 The Digest is back. And boy, do the stories pile up. So for a few days here, we’re going to be working through some of the more curious media news items from the past several weeks, starting today with a hugely important question: what’s the biggest source of media revenue for Major League Baseball? Who owns it? And, most important, why have you never heard of it?
A recent CNN article on Major League Baseball Advanced Media, or MLBAM, has brought some long overdue attention to what had operated as a largely clandestine cash cow for its parent company, Major League Baseball itself.
MLBAM was founded in 2000 as a production company that would manage and maintain MLB.com, including collecting and streamlining each individual team’s home page. Since that time, MLBAM has become a media licensing and production monolith, handling MLB and MLBPA licensing in video games, full team ticketing, mobile phone ringtones and games, and websites as diverse as MLBPA, the MLB Player Alumni website, and the Umpire’s Union website. Not to mention their big ticket item: streaming video of major league baseball games, available through MLB.com and largely responsible for MLB.com’s leap into profitability.
And then there’s all the stuff that has little or nothing to do with baseball: the acquisition of tickets.com, an equity stake in the World Championship Sports Network (WCSN), and deals both with Bon Joni and Scott Stapp. Yeah, the one from Creed.
So for an initial investment (reported at The Hardball Times) of $1 million per team per year for four years, Major League Baseball has made themselves a company now valued between $2 and $2.5 billion dollars.
Yes, that’s what I said. Insert Dr. Evil laugh here.
There are a few conclusions that we need to make here that CNN flat-out ignored. First: MLBAM is MLB’s equivalent to the NFL Network, except much better, more primed for the future, and already profitable. Whether intentionally or no, MLB has stumbled upon the creation of a wholly-owned subsidiary media empire, primed for the diversified viewing window world in which we increasingly find ourselves.
Which means that MLB can now use MLBAM much the same way that the NFL uses the NFL Network: as negotiation leverage against ESPN and Fox. Granted, ESPN just recently inked a contract extension with MLB that extends the current deal through the 2013 season, at rates that hover around $300 million/year for rights that include developing technologies like mobile content delivery. To what extent MLBAM is producing any of that content – that is to say, to what extent MLB is nicely doubling up on its revenue – is difficult to say.
The second conclusion that we need to point out is that MLBAM is not a public company, and that, as The Hardball Times points out, its promised IPO was something of a bust and a scandal.
"What really makes this arm of MLB stealthy and an absolute moneymaking machine came to light somewhat quietly in October when the major league owners decided to scrap plans for an initial public offer for MLBAM. Bank of America, Goldman Sachs, First Boston and J.P. Morgan tried in vain to get the owners to go forward with the IPO. After all, they had good reason to want to see it happen, as these analysts predicted the value of the IPO to be $2-2.5 billion.
The reason it didn’t move forward? Full public disclosure. MLB opening up the books? You must be joking. Besides, can you imagine how it would look to roll into the next round of collective bargaining after dispersing those kinds of funds around 30 ways? Somehow I doubt that selling a luxury tax again would gain much traction with the players’ union, and forget about ever discussing a salary cap in the near-to-distant future."
Instead, expect far deeper coffers across the sport, and continued increases in GM spending, without any acknowledgment of the profit-sharing model that allows it to happen. And when Steinbrenner realizes he’s been had – then, and only then, will this hit the big time.
Reggie Bush, Nano-Sized
You will watch the Rose Bowl tonight. Many, many, many people will watch the Rose Bowl tonight. By all accounts, the ratings should be through the roof, bolstered by the traditional appeal of the Rose Bowl itself and the most clear-cut national championship competition in BCS history.
At USA Today, Michael Hiestand points out a few media tidbits about the game we should be aware of, including the possible on-air retirement of Keith Jackson. And what a highlight year for Disney and college football: while Fox picks up the other BCS games next year (minus the Rose Bowl), ABC got to fully cross-promote the biggest BCS championship matchup anyone can remember, and will see ratings equaled only by major sweeps event television.
But remember, even if you don’t watch it tonight, you can download the entire game tomorrow from iTunes for $1.99. This week marks the beginning of Disney’s expanded television offerings to Apple’s music downloading service; the iTunes music store currently already boasts full game downloads from the Fiesta and Sugar Bowls, and last night’s Orange Bowl should be available as soon as somebody’s computer finishes compiling.
Woody and Skip, channeling Cosell
Here at SMW, one of our favorite bits from the holidays comes, as always, from Woody Paige and Skip Bayless on ESPN2’s Cold Pizza. Michael McCarthy reports that in the December 21 episode, Dana asked what the two clowns would like to see on ESPN’s Monday Night Football broadcasts next year.
“I would make a great person in the booth,” said Woody.
“You might need me,” said Skip.
Bayless, always tactful, suggested that the Al Michaels/Joe Theismann team will need someone to “challenge [Theismann] and puncture his ego.” As if Joe needs any more football-related injuries.
And because karma takes care of its own, ESPN has now moved Cold Pizza to 10:00 a.m. Eastern, preempting the morning-time broadcast with broadcasts of Mike & Mike in the Morning. Yes, it’s a camera in a radio booth – well, two cameras. Occasionally they cut. We can imagine that the director had bigger ideas for his or her life.
This is the strategy that YES used in its early days to provide cheap content: consistent and afternoon-long television broadcasts of talk radio shows from WFAN like Mike & the Mad Dog. It’s cheap, recognizable content, and you can pay an intern $3/hour to produce some screen graphics to create the illusion of production value.
But we have to wonder about ESPN’s strategy here. If Cold Pizza has been such a ratings bust, why keep pouring money into its production? Is the ancillary content that it produces – feature interviews, Woody & Skip blathering, etc. – really that valuable to ESPN’s other viewing windows? Or do they just feel sorry for Paige, who’s just finally quit his writing stint at the Denver Post?
Tomorrow: Revving up for the Superbowl, and continuing to work through the pile of sports media news that greeted us in the New Year. Happy Rose Bowl! |
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