Following almost a decade of litigation, the Baltimore Orioles and Mid-Atlantic Sports Network have reached an agreement over the fair market value of the TV rights fees for the Washington Nationals for 2012-2016, according to a source with knowledge of the situation.
MASN, the source said, will pay each team about $99.2 million, resolving at least a portion of the litigation.
The Orioles and Nationals declined to comment. A spokesperson for MASN, Todd Webster, also declined to comment.
The Washington Post first reported the agreement.
The New York Court of Appeals, the state’s highest court, in April ruled 6-0 against MASN and the Orioles — the majority owner of the network — to uphold an arbitration award from a Major League Baseball committee that determined that the fair market value of the TV rights for the Nationals and Orioles was almost $300 million per team for 2012-2016. MASN initially proposed paying $39.5 million per year. The Nationals pushed for $118 million per year.
The Orioles pushed for a lower rights fee because the deal that created MASN initially gave the team 90% ownership — and therefore share of profits — of MASN. That share started dropping by 1 percentage point in 2010 and will do so until 2032, when the Orioles have a 67% share and the Nationals are left with 33%.
MASN has not set rights fees for the period of 2017-2021, a source told The Baltimore Banner. Lingering questions about how much, exactly, the Nationals earn from their television deal has likely played a part in holding up the sale of the team.
The origin of the disagreement dates to when MLB bought the Montreal Expos for $120 million in 2002 and then announced that it was relocating the franchise to Washington, D.C.
MLB pushed for a settlement to resolve several issues related to the move, which included compensating the Orioles for another team moving into its exclusive territory. Under a telecast agreement, MASN would show both Orioles and Nationals games — except, for example, ones that were nationally televised — and pay each team the same amount every year in TV rights fees. The Orioles, though, would own a majority of the regional sports network and thus receive most of the profits.
The settlement agreement required the sides after 2011 to come to terms about the fair market value of the TV rights fees in five-year increments.
When the sides could not reach an agreement on the value for 2012-2016, the case went to the MLB’s Revenue Sharing Definitions Committee, composed of representatives from three other teams. That’s the body tasked under the settlement agreement with resolving these disputes.
The Revenue Sharing Definitions Committee in 2014 determined that the fair market value of the TV rights for 2012-2016 was $298.1 million, or an average of $59.6 million per year.
MASN went to court then, and it took years to reach a resolution. John Angelos, chairman and CEO of the Orioles and president of MASN, said in the spring that he hoped to avoid further disputes.
“My goal is to never be around any litigation again,” Angelos said. “You don’t need litigation to solve problems. You just need good partners. We can sort that out and solve that very quickly.”
If, in fact, the Orioles and Nationals avoid further rancor, it may be due to economic trends rather than a newfound understanding: Regional sports networks like MASN have seen a steep decrease in subscribers and revenue due to consumers opting to cancel cable in favor of streaming services.
In 2011, MASN had 5.9 million in-market subscribers and 3.3 million out-of-market subscribers, according to court documents. Those had fallen to 4.6 million and 2 million, respectively, by the end of 2018.
Earlier this year, Diamond Sports Group, a subsidiary of Baltimore County-based Sinclair Broadcasting that owned 19 regional networks, declared bankruptcy.