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Tuesday, March 27, 2007

Senate holds hearing on TV deal- MLB.com

By Barry M. Bloom / MLB.com

WASHINGTON, D.C. -- With four days remaining in Major League Baseball's negotiating window, a U.S. Senate committee put increased pressure on the sport on Tuesday to find a way to offer its Extra Innings package to a broader audience served by cable providers.

If not, DirecTV, a satellite-only provider, will have exclusive rights to the package for seven years and a 20-percent stake in the Baseball Channel, which will be offered on its basic tier beginning in 2009. DirecTV has agreed to pay $700 million for that exclusivity.

Acceding to a request by Sen. John Kerry (D-Mass.), who chaired the session of the Senate Commerce Committee, Bob DuPuy, MLB's president and chief operating officer, agreed to set up a meeting with the cable providers -- iN DEMAND and EchoStar Satellite LLC -- before the agreement with DirecTV finalizes in time for Sunday night's season opener between the Mets and Cardinals in St. Louis.

"It's possible to get the best of both worlds here if there's a good-faith effort," Kerry said near the close of the two-hour hearing.

DuPuy, seated next to the heads of the cable providers and DirecTV at the witness table, nodded in agreement.

"We're willing to meet with them," DuPuy said.

In an interview after the session, DuPuy was clear that he didn't expect the negotiations to go beyond four days and into "extra innings."

"We can't," he said. "We have a contract."

Earlier in the proceedings, DuPuy told a thin panel of senators that baseball is well within its rights to sign an exclusive deal with DirecTV.

"There's nothing sinister, illegal, wrongful or frankly unusual about that form of business negotiation or results," DuPuy said. "This is not a matter of fans being unable to view MLB's out-of-market games. It's a matter of not being able to watch those games on a particular system."

The committee is the same one that began investigating the use of performance-enhancing drugs in professional and scholastic sports five years ago before baseball had a collectively bargained drug policy at the Major League level.

There was far more interest in that topic. Of the 23 senators who are members of the committee, only two were in attendance as the hearing began at about 10 a.m. ET: Kerry and Sen. Ted Stevens (R-Alaska), the vice chairman. Five other Senators joined in at one point or another, including four committee members. But near the end, only Kerry, the 2006 Democratic presidential nominee, and Sen. Bill Nelson (D-Fla.) were left sitting at the horseshoe-shaped front table. Neither could correctly pronounce DuPuy's name.

Facing them at a rectangular table were DuPuy; Chase Carey, the chief executive of DirecTV; Rob Jacobson, the president of iN DEMAND; Carl Vogel, the president of EchoStar, and Stephen Ross, a professor at The Dickson School of Law.

Kerry has voiced the most vociferous opposition to MLB's deal with DirecTV and repeated his argument throughout the morning. He said that because MLB continues to enjoy an anti-trust exemption and that taxpayers have spent $3.7 billion on new ballparks in the past decade, baseball should be more responsive to its fan base.

"We're not here because anybody asked to intervene in a contract," Kerry said. "We're here because our constituents -- the people we represent -- leaped up at us. The economics of the deal has to be balanced by the broader public interest and have something truly seamless. I also believe that that's in the best interest of MLB, ultimately."

When MLB announced the seven-year deal on Feb. 28, DuPuy said that the cable providers had until the opening of the regular season to match DirecTV's offer "at consistent rates and carriage requirements." EchoStar and iN DEMAND had been providers of the Extra Innings package in the past.

The sides haven't met face-to-face since March 9, and neither provider has made an offer acceptable to MLB, which rejected a proposal from iN DEMAND last week.

Under questioning, DuPuy said that the Baseball Channel -- "which has been considered for 10 years," he said -- was the crux of the issue. Neither iN DEMAND nor EchoStar have been willing to match DirecTV's commitment to offer the channel to all of its 16 million subscribers by placing it on a basic tier.

In addition, neither cable provider has been willing to pay an across-the-board fee for the Extra Innings package, preferring to pay on a subscriber-by-subscriber basis only. In its exclusive deal, DirecTV is paying a flat fee regardless of how many of its customers subscribe to the Extra Innings package.

Kerry asked DuPuy if there was a chance of negotiating into next week, "three weeks if you can negotiate a fair deal," the Senator said.

"We've been trying to do that for nine months," DuPuy said. "That's why we've continued to leave the door open."

The committee hinted that Congress might have to step in and regulate the deal. MLB has enjoyed an exemption from the anti-trust laws governing interstate commerce since a Supreme Court decision in 1921 and Congress has often threatened to repeal it even though the high court has not.

"When folks around the country realize they can't watch games on television, there's going to be a tremendous reaction," said Sen. Arlen Specter (R-Pa.), who's not a member of the committee but spoke at the hearing. "And when those fans react, Congress may react. And if Congress reacts you may be well-advised to act expediently."

Afterward, DuPuy said that MLB had been treated well by the panel.

"I think it was a fair and open discussion of our desire to launch a Baseball Channel and our desire to make as much product available to as many fans as possible," he said. "It was well received."

Barry M. Bloom is a national reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.


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