Assuming Major League Baseball makes it to the finish line, the 2020 season will conclude with an expanded postseason. Sixteen teams—up from 10—will qualify for the playoffs. The revamped postseason format will begin with eight best-of-three Wildcard Series (as opposed to a pair of Wildcard Games). It would have been reasonable to assume tech giants looking to acquire tier-one broadcast rights would have found the new playoff inventory attractive, and an exclusive deal with the likes of Amazon or Apple could have given MLB a valuable trial run given that ESPN’s rights package comes up for renegotiation after next season. But instead of awarding the rights to a digital upstart, MLB granted ESPN the rights to seven of the eight first round series (TBS received the eighth). A pair of media rights consultants (Patrick Crakes and Chris Bevilacqua) say MLB’s decision to choose to their existing partners is likely indicative of how the next round of rights negotiations are likely to go across the big four leagues—unless one of the tech players decides to take down an established sports broadcaster.
Our Take: The fact that MLB never really gave the digital platforms a serious opportunity to acquire the new postseason inventory is a “real tell about where things stand.” Crakes (Principal, Crakes Media Consulting) said FAANG’s lack of reach, relative to the linear networks, simply puts them at too great a disadvantage to land major rights on an exclusive basis during the next negotiations cycle (think: 4-5 years). As Bevilacqua (Co-Founder, Bevilacqua Helfant Ventures) explained, “The linear guys are still in 80 million plus homes. Even if that [number] were to melt down to 50 million homes, you can’t ignore that reach if you’re a league or I.P. rights holder. Digital-only platforms are not going to capture the casual fan.” To be clear, we aren’t implying the big four leagues won’t do deals with FAANG; they are just likely to be simulcast packages or smaller carve-outs.
Even if one of the pro sports leagues were to make a premium broadcast package available on an exclusive basis, neither Crakes nor Bevilacqua thought it would make any sense for FAANG to pay a fortune (which is precisely what it would cost to take it from the linear networks) to acquire it. “Spending $5 billion on one NFL window doesn’t do anything for them,” Crakes said. “It doesn’t move their EBITDA—at all. The kind of investment those companies need to make [to move the needle] is like $25 billion, and I don’t know how they [find enough rights to acquire] immediately unless they were to go out and buy Fox or CBS.” Bevilacqua agreed, “To make sports an essential part of a broadcast strategy, there has to be critical mass [in terms of programming]; a collection of rights, not one package at a time. And [sports rights] don’t all come to market at the same time.” Like Crakes he suggested if Disney were to spin off ESPN and “one of these big tech guys wanted to make a whole hog move into sports, that would be a way to go.”
ESPN is a logical home for MLB’s new postseason inventory as the network has lately lacked playoff baseball (over the last 14 years, the WWL has aired just a half dozen postseason games). Crakes explained that for ESPN, “[the seven postseason series] add value to a distributor. Distributors don’t need Fox Sports or TBS to add more baseball inventory. What they need is Fox Sports and TBS to have value to the customer and ESPN to have value to the customer.” Of course, as it currently stands, MLB’s expanded postseason format is just a one-year deal, meaning it may be premature to talk about the value of expanded playoff programming (though there have been rumors MLB will expand its postseason permanently come 2022). If MLB does decide to grow postseason participation long-term, it remains to be seen if ESPN will have first dibs on acquiring the rights to the additional series (it’s reasonable to believe they would want the games). MLB did not respond to our inquiry on the subject.
From MLB’s perspective, ESPN was the ideal home for Wildcard baseball. The WWL rounds out the league’s postseason distribution portfolio (Fox Sports and TBS have up to 22 and 20 games, respectively). Should each first round series go to three games, ESPN would air 21 postseason contests.
ESPN’s purchase of the Wildcard Series would certainly seem to indicate that the network plans to re-up with MLB following next season (as Fox and Turner already have). Crakes said for as valuable as the games are, it’s unlikely ESPN would have done this deal “if next year they’re planning on walking away from baseball.” Bevilacqua added that the WWL has “all of that regular season tonnage to fill,” making it unlikely they would let the rights get away.
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