in good faith, to ensure we have broad carriage of the Extra Innings package this year.

I welcome our witnesses.


The witnesses testifying at the hearing will be:

Mr. Robert DuPuy
President and Chief Operating Officer
Major League Baseball

Mr. Chase Carey
Chief Executive Officer
DIRECTV Group, Inc.

Mr. Rob Jacobson
President and Chief Executive Officer
iN DEMAND Networks

Mr. Carl Vogel
Chairman & Vice President
EchoStar Satellite L.L.C.

Mr. Stephen F. Ross
Professor of Law
The Dickinson School of Law,
The Pennsylvania State University

[TayTay]

1. So far

Major League Baseball spokesman: Ahm, what problem? We make money, we are a business after all.

DirectTV guy: What problem? And, ahm, everybody bundles programming. This is no different.

InDEMAND networks guy: The terms are unfair. We can't met the price and DirectTV is getting special concerns.

Mr. Ross, the lawyer: (What is the law here?) Consumers will be harmed by not having access to the content. This is different from normal business competition. Consumers can't just up and leave their content providers. Non-competitive market problems. 30 MLB owners have all chosen to sell broadcast rights through one dealer. Only 1/2 of 1% of all baseball fans subscribe to out-of-market games. The only way you can do this is through this congolmerate agreement. Special legislation is justified if the partners can't work out a deal. (Sports is tough to deal with because it is a special business. )

[TayTay]

2. Oooh, Sen Lautenberg is there

I like him.

Ahm, again, sports programming is difficult to control. These deals are excluding a lot of people from watching content they want. (Anti-consumer deals are bad.) Yes, broadcast cos want to make a profit, but who is being excluded? Sen. Lautenberg is making the point of how expensive it can be to watch various sports coverage because of all these 'exclusive' deals on broadcast rights. It's anti-consumer.

[TayTay]

3. How is the judgment made to do this exclusivity deal

Don't you want this service made available to a wider, not a more exclusive audience.

Arhm, sort of.

[TayTay]

4. Well, there's the real nub of the conversation

MLB and DirectTV seem to be saying that nothing that the other providers offer is good enough to be considered. And it hinges on the onwership of the new Baseball Channel. DirectTV would get special consideration because they were first out of the box to sign up. The other content providers can't get that deal. (Too many pieces of ownership out there, then who makes a profit and who owns the not-yet-aired Baseball Channel.)

[TayTay]

5. Sen Specter

Ah, you know, keep that 'anti-trust' provision that the Congress gave MLB in mind. We could, oh, I don't know, revisit it. Seem like a good idea to you MR. Major League Baseball guy?

Sit down, negotiate, make Sen. Kerry and eveyrone else happy.

Or perhaps we should just talk about that anti-trust provision. Think it over guys.

Before that: The Lawyer: Ah, send this to binding arbitrtion. (LOL!) It's a great case for it.

[TayTay]

6. So, what happened.

The hearing stated clearly that Senators are hearing from constituents that it is unfair to have this kind of programming on exclusive deals. It's expensive to change plans for consumers. The various cable/satellite parties should, according to the lawyer present, negotiate this out so everybody gets a piece of the lucrative pie.

They demurred from this common sense advice. So, Sen. Specter came in with a gun and pointed it at them with the 'we can revisit your anti-trust status you know." The lawyer calmly stated that the Commerce Committee was well within it's jurisdiction to revisit the anti-trust provision that MBL and no other big-money sports enjoys. (Hey guys, that gun, it's loaded you know.)

Much fun ensued as MLB remembered that yeah, they could get shot, maybe they should rethink this. Hey, about that arbitration thing, think we could set a date?

[jillan]

7. This was on last nite.

Gotta catch most of it. Dozed off it was late...
Actually was going to turn off the tv completely, then heard the announcer say John Kerry conducting hearing....

That's why I love this guy...even in watching baseball on tv, he sticks up for the people, not the corporations.

[ProSense]

8. Thanks for this thread Tay.

I followed along with your posts yesterday, and forgot to thank you. :)

[globalvillage]

9. Aaaarrrrrgggghhh.

I missed this hearing. Damn.

Thanks for the play-by-play, Tay. It ain't over till it's over.

[karynnj]

10. NYT article on Kerry's hearing

"“It was just amazing,” marveled Stephen F. Ross, a sports law expert at Pennsylvania State University. “You had a United States senator trying to broker a deal in public.”

The senator in question, however, wasn’t trying to solve the trouble in the Middle East or the health care mess. No, Senator John Kerry was trying to figure out how to get more baseball on television. And he wasn’t having much success.

<snip>
What’s the possibility of having a face-to-face meeting in the next 48 hours?” Senator Kerry pressed.

<snip>
And supposedly that’s what they’re doing even as you read this, with baseball season starting tomorrow. Which is not to say there’s a high likelihood of any kind of breakthrough. That would be the smart play. And let’s face it: the men who run baseball have a history of not making the smart play."


http://select.nytimes.com/gst/tsc.html?URI=http://select.nytimes.com/2007/03/31/business/31nocera.html&OQ=_rQ3D1&OP=299784a4Q2F9Q26tQ609MbEJJM9Q2Ajjy9jq9qQ2B9Q60pb@Q7Dtbb9qQ2BQ7DJQ5BtEL!Q27M(,

Very long article - not optimistic, but mostly negative on MLB.