MLB Network, Part 2
If you missed the first part of this small installment, I am going over the launch and conceptual beginning of the new MLB Network set to debut on New Years’ Day all over the cable industry. I want o tell you that you should make a point of trying to view a show with former Rays broadcaster, Joe Magrane, I can guarantee you it will be a fun time to hear this great former player and tongue-in-cheek broadcaster. So, let’s pick up where I left off before hitting the confines of a small room with the smell of anxiety and bad oxygen in the air:
With the cable industry agreeing to allow access to the MLB of the previously contracted out-of-market concept, Extra Innings package to drive channel carriage. They used other professional leagues as a starting point for their transformation. The NHL has tied carriage deals to its channel with access to Center Ice. And the NBA is planning to use League Pass to try to persuade cable operators to move NBA TV off sports tiers and into the mind of their subscribers as a optional network.
Its contracts are up at the end of this season. The NFL also is rumored to be considering making Sunday Ticket available to cable operators, in exchange for NFL Network carriage when that contract ends in 2011. It’s uncertain whether this strategy will work for other leagues, but it is clear that other leagues are trying to use MLB’s strategy on their own properties.
“When we were putting the Oxygen Network together, we thought getting to 30 million homes was a big deal, but now getting to 50 million with the MLB Network, you have a real viable product,” said Tom Werner, Boston Red Sox chairman, a board member of MLB Network and longtime TV producer.
After MLB owners approved distribution contracts with DirecTV and cable operators last May, Brosnan and Chris Tully, senior vice president of broadcasting, immediately got to work on finding a home for the network. The process quickly turned from daunting to seemingly impossible, even with the commercial real estate market in the New York market softening and available inventories rising. The key issue was finding something that had high ceilings, open floor plans and modern infrastructure to accommodate a high-end studio set design MLB wants that will rival elaborate build-outs at ESPN and NFL Network, while at the same time was not prohibitively expensive.
Brosnan and Tully looked for months all over the five boroughs of New York City, as well as portions of suburban New Jersey and Connecticut, continuing to run into dead ends. Network partners such as DirecTV Chief Executive Chase Carey, however, continued to press MLB to focus on Manhattan. Not only is the island the country’s media focus, but a suburban or outer borough location would all but kill much-discussed plans to have players regularly come on set to appear on the network.
Common thinking was that New York is considered the center of the world to a lot of people in the country and the world. And for this new network to be more than a typical league network, you have to devise multiple ways to create excitement. You really need to be in Manhattan to make it accessible to everyone.
MLB then became connected with Vornado, which needed an anchor tenant to help push forward its plans for the modern, 21-story office tower in Harlem, using the former site of a hotel and retail development that never materialized. Within a matter of weeks, negotiations were well along for the MLB Network to occupy two lower floors for its studio and production operations, two upper floors for administration and sales, and place elaborate electronic signage and video boards facing the high-traffic, adjacent areas along Park Avenue.
Financial terms of the real estate venture have not been disclosed. But industry sources suggest that MLB, even after contributing up front to some of the tower’s development costs, will do far better than other city properties investigated that lease for more than $70 per square foot. Further sweetening the situation is that the space will be completely build-to-suit. In the meantime, the MLB Network will operate out of Secaucus, N.J., using the recently vacated MSNBC studios. The tenancy will be temporary, with the move to Harlem projected to occur in mid-2010.
The MLB-Vornado deal has not nearly been the end of the story. The project has sparked another feisty debate on the merits of gentrification and whether Harlem truly wants or needs an upscale commercial development such as this. Complicating that debate is roughly $20 million in city tax breaks that Vornado and MLB are believed to be seeking as part of the project. The pair of entities have received city planning approval for needed zoning variances to build the full 21 stories as intended, with city council authorization still pending.
While its distribution and headquarters location are under control, the network was pretty slow to find an executive to run the channel, especially when compared with other network launches. The NFL, for example, hired Steve Bornstein about 15 months before NFL Network launched in November 2003. Similarly, Jon Litner came over to work on SportsNet New York’s launch 13 months before that RSN launched in March 2006.
The list includes top media executives from various broadcast and cable channels, sources say. The new CEO will report to a board made up of five owners, two MLB executives and representatives from strategic partners DirecTV and Comcast. Tully has been tabbed as a likely COO candidate. The CEO also will “collaborate on a day-to-day basis with Brosnan,” according to a document Spencer Stuart sent to prospective candidates.
The Spenser Stuart group finally came down with recommendations for the top spot at MLB Network, and the job was offered to Tony Pettit in April 2008. This gave the highly motivated executive a mire 8 months before signing on for the first time for the network. Pettit’s position to manage the daily operations of the MLB Network came with very high references from his former employer, and a key allies in baseball front office.
Petitti resume showed outstanding points of interest for MLB, and a firm background in media. Pettit attended Haverford where he majored in economics before attending Harvard Law. He worked for two years at the law firm of Cadwalader, Wickersham & Taft before joining ABC Sports in 1988 as general attorney. After being named Vice President of Programming, where he was responsible for acquiring and scheduling ABC Sports programming, he was hired by CBS in 1997 as Senior Vice President of Business Affairs and Programming. In December 2005, Pettiti was named Executive Vice President, CBS Sports and was responsible for all day-to-day operations of CBS Sports, where he was largely responsible for the network’s NFL coverage. He basically, was held responsible for everything you see on the Sunday telecasts nationally.
It was announced on January 3, 2008, that Mr. Petitti would be placed in charge of day-to-day operations of CSTV , the college sports network that is being absorbed into CBS sports, effectively replacing network co-founder Brian Bedol , who had been serving as president of CSTV since the network was purchased by CBS Corporation in 2005. CSTV was renamed the CBS College Sports Network on March 16, 2008. Pettit a few weeks later decided to venture into the new frontier with MLB and lead the new network.
So with a high profile CEO now in place of the new network, MLB executives started planning to approach top-tier corporate sponsors such as Chevrolet, Anheuser-Busch and Pepsi to pitch presenting sponsorships that will integrate the company identities deeply into network content.
As for MLB Advanced Media, baseball’s interactive arm is barely mentioned in the Spencer Stuart prospectus, and the operation is not expected to be involved significantly in the network. The strategy differs sharply from those at the other major leagues, and in part, is designed to maximize the economic value of both assets.
Also at play is that both MLBAM and the MLB headquarters see the respective media product as very different, with the lean-back and lean-in fan experiences quite separate and distinct. Similarly, there is currently no set deal for MLBAM to operate the network’s Web site once it launches.But asked if MLB Network, already on a faster growth curve than even the triumphant MLBAM, will ultimately overtake its Web counterpart in size and scope, Selig demurred. stating, ” Only time will tell.”