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Dispute on MASN television rights rises to another level

Television IndustryWashington NationalsBaltimore OriolesMajor League BaseballThe Hollywood ReporterBud SeligMajor League Baseball All-Star Game

The long-simmering television rights dispute between the Mid-Atlantic Sports Network and the Washington Nationals appears close to reaching a boil.

The Nationals have contended since 2012 that they are entitled to a much higher annual rights fee for their television broadcasts than they are currently receiving from MASN, the network that is largely owned by the Orioles. And the stalemate reportedly has prompted baseball commissioner Bud Selig to exert pressure on both sides to reach an equitable settlement.

The Hollywood Reporter published a report Tuesday quoting a letter from Selig to Orioles owner Peter Angelos and Nationals owner Ted Lerner in which he scolds them both for failing to work in good faith to settle the dispute, which stems from the deal that was reached nearly a decade ago to share the Mid-Atlantic television territory when the Montreal Expos were moved to Washington, D.C., and became the Nationals.

Selig has attempted to use his influence to mediate the dispute, which he recently turned over to a three-owner panel that reportedly ruled in favor of the Nationals. But it appears that the matter may ultimately be decided in court, something MLB would like to avoid.

Baseball sources confirmed the authenticity of the letter, in which Selig chides both sides for their “unfathomable inability to agree on a fair division” of the television revenue and also threatens to use the full weight of his authority as commissioner if the parties escalate the dispute into an ugly legal battle.

The dispute continues an ongoing feud between the two teams, since the Orioles were given a much larger share of MASN to compensate them for the loss of potential gate and broadcast revenue they were expected to suffer because of the arrival of a second major league baseball team in the region.

Though the Nationals originally expressed satisfaction with the deal, they sought to renegotiate the rights fee they are paid each year by MASN when a clause in the contract kicked in in 2012 that required the rights fee -- which is equal for both teams -- to be reset to “fair market value” every five years. That value, however, is determined by a standard formula used by MLB and outlined in the original contract.

The negotiations went nowhere, in part because the Orioles have held firm to the contract language that determines how that value is calculated and also because the Nationals were demanding a much higher fee based on the lucrative TV contracts signed by other major league teams over the past several years.

The commissioner's office released a brief statement Tuesday that said: “Although certain legal maneuvering has taken place, [commissioner] Selig remains hopeful the parties can reach an agreement in an amicable manner.”

Selig told a group of reporters during the All-Star break in Minneapolis that he believes there will be a resolution by the time he leaves office.

Over the past few years, the same question has been posed to Selig, but in his annual All-Star Game media session with members of the Baseball Writers' Association of America, he gave his first indication that a solution could be on the horizon.

“Yes, I would say there's a good chance,” Selig said when asked whether there could be a compromise before he leaves his post in January. “We've spent an enormous amount of time. We're working through a lot of really tough details.”

Angelos didn't respond to a request for comment Tuesday, but the Orioles did release a statement Tuesday evening restating the team's long-held position that the terms of the contract negotiated with MLB and the Nationals are clear and binding.

“As those who follow the Clubs are aware, the Settlement Agreement between Baseball, the Orioles, and the Nationals established MASN to compensate the Orioles for the loss of market share and other damages caused by the relocation of the Nationals to Washington, D.C.,'' the statement read. “Contracts are meant to be honored and the Orioles have every expectation that this contract will also be honored. The Orioles continue to work with the Office of the Commissioner to try and resolve this dispute.”

MASN counsel Thomas J. Hall also released a statement explaining the network's position:

“MASN has honored the terms of the Settlement Agreement, including the formula in that contract for resetting the Nationals' telecast rights fees and expects all parties will do the same. That contract specifically includes an agreed upon and historically applied formula for resetting the Clubs' telecast rights fees that has been applied by Baseball to virtually every other club-owned regional sports network. MASN is confident its contract will be honored and looks forward to further discussions with all parties to try and resolve this matter amicably. Our loyal viewers should understand this is a business dispute and will have no impact on the telecast of the Clubs' games.”

The Hollywood Reporter, a publication for television and entertainment news, quoted Hall as questioning the motives of Major League Baseball and claiming that MLB has a financial interest in the outcome of the dispute, but Hall was not made available to explain why he considered the decision of Selig's panel “improper.”

The Nationals did not respond to a request for comment and have not yet released a statement on the latest developments in the rights dispute.

The Nationals and Orioles each received $29 million for their TV rights in 2011, but that number increased to $34 million in 2012 and is expected to reach about $46 million over the first five-year reset period.

The teams share the profits from MASN, but the Nationals currently hold only a 14 percent stake in the network. That will increase by 1 percent per year until the Nationals' equity share reaches 33 percent.

peter.schmuck@baltsun.com

twitter.com/SchmuckStop

Copyright © 2014, The Baltimore Sun
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Television IndustryWashington NationalsBaltimore OriolesMajor League BaseballThe Hollywood ReporterBud SeligMajor League Baseball All-Star Game
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