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XM Satellite scores $650 million baseball deal

"This is the crown jewel," XM's chief says. But will it offset Howard Stern's move to rival Sirius?

Culture
Game 7 between the Boston Red Sox and the New York Yankees isn't Wednesday's only ballpark news. Major League Baseball has agreed to a grand-slam broadcasting deal with XM Satellite Holdings.

The baseball signing will total roughly $650 million over the course of 11 years and will let XM broadcast games beginning with the 2005 season. Under terms of the deal, XM will also gain the rights to use MLB's logo of a batter in silhouette and the emblems of the league's 30 teams. XM said a subscription to the MLB service will retail for $10 per month or $120 per year.


"This new partnership with XM Radio is great news for baseball fans across the United States," MLB Commissioner Bud Selig said in a conference call. "XM Radio can now bring its 2.5 million subscribers baseball games from every team, no matter where subscribers are, in their cars, at home, at work, or on the go."

Hugh Panero, chief executive of XM called the MLB deal a "crown jewel" for his company and said that negotiations between the two organizations have been ongoing for some time. He said baseball is a sport "ideally suited for radio," given the game's relatively slow pace and the ability for broadcasters to "paint a picture" in describing each play.

MLB officials gave Panero credit for also playing a role in the negotiations to bring MLB's Montreal Expos franchise to Washington, where XM is based, starting next season.

"Now baseball can be experienced across a number of platforms, whether it is by radio, on TV, in the car or on the Internet," Panero said during the conference call. "This is a fabulous and spectacular deal (for XM). Baseball has 10 times as many games as there are for (professional) football, and this is an opportunity for us with new subscribers, in addition to fitting the demographics of our existing customers."

XM said it will create an MLB radio channel featuring original content and classic game broadcasts. XM will also broadcast select games in Spanish. "Baseball has enormous appeal," Panero said, "not only to its millions of fans, but to automobile manufacturers as well, which will help further strengthen XM's leadership position in the automotive market."

The pact will serve as a powerful message of viability from XM, which saw its chief rival, Sirius Satellite Radio, negotiate a five-year, multimillion-dollar deal to air shock jock Howard Stern's daily radio show earlier this month.

Sirius trumpeted the Stern signing as the biggest win in the embryonic history of satellite radio networks, but XM's baseball deal may carry a smaller price tag. Sirius has estimated that costs for Stern's show, including the performer's compensation, will total $100 million annually. According to Sirius, it would need 1 million new subscribers to cover the costs of the deal. It is believed that Sirius was also bidding for the MLB contract.

Industry analysts have hailed Sirius' Stern win as a major turning point for satellite radio, which has struggled to attract subscribers and stay ahead of mounting debts. The MLB deal is likely to inject even more life into the industry, as the baseball league has already proved that it can lure fans with nontraditional broadcasting efforts, as it has done with its Web-based programming.

"This is a wonderful opportunity for Major League Baseball, given XM's ever-increasing national availability," Selig said. "Our fans will be able to listen to the local broadcasts of their favorite teams from anywhere in the country."

The last 12 months have been busy for the MLB, in terms of establishing distribution partnerships both online and in more traditional venues, such as cable television. In March, Microsoft signed a $40 million deal with MLB to offer live audio and video of its games on PCs, heightening competition with rival RealNetworks and signaling rising costs for online video programming.

In April, MLB announced distribution partnerships with three major cable companies--Cablevision Systems, Charter Communications and Comcast--which will offer broadband Internet subscribers free access to live audio and video Webcasts of MLB games.

During the conference call, Selig pointed out how critical radio programming has been to MLB's growth, and harked back to early in the 20th century, when fans first began tuning in to broadcasts of the professional baseball games.

"Radio has a very special place in the history of baseball when the technology was young, back in the 1920s and thirties," Selig said. "The first announcers called games for our fans all over America by crystal sets, and people listened to the games. With this agreement between MLB and XM Radio, baseball is extending that tradition to the newest radio technology of the 21st century and what we believe is a perfect fit."

On Tuesday night, the Red Sox made baseball history by becoming the first team ever to rally from a three-game deficit and force a deciding seventh game, set for Wednesday night, in its American League Championship Series battle with the Yankees.

Also Wednesday night, the Houston Astros and St. Louis Cardinals will play game six of the National League Championships Series. The Astros lead that match-up three games to two over the Cardinals.

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