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Reynolds Rap

Fox Sports 1 Finally Unfurls

8/17/2013 1:35 PM

 

At the outset, it will mostly be about how viewers and pundits react to the announce teams and the panel format of Fox Sports Live, whether they will go wild for Regis’ new show and if Dana White can pin even more fans. But Fox Sports 1's ability to ultimately become a serious challenger to ESPN will come down to rights -- years from now.

Converted from Speed, the much ballyhooed Fox Sports 1 finally arrived on Aug. 17 with a college football preview show, setting up a day of NASCAR  truck and UFC action, capped by its ambitious three-hour news presentation, Fox Sports Live hosted by Canadian duo Jay Onrait and Dan O'Toole, and comely Charissa Thompson. Fox Sports 2, rebranded from Fuel TV in 37 million homes, launched much more quietly.

Thanks to some last-minute distribution tinkering that allowed DirecTV, Dish Network and Time Warner Cable/Bright House Networks to ride along on Speed’s 22-23 cent monthly subscriber license fee, FS1 launched  -- as executives declared it would during its official announcement back in March -- in approximately 90 million homes, making for the biggest debut in cable history. (Sports Business Daily reports Cox and Cablevision also launched at Speed's prior rate.)

Fox Sports Go, an authenticated mobile sports experience for iPhone, iPad, Android devices and the Web, didn’t make it to the starting line alongside the network, as officials said Fox was working through technical and verification tweaks.  Fox Sports Go aspires to combine upward of 230 feeds and offer live streaming from more than 1,000 games and events from Fox Sports, Fox Sports 1 and Fox’s 22 regional sports networks, plus scores, highlights, news, stats and analysis. 

Also left undone is working through affiliate deals that aim to boost monthly subscriber fees across the board to 80 cents and toward $1.50 over the life of multiyear contracts.

The prospects for an affiliate uptick and accompanying rise in ad sales led Morgan Stanley analyst Benjamin Swinburne to predict big fiscal things for the service. “The incremental expenses here are the marketing and production costs, along with content costs at other networks such as FX to replace sports content moving to Fox Sports 1,” he wrote in a note. “Realistically, a five-year view, assuming a $1.50 monthly affiliate fee with industry average sports network margins and advertising revenues suggests a $500 million [earnings before interest, taxes, depreciation and amortization] EBITDA stream and a $5 billion-plus asset.”

For their part, Fox Sports Media Group co-presidents Eric Shanks and Randy Freer said the network would be profitable by 2016 at 21st Century Fox’s investor day earlier this month.

On the air, college football will assume a primary role, kicking off with the new season on Aug. 29. The Champions League will roll on a network whose reach dwarfs the 50 million subscribers netted by Fox Soccer Channel, which will become FXX on Sept. 2.  Big East basketball will be on FS1’s court during the upcoming season, while Major League Baseball arrives in 2014. U.S. Open golf and the Women’s World Cup – as part of FSMG’s deal with FIFA that extends through the controversial men’s quadrennial tourney in Qatar during 2022 – the following year.

It’s a lineup that already has sports media mavens taking notice.

“They are not trying to take down ESPN at the outset.  “[Fox has] very smart business people who have launched many successful cable networks,” said Chris Bevilacqua, co-founder of Bevilacqua Helfant Ventures. “They have amassed a great portfolio of rights that clearly put the network in position to be a very strong No. 2.”

Getting to the top spot, though, may prove to be a bridge too far. Since sports are mostly about the rights to live events, erasing ESPN’s hold atop the category figures to be much tougher than how Fox moved to the top of the broadcast heap, and Fox News Channel toppled CNN.  ESPN currently collects $5.56 (and counting) in monthly sub fees and has billions invested in myriad, long-term league and college conferences pacts.

But over the next few years, new cycles of national rights to MLS (in 2015), Champions League ( 2015-16), the NBA and Barclays Premier League (2016-17),and the Big Ten Conference (2017) are coming to market. ESPN is the incumbent with the latter, but Fox may be the front-runner given its ownership ties to Big 10 Network.

Early in the next decade, rights deals with the NHL, MLB, NFL, Olympics and March Madness will expire.

Will Fox, which already holds significant rights with baseball and pro football, look to vastly expand its hand?

“What motivates rights-holders? Economics and exposure," said Bevilacqua, whose FS1 extends seven to 10 years down the road. "You need outlets to show the properties and Fox is now in a much stronger position.”

We may have to wait the better part of a decade to see just how strong.

September