It's About Playing to Win
by R. Thomas Umstead, Programming Editor -- Multichannel News, 11/30/2008 7:00:00 PM
Two weeks ago, the Sports Business Journal FSA Sports Media & Technology Conference focused on the state of sports television, but much of the discussion centered on ESPN's eye-opening, $500 million acquisition of college football's Bowl Championship Series games.
The total sports network's BCS bid — which gives the network rights to air the BCS championship game as well as the Fiesta, Orange and Sugar Bowls from January 2011 through January 2014 — was reportedly over $100 million more than that of current rights-holder Fox Sports.
Several sports executives at the conference bemoaned that ESPN's dual revenue stream — cable and satellite distributors pay the network an average of $3.65 a month for each of its 97 million subscribers — has created a virtual Godzilla among sports networks, able to destroy all competitors foolish enough to stand in its path. But as the familiar street refrain goes: Don't hate the player, hate the game.
ESPN should not be assailed for successfully navigating the financial model that cable TV created nearly three decades ago into a profitable business that is now on the verge of dominating sports television.
Over the years, ESPN was able to build enough value in its network through the acquisition of popular, highly rated and advertiser-coveted live pro and college sports content to convince — some will say strong-arm — operators into paying them by far the highest monthly license fee among all cable networks.
As for broadcasters, they'll have to find another way to generate revenue if they want to sit at the high-stakes sports-rights table with ESPN.
YES Network president Tracy Dolgin suggested at the conference that CBS, NBC, ABC or Fox may have to morph into cable networks themselves to effectively compete with ESPN and its dual revenue stream. Fox Sports Networks president Bob Thompson mentioned that broadcasters may have to ask for cash rather than cable-network launches in future retransmission-consent discussions.
Either way, broadcast networks will have to make a few financial adjustments. Whether the playing field is equitable or not is beside the point — it's the reality of doing business today.
While ESPN now holds the BCS rights, it'll be a long time before truly marquee sports events like the World Series, Super Bowl or NBA Finals will be on the table for ESPN or other cable networks to bid on.
But with television rights for the 2014 and 2016 Olympics up for grabs, as well as the NCAA Men's College Basketball Tournament — aka “March Madness” — potentially up in 2010, it's almost assured that ESPN will be one of the first knocking on the door of the International Olympic Committee and the NCAA.
If it's successful, ESPN's haters will only grow more boisterous during future conferences.
ESPN shouldn't apologize then, just as it's not apologizing now, for its success.
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