	products recent interviews FastScripts archive about ASAP Sports

Our Clients:

Browse by Sport

Find us on

Subscribe to RSS

Click to go to
Asaptext.com

View our
e-Brochure

MAJOR LEAGUE BASEBALL MEDIA CONFERENCE

March 8, 2007

THE MODERATOR: Thank you to all of you for joining us as the Major League Baseball DIRECTV conference call. We'll make a very important announcement here. I'll turn it over to Commissioner Bud Selig who will have a few introductory remarks and introduce the others on the call. Commissioner.
COMMISSIONER SELIG: Thank you very much. I want to thank everyone who has joined us on this call.
Major League Baseball is very pleased with its long-standing relationship with DIRECTV and excited that it will continue for many years. I'm also excited not only about the continuation of our package, but the impending launch of our baby camel in 2009 and what it will mean to our fans.
I'm particularly gratified both Major League Baseball and DIRECTV have been responsive to our fans and will give all Extra Inning subscribers an opportunity to continue to enjoy this exceptional service. The details of which will be discussed shortly.
On the call today we have Chase Carey, president and CEO of DIRECTV, Bob DuPuy, Major League Baseball's president, and Tim Brosnan, Major League Baseball executive vice president of business.
I'll turn it over to Bob for his remarks followed by Chase and Tim.
Bob.
BOB DuPUY: Thank you, commissioner, Chase and Tim. We are very excited and pleased to announce an extension of our agreement with DIRECTV for the telecasts of all of our out-of-market games for seven years and for coverage of the Baseball Channel beginning with its launch in 2009.
As I mentioned, there are two basic elements to this agreement. The first is that a subscription product that you're all familiar with for our out-of-market games, DIRECTV is going to provide significant major enhancements to that production and the delivery of those games, including a multi-game channel, including a Strike Zone with features that I'm sure are a work in progress and that Chase will describe, but will provide additional substantial content for all of our fans and the subscribers.
The second is coverage on a basic tier of the Baseball Channel upon its launch in 2009. We have been talking about this for a number of years and are extraordinarily excited about bringing baseball 24/7 to upwards of 15 million homes, enriching the fans' experience, consistent with our desire to bring baseball content to as many fans as possible.
I want to thank Chase Carey, the president and CEO of DIRECTV, for his leadership with DIRECTV over the past 10 years, and now for seven additional years. Thank Dan and everyone else at the DIRECTV team for their hard work over the last several months in bringing this deal to fruition.
From our standpoint, we certainly want to thank Tim Brosnan, the EVP of business who you're going to hear from. Chris, our senior vice president of broadcasting, Rob and everyone else in the business and legal teams that have worked so hard to bring to deal to fruition.
I did want to make two points before I turn the phone over to Chase and Tim and Chris. The first point, again, which is fundamental, is that there will be no impact on the FOX, TBS, ESPN agreements we have for the televising of games or the products that are available on MLB.com. All that will continue unimpeded.
The second point that the commissioner alluded to is that there have been some things written about this being an exclusive deal with DIRECTV and that fans might be unable to get the Extra Innings package in some locations because of the non-availability of DIRECTV or for other reasons.
In response to those concerns of our fans, baseball has negotiated with DIRECTV to offer the package to the incumbents, In Demand and DISH, through the end of this month, till the start of the season on April 1 essentially, at the same rates and carriage requirements. If they sign up at the same rates and carriage requirements, they will get our out-of-market package and they will get the Baseball Channel.
I hope those fans who have been directing their concerns to us over the last several weeks will now encourage their cable carriers to, in fact, enlist for this package.
Again, this is subject to a vote of the clubs, but I'm very pleased to say that the enterprises board of directors, consisting of ownership representatives and Major League Baseball's executive council, have unanimously approved this and are excited as the commissioner and all of us about our ongoing relationship with DIRECTV.
Chase, again, thank you very much. With that I'll turn this over to you.
CHASE CAREY: Thank you. Bob.
We are thrilled (indiscernible). Sports has been not just a leading force in development of DIRECTV, but in really many ways it's a signature of what DIRECTV has achieved in the marketplace. Clearly you look at what we've done with Extra Innings, Super Fan, Sunday Ticket, Hot Pass, March Madness. We really think we have proven our ability to really invigorate, excite and bring -- continually build upon and deliver exciting features to our customers out there, bringing the best experience in sports to our customers.
We do look forward to this year, as we really, across the board, continue to build on the Extra Innings package. We'll have more games than we've had in the past in it. We're clearly going to add more features. Many of the features, for those of you who watch the Super Fan package on the NFL, many of the features you see there, interactive features, HD, mosaic channel that shows multiple channels, a Strike Zone channel, really starts to give you a sense -- updated sense of what's going on across the breadth of baseball.
Fans that would like to have an up-to-date sense of what's going on across the breadth of baseball. We'll obviously continue to develop all of these who really create a great mix, exciting mix, of baseball for our customers.
We also are really excited about working with baseball to develop the MLB Channel. We think this is really going to be something unique that gives baseball fans and MLB fans a way to really get a unique insight and the excitement of baseball in a way they never have before. That is something we really truly look forward to as we head to 2009 with the launch of that.
We clearly have to work through March in this agreement, short-term uncertainty, as Bob said. This agreement has a period where it's not clear how these rights end up in terms of exclusive versus non-exclusive rights. We will have to probably create some degree of short-term issues for us as to how we develop the properties around it, but we'll work through that.
But we were able to reach an agreement, exclusive or non-exclusive, that works for us, and we can go forward and develop this property as something that is a great part of the DIRECTV experience for our customers.
With that, I'll turn it over to Tim.
TIM BROSNAN: Thank you. I'll be brief. I echo both Bob and Chase's sentiment. I just wanted to stress that, you know, today's announcement is really a day for Major League Baseball and its fans to celebrate. We secured a worldwide leader, as Chase said.
DIRECTV's commitment to sports and to pushing the envelope on these Extra Innings and out-of-market packages is unprecedented. It's proven in the marketplace. We couldn't be more thrilled that they've made that same commitment to move the Major League Baseball Extra Innings package forward in a way that I think is going to be an enormous asset presented to our fans.
In addition, it's also a reason to celebrate because this agreement guarantees the launch of the MLB Channel, not only in a meaningful way but in partnership with Chase and DIRECTV. Having Chase's knowledge and expertise in the launch and development of the channel is an invaluable component to this deal.
Again, I would think it's cause for celebration for baseball and its fans.
THE MODERATOR: We'll take questions now.

