With 18 of 30 Major League Baseball teams experiencing a YoY attendance decline, many are asking what the league can do to stop the slide and spark a return to the ballpark. Alleviating the friction that prevents fans from watching league games seems like a reasonable place to start, but defined home markets and existing local broadcast deals complicate the matter. There is hope on the horizon though. With technology continuing to improve, young fans gravitating towards players over teams and MLB considering reallocating digital media rights to its teams (as opposed to the RSNs), it’s possible if not likely that the future will be one in which fans willing to pay for games “on demand” have that option.
Howie Long-Short: Major League Baseball’s blackout policy is in place to promote competitive balance. While the league sells national broadcast and distribution rights and those revenues are split evenly amongst its teams, the clubs retain 100% of local broadcast revenues. If defined home territories didn’t exist, the league’s most popular franchises [and the RSNs they play on] would appear on TV sets across the country, while the remainder of the league’s teams would struggle to even gain carriage in their local markets; and needless to say, it’s difficult for a team to build a local following if the games aren’t being broadcast on television.
With several operators in each MLB market, the RSN distributing the home team’s rights must strike deals with multiple carriers (if all fans in-market are to have access to the games). If the RSN and a cable company are unable to come to an agreement, the local team’s games aren’t broadcast to that carriers’ subscribers; those same fans also aren’t eligible to watch the home team’s games through MLB.tv or MLB Extra Innings as those services exclusively carry to out-of-market broadcasts. The blackout policy is meant to protect the RSNs – which pay teams significant amounts of money for their local broadcast rights on an exclusive basis – from losing in-market viewers to a national package.
Blackouts were particularly disruptive to baseball fans when cable television companies were the primary method of RSN distribution. As distribution technology has advanced and the reliance on cable has eased, MLB’s blackout policy has had less of an impact on fans. Those who reside in cable blackout zones can now subscribe to a satellite provider like DirecTV (has RSNs with the broadcast rights to 27 of the 29 U.S. based clubs, Phillies and Dodgers excluded) or a virtual MVPD service like YouTube TV (has RSNs with rights to 22 teams’ games) and catch the home team’s games unencumbered by territorial restrictions.
Howard Handler, former head of NFL and MLS marketing (currently leading h2 Advisors), explained that blackouts are the result of your classic “rights seller vs. fan centric” conflict. “Teams, leagues, owners of intellectual property have historically sold media rights to the highest bidder, technology has now created the ability for them to go direct-to-consumer I expect leagues to ensure that during their next round of media rights negotiations the fans’ ability to watch all of the games – for a price – is protected. These entities are in the business of maximizing the value of their rights and you do that by making them available as broadly and expansively as possible. It’s simply not logical to impede the access and engagement of your highest value customers.”
Fan Marino: MLB teams’ home television territories are not defined by a common radius from ballparks, but by a multitude of factors including historic broadcast patterns, team marketing initiatives, geographic location and fan interest – which leads to multiple teams claiming large swathes of the country without a local franchise. No state makes it more difficult for fans to watch MLB games than Iowa, where the Brewers, Cardinals, Royals, Cubs, Twins & White Sox all stake a claim to the market. With cable operators in the Hawkeye state unlikely to carry the RSNs that broadcast those teams’ games and blackout rules preventing the games from being shown on a national package, fans in Iowa aren’t getting to watch much AL or NL Central ball.
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