Apple’s potential MLB package bid could bring a big player into the sport

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Los Angeles Dodgers center fielder Cody Bellinger (35) steals the second base while St. Louis Cardinals second baseman Tommy Edman (19) takes the late kick at Dodger Stadium in the game of the National League of 2021 Wild Card.

Robert Hanashiro | USA TODAY Sports

Now that Amazon has established itself in live sports, most recently with a billion dollar deal to broadcast “Thursday Night Football,” Apple is trying to get into the game.

Apple is in talks with Major League Baseball to acquire the rights to its weekday package, according to people familiar with the deal who have asked not to be named because the talks are confidential. A deal would, for the first time, align America’s most valued tech company with a set of professional sports media and give Apple a major boost in content for its streaming service, Apple TV +.

The MLB weekday package allows a network or streaming service to feature baseball games on Mondays and Wednesdays during the regular season. MLB and Apple declined to comment on a potential deal, which was first reported by The New York Post on Monday.

The rights are not exclusive, as matches can still be broadcast on Regional Sports Networks (RSNs) for the teams playing. Still, for Apple, it’s an important entry point, said Lee Berke, CEO of LHB Sports, which advises the sports entertainment industry.

Apple is using its nearly $ 3 trillion market capitalization and $ 191 billion in cash and cash equivalents to expand its business far beyond iPhones, computers, watches, and the App Store. The company introduced Apple TV + in 2019 as a $ 5 per month subscription service that would work on all major streaming platforms and compete with Netflix and Amazon for original content.

“When looking to develop a content strategy on any media platform, one of the fastest and most expensive ways for that matter is to add sports,” Berke said.

For the MLB, finding new sources of income during the offseason is essential as the league faces its ninth work stoppage in history. MLB owners locked out players in December as the parties argue over how the savings generated by the sport should be shared.

Media rights are an increasingly lucrative source for the league, but the MLB must be creative to maximize its revenue.

In January 2021, MLB was in the middle of a contract renewal with ESPN, following a deal that paid the league $ 5.6 billion over eight years and included exclusive Sunday night games as well as midweek rights. The games were semi-exclusive, as they also aired on RSNs.

Octagon analysts used 108 of 114 games from MLB’s 2018-2020 seasons to determine the average audience for the Monday-Wednesday package on ESPN, not counting ESPN2 broadcasts. They found an average audience of 761,434 in 2018, falling to around 632,000 in 2019 and 358,947 in 2020.

In May, the two sides agreed to phase out weekday games, which would have reduced ESPN’s fees from $ 700 million per year to $ 550 million per year. The new deal runs until 2028 and ESPN retains the exclusive rights to “Sunday Night Baseball”, the Home Run Derby and MLB wild card games.

While the gap between ESPN’s old contract and the new fees stands at $ 150 million per year, industry experts have suggested that MLB is seeking $ 350 million per year for weekday rights.

Daniel Cohen, senior vice president of Octagon’s global media rights advisory division, said a traditional media company would likely not be able to hit the price MLB is asking. And Turner Sports will add its own weekday game on Tuesday nights as part of its new $ 3.2 billion package that pays MLB $ 470 million a year, up from $ 325 million.

But Berke said a cash-rich tech company like Apple would “absolutely” pay for it.

“Apple has the money to buy a wide variety of sports in addition to the MLB package,” Berke said. “But to demonstrate that they can do it right, they have to climb the ranks.”

Apple the new radio?

Berke compared Apple’s position to a situation another company faced a century ago.

In the early 1920s, electronics maker RCA created radios. The company then bought radio stations and in 1926 formed the National Broadcasting Co. NBC agreed with the MLB to broadcast the first World Series on radio. (NBCUniversal is now the parent company of NBC and CNBC.)

“RCA was trying to sell radios and Apple is trying to sell headphones,” Berke said. “The same principle applies.”

Apple has a whole ecosystem that it can present to consumers, he said.

“You have to get into the game if you’re Apple,” Berke said. “If Apple is looking to increase the use of Apple TV + but is also looking to sell additional hardware – phones, watches, iPads – then sport offers you a mass audience out of the box.”

The pandemic has changed media consumption, making a deal between MLB and Apple more attractive to both parties.

MLB attracts younger people, who have become even more glued to their devices for content while stuck at home. And with RSN in financial jeopardy as consumers cut the cord, the league needs alternatives to linear TV.

“You are putting yourself in front of your next generation of fans, which is absolutely essential for any efforts you make in the future,” Berke said. “The games need to be there on these screens for new fans to be exposed to them.”

A view of fans watching from the outfield during the game between the Houston Astros and the Atlanta Braves in the first inning of Game 6 of the 2021 World Series at Minute Maid Park.

Jérôme Miron | USA TODAY Sports

After years of simulcasting “Thursday Night” games and developing its technology to handle a large volume of live streaming, Amazon landed a $ 1 billion per year NFL package in March 2021. Now the company tries to get senior NFL analyst Troy Aikman to join his production staff at Fox.

In 2019, Amazon also bought shares of the YES Network, which broadcasts New York Yankees games and broadcasts regular season contests. It has a deal with the Women’s National Basketball Association around its seasonal tournament, an idea the NBA wants to embrace, as well as tennis streaming rights.

“Step by step, they’ve built a very large portfolio in sports, not just in the United States but around the world,” Berke said. “It’s a multi-year process to demonstrate that you have the assets in terms of production, sales and distribution at a professional level without a problem. “

Apple and MLB have a certain history together, dating back to 2008 when the league launched its iPhone app. Two years later, Apple asked MLB to help launch the iPad.

If Apple now owns the rights to MLB and proves that it can compete with Amazon to attract users with live sports, more opportunities may open up.

“If you’re interested in bidding for the NBA, I think it helps if you have a background in the sport that came before it,” Berke said.

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