• by Wayne Friedman , July 12, 2006

Fox checked its swing with Major League Baseball - as well as its checkbook. The network will significantly reduce its $417 million a year payment for Major League Baseball for the next seven years with a deal down to $250 million a year.

There's a catch: It will only get to air one League Champion Series and no divisional series. All divisional series will go in a new package created for Turner Sports, which will also have a slate of nonexclusive Sunday games. Executives estimate Turner paid around $120 million per year.

The decision is strictly bottom line. Fox was losing money with baseball and the playoffs disrupted Fox's fall season, when it premieres new shows. Fox will get more Saturday games - 26 weeks up from 18 weeks - and continue to air all World Series. "They have reduced the amount of post-season inventory and increased Saturday afternoon baseball where they don't have programming conflicts," said Neal Pilson, president of Pilson Communications, a sports-management firm.

Because Fox didn't want to pay more for baseball, Pilson says the new Turner package helps MLB. "Major League Baseball knew no one would pay an increase. Fox negotiated hard," said Pilson, "and was determined to move baseball to be profitable - or at least have a good chance at it."

There are more negotiations to come. Major League Baseball, Fox and Turner have yet to determine which network will air the second League Championship Series. MLB discloses any news concerning ESPN, which carries regular season baseball games.

Though News Corp. President-COO Peter Chernin had hemmed and hawed about whether Fox would re-up with Major League Baseball, the move is hardly a surprise given Chernin's recent bullishness on the value of live sports broadcasts. At an investor conference last month, Chernin championed sports - and news - as DVR-proof programming since viewers hunger to watch the action live.

If DVRs lead to ad-skipping in entertainment programming, Chernin said News Corp. plans to charge advertisers more for live sports, due to their perceived immunity from ad-zapping. He said sports CPMs should grow at a rate double those for entertainment programs. "To the degree there is some potential degradation in CPMs for entertainment (due to ad-skipping), you're likely to see a corollary increase in CPMs in live news and live sports programming," he said.

Fox has been on a recent foray in making deals to secure big-time sports programming. The network has re-upped with the NFL, NASCAR (becoming the home of the Daytona 500 for the next eight years) and now baseball. Plus, it picked up college football's Bowl Championship Series. Since Fox carries no regular-season college football, the latter was a somewhat quizzical move, though it does shed light on News Corp.'s affection for premium events.

Already the No. 1 network in the coveted 18-to-49 demo, Fox will have a potent promotional platform for the second-half of its season each January with the BCS, NFL playoffs, the launch of "American Idol" and the Daytona 500.

The baseball renewal likely means Fox will continue to premiere its fall line-up before the other networks, as early as the final weeks in August for some shows. The goal is to build momentum for shows before they go on hiatus, due to the World Series and other prime-time baseball. However, the new deal includes fewer prime-time games, allowing Fox the opportunity to keep some shows running straight through.

In May, Peter Liguori, Fox's entertainment president, said he was neutral on whether Fox should re-up with baseball, but emphasized that the network has learned to program around the interruptions it causes and would deal with it either way.