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senate-committee-hears-extra-innings-issue-2 | March | 2007 Articles

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Senate Committee Hears Extra Innings Issue

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Today, the Senate Commerce Committee heard testimony on MLB's exclusive deal with DirecTV to carry the Extra Innings package.† iN DEMAND and DISH Network subscribers have been in an uproar for a couple of months over this issue.† MLB has given both until the end of the month to make deals†equal to DirecTV's seven-year, $700 million contract.† Included in that contract is a commitment to help†MLB launch a new baseball channel by 2009. Exactly one week ago, I wrote about an offer iN DEMAND made that they insisted was equivalent to DirecTV's.† MLB came back on the same day and said that they offer was not equivalent and that they would continue to accept offers until the end of the month.† Reports have surfaced that their offer was only $70 million a year and did not include the commitment to develop and carry the new baseball channel proposed for 2009.† Regardless of what was or wasn't in that deal, more than just your average fan was upset by the continued failure by MLB to accept offers from iN DEMAND or DISH Network.† A very important Red Sox fan was upset.† His name is John Kerry. I, for one, am far from surprised that the Senate has gotten involved in this matter.† After all, this is our national pasttime we are talking about.† Baseball is the only sport where the President throws out the first pitch at a season opener.† Only America has adopted a criminal law standard based on baseball terminoloy (i.e., the "three strikes law").† Only American's call Amyotrophic Lateral Sclerosis "Lou Gehrig's Disease."† And my personal favorite, only baseball is exempt from federal antitrust laws (for those not familiar with legalease, those are laws that encourage competition and prohibit monopolies).† Baseball has always had a presence in Washington, even before the Nationals came to town.† Last month, John Kerry wrote to the FCC Commissioner asking for an investigation of the proposed exclusive deal with DirecTV.† A prompt reply indicated that the FCC would indeed investigate.† The concern is that MLB is depriving customers of choices all in the name of greater profit for themselves (because they profit from MLB.TV, the less competitors, the better).† Today, the Senate Commerce Committee heard testimony from Rob Jacobson, CEO of iN DEMAND, and Bob DuPuy, MLB's Chief Operating Officer.† Jacobson offered to match DirecTV's seven-year, $700 million deal, asking to put off a decision on the new baseball channel until 2009 when it is offered.† Kerry inquired of DuPuy what was wrong with that deal and DuPuy answered that DirecTV had the right to start building the new baseball channel with MLB.† DuPuy also pointed out that fans had the option to subscribe to DirecTV or MLB.TV.† Unfortunately, many fans cannot subscribe to DirecTV because of satellite dish restrictions at their place of abode or interference from trees.† In fact, Michael Abramowicz, a law professor at George Washington University, said this:† "Watching baseball games is my No. 1 hobby, and my house can't get DirecTV because of nearby trees. It did occur to me that if I chopped down my neighbors' trees, I would probably do a year in jail, which would leave me six years to enjoy the games." Senator Arlen Specter, R-PA, has been fighting a similar battle involving the NFL and their "Sunday Ticket" package, available exclusively on DirecTV.† He's proposed that the NFL's antitrust exemption for broadcasting rights be repealed.† He is also critical of the current situation with Extra Innings.† In today's hearings he said, "When fans react, Congress reacts," he said, adding, "You may be well advised to act before we do."† A layperson might think this threat has no teeth to it given the failure of Congress to act in other political arenas.† However, they hold in their back pockets something that, if leveraged correctly, could convince MLB to rethink it's decision on this matter.† That little thing is known as baseball's antitrust exemption.† In a recent legal paper I wrote, I advanced that part of the reason Congress has failed to repeal MLB's antitrust exemption is because they hold more power by allowing it to remain.† With the exemption, as it stands today, anti-monopoly laws do not apply to the minor leagues, the amateur draft, franchise relocation, etc.† However, by allowing the exemption to stand, Congress has been able to use the threat of repealing it to bend baseball to its will.† For example, in 1988, the Senate Task Force on the Expansion of Major League Baseball threatened repeal of the exemption if baseball failed produce a timetable for expansion. By 1991, MLB had awarded new teams to Denver and Miami.The threat was used again in 2001 and 2002 when baseball announced planned contraction of two teams. Accordingly, no teams were ever contracted by MLB.Most recently, the threat was used to compel players to testify at Senate hearings on steroid use by players in 2005. For those who haven't caught on to where I'm going with this...I think Congress could use the threat of repeal to compel baseball to accept any fair offer made by iN DEMAND or DirecTV.† I'm not saying they're going to come out in a committee hearing or the press and make this threat.† I guarantee MLB has already weighed the risk that going against Congress on this issue could lead to Congress going against MLB the next time a player voices concern over the antitrust exemption. There are four days until MLB's deadline comes around.† Look to see either an extension or†a deal with iN DEMAND, at the very least. Note:† For those who want to discuss this more, or have questions about the legal issues, feel free to comment, or you can email me directly at This email address is being protected from spambots. You need JavaScript enabled to view it. .† I get a LOT of emails asking about this issue and am happy to compile questions and answers and post them on here.

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