Q. Chase or Tim, anybody, can you explain exactly how this offering of Extra Innings to cable will work? What's the incentive for them doing this if they couldn't negotiate a deal directly with you guys?
BOB DuPUY: The incentive to them is they can participate, so their fans can obtain the product. It certainly was an incentive to DIRECTV to enter into this arrangement. We would assume the incentives would be the same for the cable companies.
In terms of the exact formulation, the same rates, the same carriage requirements as DIRECTV has been willing to meet.
CHASE CAREY: They'll negotiate with MLB. They're not negotiating with us. We've got a construct that works for us for a non-exclusive. If they reach agreements, then we have one construct that addresses a non-exclusive arrangement. And if not, we've got a construct that is an exclusive arrangement.
Obviously, they're different. But it's not us negotiating with the other distributors.
BOB DuPUY: This is not a sublicense arrangement. This would be essentially the same deal that's spread out over additional participants.

Q. Negotiating with everybody, isn't this something of a mess?
BOB DuPUY: I don't think it's a mess at all. I don't think it's particularly complicated at all.
CHASE CAREY: If you look at the marketplace, you take the pieces, it's not nothing like a channel, carriage or pricing for a channel. They set the table over how you take that forward.
Obviously there's a value to Extra Innings. They assume parties can look at the universe to deal with and determine how it probably gets allocated. I don't think it's that difficult to envision how multiple parties view something.
TIM BROSNAN: It's actually, to the contrary, quite a simple process as we envision it. It's been negotiated. We know the steps that we need to take. We want to make this available to our fans, and the issue will be whether the incumbents of the In-Demand cable and the DISH incumbent want to make it available to their customers.

Q. Following up on the previous question, matching those terms, does that mean household per household, tier per tier? What is the match-up on that?
TIM BROSNAN: We've been consistent throughout this process not to negotiate in the media, not to have a private negotiation through the media. We have to respectfully kind of restate that position again. We've followed the policy to this negotiation and all of our negotiations, in fact, that negotiations between us and other private parties are just that: private negotiations.

