MLB And <i>ESPN</i> Come To Terms

December 6, 1999 / 2:26 PM EST / AP

Major league baseball and ESPN came to a conclusion even before they went to trial: ESPN couldn't afford to lose baseball and baseball couldn't afford to turn down $800 million.

The two sides settled a lawsuit and agreed to new six-year deal Monday, hours before a jury was to hear the case. The disagreement involved the cable network's decision to put NFL games on its main channel while relegating late-season Sunday night baseball games to one with a smaller audience.

"As the process unfolded, it became obvious that this partnership that was under significant strain was something that was beneficial to both sides," commissioner Bud Selig said. "That's the thing that moved us forward, and I'm sure it is the same for ESPN."

ESPN needs baseball to fill the programming hole on its four cable channels ESPN, ESPN2, ESPNEWS and ESPN Classic and baseball would have trouble finding another cable partner that could promote the game as well as ESPN, or pay as much.

"ESPN loves baseball, and baseball is in safe hands with ESPN," said Neal Pilson, the former president of CBS Sports who runs a consulting firm. "Baseball comes away with significant new revenue stream, and ESPN protects its baseball franchise."

It didn't come without a price for the cable network, which has been showing baseball games for 10 years.

The two sides tore up the existing $117 million, three-year contract that baseball terminated in April and signed a new deal that sources in baseball and television, speaking on condition of anonymity, said was worth $800 million over six years.

That is more than what baseball had originally been asking for in return for moving three Sunday night games from ESPN to ESPN2, which is available in about 10 million fewer homes.

In April 1998, baseball asked ESPN for $30 million to grant the move. Last January, the sport increased the price to $200 million plus a $265 million, two-year extension. In the end, ESPN is paying $288 million on top of the existing contract and $400 million for three additional years.

In return, ESPN settles the Sunday night issue, gets 18 additional games a year, the right to show at least 44 games on ESPN2, about 250 additional hours of studio programming, as well as Internet and radio rights.

"It is more important what you get than what you pay," ESPN president George Bodenheimer said. "If you analyze the deal and how broad it is, you will see that focusing on 20 percent increase in games is a small piece of value derived from this deal."

In the first two years of the new contract, there will be no Sunday night baseball games during the football season. For each baseball game pre-empted, the network will show two games in its place one on Fridays in September on ESPN, and one on Sunday nights on ESPN2 earlier in the baseball season.

After two years, the two sides could move the September Sunday night games to ESPN2 something Selig had adamantly resisted since ESPN signed a $4.9 billion, eight-year deal with the NFL in 1998.

"It sounds like ESPN won the argument about carrying games on ESPN2, but of course they have to pay for privilege," Pilson said.

The conflict began nearly two years ago when ESPN made its deal with the NFL, necessitating baseball's shift to ESPN2 in September.

Baseball felt slighted about taking a back seat to another sport and pulled those three games off ESPN in 1998. In April, baseball said it was terminating its regular-season contract with ESPN after the 1999 season.

ESPN filed suit in May in attempt to force baseball to honor its deal, and baseball countersued for breach of contract.

"Obviously I was upset about it and I didn't hide it from anybody," Selig said. "You can disagree but have to learn to do it in a way that doesn't affect good judgment going forward."

Baseball chief operating officer Paul Beeston said talks speeded up Wednesday and a deal was finally reached at 5:45 a.m. Sunday. After baseball's owners were informed of the deal Monday, Judge Shira A. Scheindlin dismissed the jurors.

ESPN was motivated to settle by two recent TV sports deals. Since losing the rights to NASCAR last month, ESPN had little major, prime-time sports programming between the end of the hockey season and the beginning of the football season. ESPN also failed in its bid to acquire the NCAA men's basketball tournament.

"I certainly didn't feel any pressure," Bodenheimer said. "All along, baseball was our No. 1 priority."

Baseball's network TV deals with Fox and NBC, and the postseason contract with ESPN which was not affected by this settlement expire after next season.

Baseball will take advantage of a market that has helped the NFL, NBA, NHL, NASCAR, and NCAA more than double their national TV revenues since it reached its last deal.

Fox is paying $575 million for five years of regular and postseason coverage, while NBC pays $400 million for the postseason. CBS and ABC also could join the bidding with both networks most likely only interested in NBC's postseason package.

ESPN pays about $4.9 billion over eight years for the NFL's cable package; Turner Sports has an $890 million, four-year deal to show regular and postseason NBA games on cable; and ESPN has a $350 million, five-year deal with the NHL.