The Associated Press reports:
Sixty million consumers would lose access to baseball’s television package of out-of-market games if the sport is allowed to strike an exclusive deal with DirecTV, according to Sen. John Kerry.
I am perplexed to how this excludes sixty million customers. Let’s look at the facts…
1.) DirecTV obtains the exclusive rights to “MLB Extra Innings”, which allows viewers to watch out-of-market games. They similarly have exclusive rights to NFL games the the NFL’s “Sunday Ticket”.
2.) DirecTV obtains these rights in an effort to attract customers who value these packages. If a consumer is “exluded” (i.e. doesn’t have DirecTV), he/she can gain access very simply by switching to DirecTV.
3.) The costs of transitioning from cable to satellite are small (if any exist at all). DirecTV routinely gives away its equipment in exchange for an agreement to use their services for 1 year. In addition, many states do not charge taxes on satellite service, whereas they do levy taxes on cable. Local channels, which long impeded the diffusion of satellite services are now available in most markets as well. Thus the tranisition cost is essentially the time cost of making a phone call to DirecTV to obtain their service.
Exclusive deals with certain service providers does not cause the exclusion of customers. If they value “MLB Extra Innings” more than the costs associated with switching to DirecTV then the customer should switch. If not, they should keep their cable service. It is as simple as that.