ESPN's Baseball Deal: A Home Run for Disney, a Foul Ball for Your Cable Bill

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Cardinals Reds BaseballESPN is loading up on baseball, and it may cost you in the end.

Disney's (DIS) ubiquitous sports network and Major League Baseball announced a blockbuster deal on Tuesday. The eight-year deal will have ESPN shelling out $5.6 billion for expanded baseball coverage including TV, radio, and digital rights.

For baseball fans, the deal means that ESPN will be televising as many as 90 games during the regular season, two wild-card playoff bouts, and broader rights for recap and highlight shows. We're talking about 850 hours of additional programming.

This matters, even if you don't know a splitter from a designated hitter.

Out at the Plate

An SNL Kagan study cited by The Wall Street Journal points out that roughly 100 million cable and satellite subscribers are already paying more than $5 a month for ESPN.

Which way do you think that price tag will be headed after this deal kicks in?

The current deal between ESPN and Major League Baseball averages around $350 million a year. The new deal works out to an average of $700 million a year.

Advertisers will naturally be taking the brunt of the impact, but there's only so much sponsors are willing to pay. As ESPN negotiates with the leading cable and satellite television providers, you can be sure that it will hold out for more -- and it will get it.

ESPN's existing deals with all of the major sporting leagues make it hard for cable companies to turn down the network's requests. Despite efforts by others to compete against ESPN nationally, no one has the scale that Disney's iconic network has achieved.

Stealing Home

ESPN won't be paying $700 million a year right away. These contracts usually go up in steps during the life of the deal. However, the cable industry is coming to a tipping point. Consumers are truly tired of paying for cable channels they don't watch.

How many of the country's 100 million subscribers would be open to nixing ESPN in exchange for lighter bills? We don't know, because the cable and satellite television providers have made it a point to wedge as many channels as possible into their basic plans.

Playing Ball

Even many sporting enthusiasts may argue that baseball isn't worth it. The games don't draw the same kind of audiences that football and basketball do, especially when the playoffs arrive.

The slow pace of the sport and the disparity between the competitiveness of the teams, given the varying payrolls, make the self-proclaimed "national pastime" an acquired taste. However, baseball also has the luxury of playing out its season during the summer, when traditional primetime programming on the major networks is on hiatus.

It's important to ESPN, and it will be important to you over the next few years if you're still cutting checks to your cable or satellite television company.



Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Walt Disney. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney.

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58 Comments

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magicalbob

My cable bill in NYC is much too high right now. I don't need the YES network. I don't give a darn about the Yankees. I pay too much to have the YES network but I'm not allowed to drop it.

What happened to the good old days when ALL television was FREE? I had 7 channels and that was all I needed!

It seems that whether I have 7 channels, 100 channels, or 1000 channels to choose from .... it always winds up hat I can only watch ONE channel at a time!

August 31 2012 at 11:24 PM Report abuse +1 rate up rate down Reply
1 reply to magicalbob's comment
gwalt0771

That's right on, you can only watch one at a time and, if you're like me and many others - you only have interest in, and customarily watch, 5 to 10 channels of the 300 or more they offer anyway. But they cleverly make you work your way up to the expensive premium package just to get those 5 to 10 channels.

September 04 2012 at 12:49 PM Report abuse rate up rate down Reply
wngknut12

Cable companies need to let their customers have more choice in what channels they want, not just a few packages that include many channels that are never watched. I have seriously been thinking about cancelling Comcast, and if my rates go up because of this, I will cancel.

August 31 2012 at 10:40 PM Report abuse +1 rate up rate down Reply
wrench701

If I couldn't watch a bunch of millionaires play kids games on tv, I'd be lost. Darn.

August 31 2012 at 10:24 PM Report abuse +2 rate up rate down Reply
teltech544

I have never been happier since I cancelled cable. Spending $60.00 a month on crap I might as well have flushed it down the toilet with all the fare they put on. And it is not reality TV if you know it is being recorded for broadcast.

August 31 2012 at 10:22 PM Report abuse +2 rate up rate down Reply
oldbuzzard1959

The problem is not the providers, it's the programmers. ESPN is the most expensive channel to carry, and the prioviders are forced to put it in the basic package where the most subscribers are. The FCC is always wanting to stick its nose in somewhere. Why don't they step in here and set up some rules that will give subscribers real choices and the ability to save some money? Of course you all know why. They are bought and paid for, just like all the rest of the government agencies.

August 31 2012 at 9:55 PM Report abuse +1 rate up rate down Reply
Sensible

I'll cut out the cable if they start forcing me to pay for other people's baseball addictions.

August 31 2012 at 9:50 PM Report abuse +1 rate up rate down Reply
Norman M.

People are sick and tired of forced channels they don't want with exorbitant costs. The cable companies need to appreciate their customers while they still have them. I can do without music channels I never listen to and numerous ESPN channels.

August 31 2012 at 9:27 PM Report abuse +1 rate up rate down Reply
jmchladek

The only baseball I watch on ESPN these days is the College World Series (and sometimes the Little League World Series). The MLB games just really aren't that exciting by comparison and football is the only real fix I tend to get anyway (so I guess no Monday Night Football for me if I cut ESPN, thanks to it getting moved off of ABC). The boys in Bristol have always been baseball crazy, but I really hope this deal doesn't cause them to cut coverage of other sports I like, such as NFL and Nascar (which would affect me for maybe only 1/3rd of the races total with the bulk being on Fox and TNT). I do think sports coverage on pay TV is a bit on the decline though given that web coverage seems to be exploding so much (although ESPN likely has that avenue covered with ESPN 3). I could care less about the overpayed talking heads such as "Boomer" and his lame "WWHHHOOOPPP!" crap though.

August 31 2012 at 9:22 PM Report abuse +1 rate up rate down Reply
frebee2

if my bill goes up one more time i will cut ties and use regular tv and the internets

August 31 2012 at 8:59 PM Report abuse +2 rate up rate down Reply
kodeex

ESPN, BET and all the BS channels should be pay only if you want them .

August 31 2012 at 8:47 PM Report abuse +1 rate up rate down Reply