Q. Following up on that a little bit, having this construct in place, in a broad sense, what do you anticipate in terms of impact given some of the response we've gotten already from Washington? Does having this structure with cable, giving them an opportunity to get back into this in a sense, does that in your mind alleviate the concerns that have been addressed?
BOB DuPUY: Certainly would hope it would alleviate the concerns because the product is now being offered to everyone who had the product. So, yes, we hope it will completely alleviate the concerns in Washington.
COMMISSIONER SELIG: I'll add, certainly given the way some of the concerns were articulated, I certainly believe that this should help enormously in that area.
BOB DuPUY: This product has always been available to everyone. It's been an open and competitive bid. It just happens in pursuing the goal we stated was our goal all along, which was to make the most baseball programming available to the most fans.
DIRECTV, in the of course of those open negotiations, presented that agreement to us. Going back to the incumbents is driven by principally our desire to deliver the most baseball programming to our fans.

Q. It's not an exclusive deal, you're still going to negotiate with In-Demand and DIRECTV and DISH Network? Is that what I'm understanding?
BOB DuPUY: They are being given an opportunity between now and the end of the month to participate on the same rate structure and with the same carriage requirements as DIRECTV has been willing to meet.

Q. Are you optimistic that a deal can be reached?
BOB DuPUY: We hope a deal can be reached. It really is up now to them to make the product available to their fans.

Q. Did the reaction from fans and Senator Kerry come into play into this decision to go back to cable and dish?
BOB DuPUY: We always try to meet the concerns of our fans and deliver as much product to our fans as possible, consistent with the constraints and the economic realities of running a business.

Q. News of this came out in mid January or so. It took quite a while for this announcement. What were the problems in getting to this point?
BOB DuPUY: I wouldn't describe them as problems. This is a seven-year agreement. It breaks new ground with regard to the Baseball Channel. It takes time to document them. So I wouldn't -- these have been extremely productive and ongoing negotiations, again, plowing new ground. We're excited about it.
CHASE CAREY: These are large agreements that are not just Extra Innings agreements, there are multiple parts to it. They're complex agreements. There will be a lot of issues to work through.

Q. They have to match the commitment through DIRECTV to carry the Baseball Channel, does that mean on what tier is that?
BOB DuPUY: We're just not going to talk about -- as Tim indicated before, we really don't want to talk about private and individual negotiations. When we reach an agreement, we will announce the tournaments of the agreement the same way we have today.

Q. How does that apply to In-Demand since it's really not a cable system, it just provides the service to the cable system? Is it apples to apples? How does that fit in?
TIM BROSNAN: You know that In-Demand operates as a buying consortium for several of the large cable operators. They have traditionally been the purchaser of packages like this. So use In-Demand as a euphemism for those cable operators.

Q. The cable operators, is that primarily Comcast, Time Warner? How would we define that group?
TIM BROSNAN: I think the group is Time Warner, Cox and Comcast.

Q. So when you're say matching, it's really those three companies that would have to match those levels through In-Demand?
BOB DuPUY: The two incumbents are In-Demand and DISH, the other satellite provider we had an incumbent relationship with.

Q. To clarify, will the other two parties be given any chance for an ownership stake in the channel?
TIM BROSNAN: You know, I want to go back to my general comments.
This call is about our arrangement and our announcement with DIRECTV for the carriage of Extra Innings on DIRECTV and the launch of the MLB Channel. That's what we'd like to continue to focus our comments on.
As to the negotiation, the piece of negotiation that's left here, if and when we conclude that I'm sure we'll have a similar press call to talk about those issues.

Q. I'm a DIRECTV subscriber, but I can't even get my local games with DIRECTV. They don't play the Philly games out here. Any resolution?
CHASE CAREY: We'll take all the help we can get from you.

Q. I'm ready to cancel DIRECTV because of that.
CHASE CAREY: We'd be very happy to carry it. It's not an issue at this point in our control to negotiate it. One of the inequities that exists in this business, but that's the reality today. It is certainly not by our doing. We'd be very happy and enthusiastic to bring customers like you the local games.
In many ways, we think these local games, that issue deserves some of the type of attention you've seen. In many ways I think the local games are the sort of foundation, much more the foundation rights, sort of the basic programming rights that should be focused on as opposed to premium package, which are an important addition to it, but they're not the foundation of that experience.
Again, long winded way of saying we're happy to work with you to try to get those games to you.
BOB DuPUY: We have this issue in Philadelphia and in San Diego. We are disappointed that, in fact, the games are not provided to satellite. Think they should be. We, too, would like to see that change so that the games are available on DIRECTV.

