Nbc Sports: The Major League Baseball Television Rights Decision

13 Pages Posted: 21 Oct 2008

See all articles by Robert E. Spekman

Robert E. Spekman

University of Virginia - Darden School of Business

Todd Whiting

University of Virginia - Darden School of Business

Abstract

This case examines NBC's decision to bid on Major League Baseball's contract. The issues relate to the cost of the contract and whether it helps NBC meet both its profit targets and strategic goals. The case includes a pricing model to help the student determine whether to bid or not. A teaching note is available to registered faculty.

Excerpt

UVA-M-0691

NBC SPORTS:

THE MAJOR LEAGUE BASEBALL TELEVISION RIGHTS DECISION

As he hung up the phone, Ed Swindler fell back in his chair, surprised at the call he had just received. Ken Schanzer, president of NBC Sports, had just told him that Fox Entertainment Group, Inc. (the FOX Network), had bid for the entire 2001–06 Major League Baseball (MLB) television rights contract. MLB was expecting a counteroffer from NBC for all or part of the contract within the next couple of days.

Swindler, senior vice president of NBC sales strategy, pricing, and planning, was the network's pricing and programming valuation expert. He started his career with NBC after graduating from the Darden Graduate School of Business Administration at the University of Virginia in 1984. Over the years, Swindler had held a variety of finance positions with the network. Now, in his current position, he reported to both the CFO and president of the network. Swindler was charged with evaluating and valuing the MLB contract.

Evaluating the contract was a complex task. Among the key considerations were ratings and market share. As for many businesses, market share in television was volatile. Careful forecasting was important, especially since sports contracts lasted several years, and the valuation model accounted for the out years as well as the first year.

. . .

Keywords: makegood

Suggested Citation

Spekman, Robert E. and Whiting, Todd, Nbc Sports: The Major League Baseball Television Rights Decision. Darden Case No. UVA-M-0691, Available at SSRN: https://ssrn.com/abstract=1280608

Robert E. Spekman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4860 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/spekman.htm

Todd Whiting

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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