Wednesday, October 20, 2004

NEW YORK — Major League Baseball’s triumphant return to mass popularity received another major confirmation yesterday as District-based XM Satellite Radio Holdings unveiled an 11-year, $650million pact to put regular-season and playoff games on the upstart radio service.

The deal, set to start next season, calls for live, local audio feeds for every game to be provided to XM Radio subscribers, the creation of a dedicated MLB radio channel, and the broadcast of select games in Spanish. MLB executives, who normally avoid making business announcements during postseason play, made a notable exception to herald this connection to one of the fastest growing entertainment platforms in the country.

“Baseball is really on a great run,” said MLB president Bob DuPuy. “The interest in the game has never been higher, and the business side of baseball is booming.

The deal is but one of several eight- and nine-figure sponsorship and media contracts signed by MLB executives this year. Earlier, Taco Bell, Ameriquest and Bank of America signed on as top-tier corporate sponsors, committing more than $115million among them to MLB. Baseball also has been successful signing numerous foreign distribution pacts for its TV and Internet properties.

All of baseball’s other key indicators, including attendance, local and national TV ratings, Internet traffic on mlb.com and merchandise sales have shown significant spikes from a year ago, including the establishment of a new aggregate attendance record of 73million for the 2004 regular season.



And in some cases, the growth in fan and corporate support represents a quantum leap from two years ago, when MLB barely averted yet another work stoppage and the game was enveloped in negativity and disinterest.

TV ratings for last night’s Game7 of the American League Championship Series between New York and Boston, to be released this afternoon, were expected to be at or near record levels.

“What better time to announce this deal than the midst of these epic battles happening every night on the field?” said Hugh Panero, XM chief executive officer.

For XM, headquartered in Northeast, the MLB deal provides a major boost in its ongoing fight against New York-based Sirius Satellite Radio for supremacy in the market. Sirius earlier this year signed a seven-year, $220million pact with the NFL that gets every regular-season game on its service, and recently signed shock jock Howard Stern to a five-year, $500million contract.

XM failed to land the NFL pact, and openly scoffed at the terms struck by its archrival. But XM was clearly willing to pay far more for satellite radio rights to baseball, a sport with 10 times as many games, a much longer season and a daily presence.

“There is simply much more content, and quite frankly, this is a sport that translates much better to radio than football,” Panero said. “The history of baseball is steeped in radio.”

XM has 2.5million subscribers, and projects to reach 3.2million by the end of the year, far more than the nearly 750,000 held by Sirius. Both companies are posting significant fiscal losses and have not offered any specific targets to reach profitability. But XM intends to reach 20million subscribers by the end of the decade and said the addition of 700,000 new subscribers a year would provide enough new revenue to support the MLB deal.

XM’s basic service costs $9.95 a month. Satellite radio began as an add-on service in cars but is now expanding rapidly into home and portable uses and is coming preloaded in several makes of new cars.

“We are now a growth rate where we can support this deal,” Panero said. “Satellite radio is now something embedded in our entertainment landscape. It is now time to do these types of strategic deals to really push us forward. This is now our moment.”

The base terms of the contract call for XM to be MLB’s official satellite radio partner from 2005 through 2012, with baseball holding three option years beyond that.

The deal is also expected to be a boon for geographically displaced fans. Like the NFL, baseball carries an extensive fan base that roots for a team other than the one nearest home.

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