- Pact including Comcast and DirecTV could change way fans watch
- Deal follows pretrial ruling against MLB's antitrust exemption
Major League Baseball, Comcast Corp. and DirecTV agreed to settle a lawsuit brought by fans over how games are broadcast, a crack in the dam the league and pay TV have built against unrestrained viewing.
The class action, filed in 2012, challenged baseball’s system for granting exclusive broadcast rights to regional networks and barring teams from broadcasting or streaming games outside their home territories. The fans claimed the arrangement inflated prices, restricted choice and violated U.S. antitrust law.
The agreement would permit fans to watch their favorite teams, without blackouts, as long as they subscribe to pay-TV and buy a separate, Internet-streaming service from MLB, according to settlement terms disclosed Tuesday by a lawyer for the plaintiffs. Fans of out-of-town teams can buy discounted, single-team Internet packages for the first time, according to a statement by the lawyer, Ned Diver. And hometown fans will have the opportunity to stream games to tablets, smartphones or TV players such as Roku.
MLB confirmed the settlement in a statement, without providing details.
The trial was scheduled for Tuesday before U.S. District Judge Shira Scheindlin, who was to consider the case without a jury. Scheindlin issued several pretrial rulings that made the defense more difficult. In one, she said baseball’s exemption from antitrust law, which it won in a 1922 Supreme Court case, didn’t apply to its broadcast contracts. She must approve the settlement before it can take effect.
The agreement follows one reached in June by the National Hockey League in a parallel case. Under that pact, the NHL will provide fans with single-team packages priced at least 20 percent below the bundled out-of-market package for the next five years. The baseball suit had already prompted changes in the system. In December, MLB said in court papers that before next season it would introduce single-team streaming packages to allow out-of-market fans to watch their ball clubs without paying for other games.
The plaintiffs had argued that MLB was illegally restraining competition by limiting the markets in which its 30 teams can make broadcast deals.
For example, New York Yankees fans living in Florida have had to buy a package of out-of-market games rather than just paying for the YES Network, which broadcasts the team’s games on pay TV.
A New York Mets fan in Iowa was also out of luck. There are no major league teams in the state, yet six hold broadcast rights there, three in the National League: the Chicago Cubs, the St. Louis Cardinals and the Milwaukee Brewers. A Mets match-up with any of those teams gets blacked out of an Iowa MLB.TV package.
MLB says the system prevents the teams in big markets from gobbling up all the TV deals and starving small-market teams, ensuring more games, more competition and more choices for fans.
While antitrust law encourages Coca-Cola Co. and PepsiCo Inc. to battle it out in the marketplace even if one of them perishes, a professional sports league such as MLB may coordinate to guarantee on-field competitiveness and its overall financial health, said Elai Katz, head of the antitrust law practice at New York’s Cahill Gordon & Reindel LLP.
“You don’t want all revenues to go to the Yankees and the Dodgers,” he said before the settlement was announced.
In Scheindlin’s only other big sports antitrust case so far, in 2004, the judge ruled against the National Football League and was reversed on appeal by Judge Sonia Sotomayor, later appointed to the U.S. Supreme Court.
Under the agreement between Major League Baseball, the pay-TV companies and a group of baseball fans, MLB will offer an MLB.TV package allowing fans to buy Internet-streamed broadcasts of single teams for the next five years at a cost of $84.99 next season, according to the statement from Diver, the plaintiffs’ lawyer. In the most recent season, fans were left to choose between a $109.99 basic package of all home-team feeds by teams outside the viewer’s designated area, and a premium package, featuring both home and away feeds, for $129.99.
By mid-season, MLB will offer a "Follow Your Team" MLB.TV package permitting consumers to watch a chosen out-of-town team’s telecast when the team is playing in the viewer’s area, according to Diver. A Phillies fan living in New York, for example, could watch Philadelphia broadcasters call a game against the New York Mets. In the past, those games would be blacked out under agreements between MLB and broadcasters.
Follow Your Team will cost $10 on top of the $109.99 MLB.TV cost and will be available only to people who subscribe to a pay TV service that carries the local team broadcasts, according to Diver’s statement.
MLB is also working to offer live Internet broadcasts of home-team games to pay TV subscribers, so they can watch when they’re away from their televisions. Such “In-Market Streaming” will be available to subscribers to regional sports networks owned by DirecTV, Comcast and 21st Century Fox, which carry most teams’ broadcasts.
Gabe Feldman, a law professor and director of the Tulane Sports Law Program, said both MLB and fans are partial winners in the proposed settlement.
“Major League Baseball is a winner because they settled for a deal they were planning to offer anyway,” Feldman said. “They were going to offer single-team packages for a discount. This still provides a significant source of revenue for Major League Baseball.”
The agreement also gives fans greater access to the games they want to see, he said. “This will lead to a system that is more responsive to consumer demand.”
The case is Garber v. Office of the Commissioner of Major League Baseball, 12-cv-03704, U.S. District Court, Southern District of New York (Manhattan).