ESPN Opts Out Of Digital Rights Deal With MLBAM To Restructure

ESPN is "exercising an out-clause" three years into its digital rights deal with MLB Advanced Media (MLBAM), as the net is "looking to pay a significantly lower fee after finding several pieces of the original pact it signed in 2005 no longer cost effective," according to sources cited by Ourand & Fisher of SPORTSBUSINESS JOURNAL. The seven-year agreement worth $20M annually giving ESPN "numerous digital and fantasy rights" was separate from the eight-year, $2.37B TV deal the net signed the same year. ESPN is "most interested in retaining access to daily video highlights that stream on ESPN.com and its other interactive platforms," and the net wants to "shed some of the rights it feels it no longer needs." Industry sources said that MLB wants to "avoid a reduction of ESPN's payments and is focusing on recalibrating the rights package rather than a simple dollar negotiation." The deal's revisions are expected to include "ending ESPN's third-party selling of MLB.TV subscriptions through ESPN.com, an element of the original deal that generated little revenue for the network; reducing the number of mobile highlights because ESPN doesn't need as many after the ... failure of Mobile ESPN; and reducing, or possibly ending, fantasy licensing fees." Both ESPN and MLBAM execs are "confident a deal will be reached in the coming months" and describe talks as cordial. ESPN's desire to restructure the deal comes after a recent federal appeals court defeat for MLBAM in its case with CDM Fantasy Sports. ESPN believes the decision means the net was "paying a license fee for fantasy rights that others, such as CDM, were getting free".