MLB seeks creative solution to MASN rights fees dispute between Nationals, Orioles


According to multiple sources, Major League Baseball is seeking a potential buyer for the cable broadcast rights to both Nationals and Orioles games, a move that could result in the creation of a new regional sports network. (Toni L. Sandys/The Washington Post)
December 13, 2012

Hoping to find a solution to the dispute between the Washington Nationals and Baltimore Orioles over the value of the Nationals’ television rights, Major League Baseball has asked a private investment bank to seek potential new owners for the rights that are now held by the regional sports network controlled by Orioles owner Peter Angelos.

Allen & Co., a New York-based investment bank, is seeking buyers to acquire the two franchises’ broadcast rights from the Mid-Atlantic Sports Network, according to two people with direct knowledge of the matter who spoke on condition of anonymity.

A new owner would essentially separate MASN and Angelos from the Nationals by creating a new regional sports network.

Fox Sports and Comcast are candidates to purchase the rights, according to one of the individuals. Both companies, Fox Sports in particular, have delved heavily into the regional sports network market.

Fox Sports recently spent $1.5 billion to increase its stake to 49 percent in the YES Network that broadcasts New York Yankees games and is negotiating a $6 billion deal to secure the rights for the Los Angeles Dodgers. Comcast, in a joint venture between the Houston Astros and NBA’s Houston Rockets, recently created a network that would broadcast both teams’ games and pay the Astros a reported annual average rights fee of $80 million.

The Nationals and MASN have been in a disagreement over the size of the Nationals’ TV rights fee since the end of the 2011 season. The Nationals have asked for between $100 million and $120 million per year, far more than the $29 million they received in the 2011 season, according to one person familiar with the request. MASN proposed paying Washington $34 million for the 2012 season, according to another individual, who like others spoke on condition of anonymity because of the sensitivity of the issue.

When MLB relocated the Montreal Expos franchise to Washington in 2005 and created the Nationals, it gave Angelos and his sports network the rights to broadcast Nationals games. It was an arrangement unique in professional sports struck to placate Angelos, who argued the new franchise was moving into the Orioles’ exclusive commercial and broadcast region.

Under the arrangement, the network would remain under the Orioles’ majority control, with the Nationals’ share rising over a period of years to a maximum of 33 percent. The rights fees for both teams were to be reset every five years, beginning last year.

But in an age in which sports are the last bastion of live television, the money paid to professional teams for their television rights have skyrocketed. The Nationals believe they should be compensated on par with rights fees of other top-10 markets.

With the Nationals and MASN deadlocked on the size of the fee, a committee of baseball executives has been reviewing the issue. The committee, which includes representatives from the Tampa Bay Rays, Pittsburgh Pirates and New York Mets, has yet to make a ruling.

Reached at his office last week, Steve Greenberg, a managing director at Allen & Co. who has deep ties to baseball, would neither confirm nor deny the investment bank’s involvement.

Greenberg was involved in the sale of the Washington Wizards to Ted Leonsis, and when MLB Commissioner Bud Selig and his family sold the Milwaukee Brewers. He has been a key adviser to baseball and some of its teams on TV matters, and was also instrumental in creation of the Big Ten Television Network and the Classic Sports Network, which was bought by ESPN in 2000 and renamed ESPN Classic.

Through a spokesman, MLB declined to comment. The Nationals, through a spokesman, also declined comment.

Another individual familiar with MASN and the Orioles said the network has not been approached about a potential sale and that MASN is not for sale.

The Nationals’ stake in MASN will increase to 14 percent next season. Based on MASN’s proposal, the rights fee amount would increase to just under $37 million in 2013 with an equity stake payment of $8 million, one person said.

James Wagner joined the Post in August 2010 and, prior to covering the Nationals, covered high school sports across the region.
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