Q. Based on my senses through the take-it-or-leave-it approach you seem to be taking with In-Demand and DISH, it seems like you would be content with an exclusive package with DIRECTV. Are you sensitive to the feeling that a lot of people have towards these exclusive deals, the sort of difficulty that some people might have in switching providers if needed?
BOB DuPUY: We are always sensitive, again, to the interests of our fans and the concerns of our fans and our fans' ability to watch our games.
Again, games are available on MLB.com. They've been available on MLB.com for a number of years. But in response to concerns of the fans, we've reached the agreement with Chase that's been outlined and has been the subject of a number of the questions.
Of course, we're sensitive to our fans. We're very happy with our arrangement with DIRECTV. We've been happy with the arrangement. We're happy with the arrangement negotiated. We'd be very happy to proceed with DIRECTV going forward.
CHASE CAREY: Your last comment about the difficulty in switching. You know, realistically, nothing could be easier. We have a great service. Any research you do, you put out there, DIRECTV beats all our competitors in service, content, quality of it. We don't charge you to switch.
In reality, you usually get an offer to switch. Nothing could be easier. There are a handful of customers that really have - truly a small number - that have a line-of-sight issue. But we have a great service that our customers love, stacks up competitively great against anybody else, and there's no cause or other impediments to making that switch.
TIM BROSNAN: Just to add one last piece because you made a supposition in your question about take it or leave it. Have to reiterate, this has been months of open and competitive negotiations. While we would be perfectly satisfied to end up in an exclusive with DIRECTV, that choice as to whether these packages end up on cable will not be ours but rather the cable operators'.

Q. Chase, did it take a lot of convincing to get you to go back into this deal a little bit and negotiate for something that would not be exclusive? Bob, is there anything that can be done - you mentioned Philadelphia and San Diego - anything that can be done regarding the San Diego situation in particular, or is that pretty much set in stone until the contract expires several years from now?
BOB DuPUY: It has nothing to do with the contract. What it has to do with is Cox availing itself of the federal law and what we view as a loophole in the federal law. What it really involves is the law to be changed.
Cox and Comcast can do this forever in these two markets because of the terrestrial nature of the broadcast. They don't have to deliver it under a loophole. We'd like to see the law changed. Nothing to do with our contract.
CHASE CAREY: I guess in terms of where this -- the first part of the question. Obviously, they're different deals: Exclusive, non-exclusive. We got to an arrangement that works for us on either front. If you're asking which would I prefer between the two, it would be the exclusive. I think that would probably have been our preferred path. We were able to reach an accommodation that makes either one work for us.

Q. Chase, seven years, $700 million, can you describe the degree to which this figure will drop if it is non-exclusive in terms of percentages or just the nature of the deal?
CHASE CAREY: Not with any specificity. I mean, obviously I assume you would recognize it will -- we're not really affirming the numbers. I recognize the 700 has been widely reported. We are not affirming that. Let me be clear on that.
Logically, certainly, whatever we are paying for these rights, it is a significantly different number in a non-exclusive arrangement than it is in an exclusive arrangement, just to state the obvious. I probably wouldn't embellish it further than that.

Q. To what degree do you hope you'll be able to increase subscribers if it does end up being an exclusive deal? Do you have a target figure in terms of tens of thousands or more than that? To what degree do you think this will grow your business by taking business from cable if it is exclusive?
CHASE CAREY: Certainly that's a part. We've made content differentiation a part of how we compete with everybody, probably led by sports, unique sports properties.
Again, you look at it today, Sunday Ticket, March Madness, NASCAR. We do believe that drives subscribers. I probably would not be happy with the NFL, we've dealt with these properties, provided specific subscriber projections of what it means.
An exclusive arrangement, strategic value, you pay premium for exclusivity. Part of the value that comes back with it is the ability to generate subscribers. Non-exclusive, the economics become more of a central part of it. The strategic value of exclusivity probably more relates to gaining subscribers.
I think it is both gaining subscribers as well as for us clearly a part of what defines DIRECTV really for everybody. DIRECTV I think is a unique brand in the television business today. It's a unique brand in the distribution business. It stands for excellence and quality.
A big part of how we have made DIRECTV stand out from our competitors, as a unique brand that has an umbrella, is by having truly unique, you know, top-quality, you know, product that we continue to enhance and build.
Again, long winded way of saying I'm not going to get a specific number, but certainly some growth and broader enhancement of the DIRECTV franchise. In an exclusive arrangement, it becomes a very meaningful part of that.

