• by Wayne Friedman , February 21, 2025

In a dramatic pullback against ever-higher sports rights fees, ESPN is opting out of the final three years of its contract with Major League Baseball, in a “mutually” agreed-upon agreement.

ESPN has been asking MLB for a reduction in rights fees due to scaling back of programming time, including its “Baseball Tonight” franchise show. ESPN airs the league’s high-profile, exclusive “Sunday Night Baseball” series

Back in 2021, ESPN signed a seven-year deal with a price tag of around $550 million per season. Fox (at around $730 million a year, according to analysts) and TNT (at $470 million) also have MLB deals, which expire in 2028.

ESPN’s statement said: “In making this decision, we applied the same discipline and fiscal responsibility that has built ESPN’s industry-leading live events portfolio as we continue to grow our audience across linear, digital and social platforms.”

“Given that MLB provides strong viewership, valuable demographics, and the exclusive right to cover unique events like the Home Run Derby, ESPN’s demand to reduce rights fees is simply unacceptable,” said the MLB in a statement.

ESPN says it would like to continue to have a deal with the league -- with via broadcast or streaming. ESPN has deals with all four major sports leagues -- including NFL, NBA, and NHL with MLB being the least expensive.

Analysts say the mutual decision is the result of cord-cutting but also an effort to find ways to boost profitability around its major sports franchises.

MLB has complained that linear pay TV is declining: “As of December 2024, ESPN was available in 53.6 million homes, down from its peak of over 100 million homes in 2011 and 69 million homes when we struck the current deal in 2021.”

Robert Fishman, media analyst for MoffettNathanson Research, says: “We already knew ESPN’s new NBA contract kicks in this year with an expected first year step up of roughly $500 million. Combining that with underlying growth in Disney’s existing rights packages, the sports segment should see approximately an incremental $700 million in sports rights costs year-over-year.”

He adds: “If Disney were to meet its guidance and return sports to [earnings] growth, something had to give.”

This would be the second big sports franchise that ESPN is pulling back on. Recently it decided to cut back on its Formula 1 deal.

This all comes as ESPN prepares to shift to starting up its “flagship” streaming ESPN streaming service by the end of this year.