The MLB-ESPN Split: What It Means for Baseball's Broadcast Future

Major League Baseball and ESPN had an ugly divorce recently as the venerable sports network opted out of its contract with MLB for broadcast rights, reflecting the uncertain media landscape of the National Pastime. Get the background of the divorce and the future of baseball broadcasting in this episode of Prof. Mark Conrad's "Sports Business Podcast with Prof. C."

Host: Mark Conrad Producer: Victoria Ilano Additional Production: Jeffrey Haynes Artwork: Pamela V. White Marketing: Michelle Miller Music: ”MarcusWay/Energetic Pop Punk/Tribe of Noise”

Episode Transcript

(00:07):
Hello and welcome to the
Sports Business Podcastwith Prof C, the podcast that explores
the world of professional, collegiate,amateur, and Olympic sports.
I’m Mark Conrad, or Prof.
C from Fordham University’s Gabelli Schoolof Business, where I serve as Professor

(00:28):
of Law and Ethics and the Directorof the Sports Business Initiative.
Since 1990,ESPN has been a stalwart broadcast
partner of Major League Baseball.
As recently as five years ago,the sports network broadcast
90 regular season gamesand 10 spring training games.

(00:52):
It also aired a package of highlights
under the “Baseball Tonight” moniker,
as well as other MLB-related programming.
Under its current agreement in place since
2021, ESPN’s baseball coverage
dropped to just 30 regular-season games-- mostly on Sunday night --

(01:14):
and the wild-card postseason series.
ESPN paid dearly
for these truncated rights – about $550million
a season, proportionatelymuch higher than Fox and TBS, which hold
the lion’s share of the baseballnational broadcasting pie.

(01:34):
And particularly galling to the suitsat Disney, the owner of ESPN, are
the reduced fees that streaming serviceslike Apple and Roku are paying.
Apple pays $85 million per seasonfor a Friday night package
it has aired since 2022,while Roku's deal for Sunday
afternoon games is worth $10 millionper year.

(01:57):
So, ESPN execs felt they had little choice
but to exercise a contractual opt-outto end their deal early
after the 2025 season, three yearsearlier than the original date.
Media reports noted thatthe divorce was not pretty,
but more importantly, ESPN’sexit raises questions

(02:19):
about the financial future of Major LeagueBaseball and traditional television.
Baseball is in a challenging positionbecause it has so much content.
With 162 regular season games,plus multiple rounds of playoffs,
it has more tonnage than any other sport– by far.

(02:39):
The NFL, with 17 games a season,has monetized their product by negotiating
exclusively with national broadcastersfor over sixty years.
The NBA, with combinationlocal and national
broadcasting packages,secured a huge increase in broadcast
rights due to its popularity and youthappeal.

(03:01):
Baseball has not been as fortunate.
With an older demographicand multiple games almost every night,
CommissionerRob Manfred is facing an uncertain
analog and digital landscape.
One of his biggest headaches involveslocal broadcasts on regional sports
networks or RSNs, those cable channels

(03:23):
that are devoted to sportsin a given market.
When cable TV penetrationreached 110 million people,
the RSNs were supporting the local marketswhile national games of the week
and playoffscreated a more national audience.
But with cable subscribersdropping by at least 40%

(03:44):
in the last decade, this model has broken.
In 2023, Diamond
Sports, the leading regional sportsnetwork whose local cable channels
carried games from about half of the MLBteams, filed for bankruptcy.
It successfully reorganized,but the result was that a number of teams

(04:04):
ended their arrangements earlyand others were forced
to accept less money from the new entity.
While Diamond Sportsalso carried games for NBA and NHL teams,
the effect of the financial troubleswas more acutely felt by baseball
because there is a questionon how much money these teams can make
with future rights deals, and the ESPNexit certainly has not helped.

(04:29):
Manfred is in a tough spot.
He must steer a legacy sport with less
than stellar ratings into a new era.
He could corral more local teamsinto a streaming universe and try to
nationalize those deals with streamerslike Amazon Prime, Netflix or Hulu.
He could try to get another networkto take some weekly games –

(04:51):
maybe an over the air network like CW.
Manfred, with the agreement of the ownersand players association, could create
more special events like the NHL’s wildly
successful “Four Nations” tournament.
He could try to get ESPN back in the fold
with a cheaper and more limitedrights deal since it has been reported

(05:12):
that ESPN is still open to pursuinga deal with a reduced rights fee.
But the
dirty little secret was revealed by CNBC’sAlex Sherman
on the podcast known as The Varsity.
ESPN and othersget a higher Return on Investment
from one-off or limitedrun sports creations like the “Four

(05:35):
Nations” Tournamentrather than a century old legacy sport.
MLB has to address a change in this medialandscape before the other leagues.
Its broadcasting agreementwith Fox and Turner
expires in 2028,which is not that many years away.
The landscape is treacherous and not aneasy challenge for Commissioner Manfred.

(05:58):
For the Sports Business Podcastat Fordham’s Gabelli School of Business,
I’m Mark Conrad, or Prof. C.
Have a great day!