Q. You said you'll start giving free equipment. Will you start making that offer right now since your deal is in place? Will you start marketing this as, We have Extra Innings switched to us so we're going to give you this equipment free?
CHASE CAREY: Essentially that's our offer for anybody. If you wanted to get DIRECTV last month, I mean, it's free equipment, free install. We have made it very easy for customers to switch to DIRECTV. That's what we have in the marketplace.
Yes, we'll start marketing this. That will be part of it. But that is just, so you understand, really the offer -- that is the DIRECTV experience today.

Q. Bob, will this be the only opportunity for In-Demand and the other satellite services to purchase the package for the duration of the seven years or only for this month?
BOB DuPUY: The window for participating is through the end of the month, and it would be for the entire time. It is being offered on the same terms, as I mentioned.
We need an element of certainty going into the season in terms of who is going to participate, for all the reasons Chase indicated earlier. We pegged a reasonable amount of time for a decision to be made.
At the same time, an amount of time that would not require DIRECTV to be handicapped for any longer than necessary.

Q. With the Baseball Channel launching in 2009, will that be broached during part of this talk with cable operators this month?
BOB DuPUY: That's all part of it. As I mentioned, same rate structure, same carriage requirements. As part of it, it will be the same carriage requirements starting in 2009.

Q. Chase, are you looking at any other carriage agreements with any other sort of newer outlets such as Verizon, moving into the fiberoptics? Is Verizon in any future negotiations in these last 17 business days? You have an agreement with Verizon. Are you going to extend that in any form into their network as they compete in these markets?
CHASE CAREY: I think the focus is very short-term on the incumbents. We have relationships with a number of the telcos that I think as we go forward, we continue to try to explore ways to work together, and continue to try and do so.
You know, I think the focus for us is DIRECTV for us in baseball is on the incumbents.

Q. Tim, are you looking to talk to Verizon?
TIM BROSNAN: Not at the current time. It's not that we're looking for talks under the current deal structure, the incumbents are who we contemplate approaching.
Again, depending on where this partnership ends up, sure the Verizons of the world are people that will be considered in the mix. But right now under this current structure it's the incumbents.

Q. So for this year and these remaining days, you would say Verizon is -- you're not taking it off the table that you would not offer that opportunity that you're going to the MSOs now to Verizon down the road?
TIM BROSNAN: That's a big "what if." We don't have the contractual ability to go and do that negotiation right now. Again, depending on who we partner with at the end of the day, we'd like to think we enter into partnerships where reason and good business judgment rule the day.
If reason and good business judgment direct us to those folks, I'm sure we and our partners will approach them at the appropriate time.
THE MODERATOR: Commissioner, any final comments?
COMMISSIONER SELIG: No. I just want to thank everybody. I know this has been done on very short notice. One comment I would want to make, some of the questions, people asked -- somebody asked about take it or leave it. Bob, I think, stressed over and over again, as did Tim, that they're being offered on the same terms that DIRECTV is.
To think otherwise, this is something that we believe at least increases the opportunity for people. The decision frankly at this point will not be up to us any more. I want to make that point and underscore it.
Other than that, thank all of you, Chase, Bob, Tim, everybody, appreciate all your efforts.
CHASE CAREY: I guess in closing I actually just want to add my thanks to the commissioner, to Bob, Tim, baseball owners, everybody at MLB, for what I really perceive as confidence in DIRECTV to create an experience that we can all be proud of in both fronts we're working towards.
We do look forward to the future. I think it will be exciting for everybody.
THE MODERATOR: Thank you.

End of FastScripts

ASAP Sports, Inc. | T: 1.212 385 0297

MAJOR LEAGUE BASEBALL MEDIA CONFERENCE

March 8, 2007

Tim Brosnan

Chase Carey

Bob DuPuy

Allan H. "Bud" Selig