ESPN may be leveraging opt-out option to exit MLB deal, or boost its investment

There are increasing reports that ESPN may exercise an early “opt-out” clause in its broadcast rights agreement with MLB.

There are conflicting reports on when, exactly, that might happen. The New York Post reports that option isn’t valid until after the 2025 season, which is more than two years away.

However, a separate Puck News report indicates that ESPN may exercise its option at the end of the current season. 

It’s not entirely clear when ESPN’s opt-out right actually comes up or where there might be two dates floating around.

Puck also reports that ESPN’s desire to exercise this clause may actually be grounded in a desire to get more for the $550 million a year it’s paying for its current MLB rights.

The current rights deal runs through 2028 and is actually valued at less than the previous agreement between the league and network. However, it also called for ESPN to give up rights to select games.

Other MLB deals are held by Fox, TNT and Apple.

ESPN may see the opt-out option in its deal as a strategic time to possibly add more games to its slate under better financial terms, including some local rights that may be up for grabs amid the Diamond Sports Group bankruptcy that could result in MLB yanking those rights away from the Bally-branded RSNs owned by the Sinclair Broadcast Group subsidiary.

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There are also early Sunday afternoon MLB games that streamed on Peacock last season, but NBCUniversal hasn’t come to terms with MLB on those so they could be up for bid as well, according to Puck.

At least some of this dealmaking could hinge on how serious MLB thinks ESPN is about opting out. While the general desire is to spend less money on content licensing deals such as these, live sports can also be seen as a key way to hang on to viewers on both linear and streaming services. 

It’s not surprising ESPN may be interested in getting more content for the money it’s forking over to MLB, given that many media companies are trying to reign in content costs. 

ESPN is also part of a joint venture between it, Fox and Warner Bros. Discovery to bundle its linear channel streams under a yet-to-be-named offering sometimes nicknamed “Spulu.” That effort is set to launch later in 2024. ESPN is also planning a separate streaming package of its linear channels of its own, set for 2025.