Rupert Murdoch - The Real Commissioner?

When Bowie Kuhn became Commissioner, critics whispered that he wouldn’t sneeze without clearing it with Dodgers owner Walter O’Malley. Thirty years later, a very different Dodgers owner may enjoy similar power, for very different reasons. The Dodgers are now part of Rupert Murdoch’s empire -- and Murdoch has unprecedented control over Major League Baseball’s television exposure.

Before 2001, MLB’s national television rights had been divided between two networks for 21 of the past 25 seasons. NBC shared the package with ABC from 1976-89 and again, as part of “The Baseball Network,” in 1994-95. Then NBC shared the postseason with Fox from 1996-2000. (See table.)

TABLE: MLB's Network TV Contracts
 Years  Networks  Average annual value ($ millions)
 1966-68  NBC  $10.2
 1969-71  NBC  $16.5
 1972-75  NBC  $18.0
 1976-79  NBC, ABC  $23.2
 1980-83  NBC, ABC  $43.75
 1984-89  NBC, ABC  $176
 1990-93  CBS  $275
 1994-95  NBC, ABC  n/a (revenue sharing, no rights fees)
 1996-2000  NBC, FOX  $195
 2001-06  FOX  $416.7 (includes 2 games/week on cable)

Late last year, Murdoch’s Fox Sports signed a six-year deal locking up nearly all of MLB’s national TV and cable rights. The flagship Fox network will carry every All-Star and postseason game through 2006. The fX cable network airs Saturday night games, and the Fox Family Channel airs Thursday night games. During this period the only non-Fox national baseball broadcasts will be ESPN’s Wednesday and Sunday night cablecasts.

For all the talk of baseball’s ratings decline, Fox paid $2.5 billion for this package, an increase of 44% over the previous contracts signed five years before. The contract protects MLB in the event of a labor dispute: if some of the games are canceled by a strike or lockout, MLB still gets all its money, but must compensate Fox with additional telecasts.

That may help the cable networks in case of a regular-season stoppage, but it does nothing for the Fox TV network. 90% of the contract’s value to Fox comes from the postseason, which not only attracts large audiences, but also provides an irreplaceable opportunity for the network to showcase its fall schedule to people who don’t otherwise watch much TV. (Remember all those “Boston Public” and “Dark Angel” promos last year?) Behind the scenes, Fox will move heaven and earth to prevent a labor stoppage from threatening the playoffs.

And the concerns of the national Fox networks are nothing compared to those of the local Fox broadcast and cable affiliates which dominate local baseball coverage. Thanks to mergers and acquisitions of local sports channels, Fox Sports now controls the cable rights for 26 of the 30 major league teams – all but the Red Sox, Padres and the two Canadian teams -- at a cost of close to $300 million per year. Half of the major league teams now sell both their broadcast TV and cable games to Fox. In all, Fox’s local outlets air over two thousand baseball telecasts per year.

What would they broadcast in the event of a strike or lockout? Soccer? The WNBA? And if so, who would watch?

Live major league baseball is the backbone of every local sports channel. MLB provides hundreds of hours of live programming each summer, as well as countless hours of highlight shows, pre- and postgame shows, weekly “magazines,” etc. And in the summer, those channels don’t have a lot of alternatives. A strike or lockout would leave dozens of Fox Sports affiliates hemorrhaging red ink.

Over the next five years, the various components of Fox Sports will pay MLB more than $4 billion in rights fees. A repeat of the 1994-95 meltdown would cost Fox well over $1 billion. But with a seat at the owners’ meetings and a stranglehold on national and local broadcasting, Fox Sports won’t let this happen without a fight.

Copyright © 2001 Doug Pappas. All rights reserved.
Originally published in the August 2001 issue of Boston Baseball.

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