Sports

Helping NBC Sports Group Make Its Mark

From the Olympics to the NFL to Premier League football, Mark Lazarus helps the Peacock carve a high-profile sports niche 8/21/2017 8:00 AM Eastern
MCN Sports Executive of the Year: Mark Lazarus, chairman of NBC Broadcasting & Sports

When Mark Lazarus was tapped as chairman of NBC Broadcasting & Sports last September, NBC Sports Group had just wrapped up its coverage of the 2016 Summer Olympics in Rio de Janeiro as its most economically successful games ever. NBC’s multiplatform, multi-network coverage generated profits of $250 million, with 78% of U.S. TV homes tuning in for coverage. NBC’s Rio content delivered an average of 27.5 million viewers, the second-highest average audience on record for any non-domestic Summer Games.

Lazarus — who, with his promotion, added oversight of NBCUniversal’s 30 owned-and-operated television stations to his duties as NBC Sports Group chairman — also oversaw NBC’s Sunday Night Football and its share of Thursday Night Football, which held strong in the ratings despite an overall down year for the National Football League on television.

SNF in particular remains a ratings juggernaut, averaging 20 million viewers and finishing as television’s most-watched show for a record sixth-straight year, tying Fox’s American Idol for the title.

He also presided over a strong National Hockey League campaign for NBC Sports, which produced a record-setting ratings performance for the Stanley Cup Finals. NBC’s June coverage of the Pittsburgh Penguins-Nashville Predators finals produced 4.7 million average combined linear and digital audience, making it the most watched Stanley Cup on record not featuring “Original Six” NHL team, according to NBC Sports.

Looking to keep NBC’s Olympic flame burning, Lazarus last month bucked conventional industry thinking and launching a new linear sports network, The Olympic Channel. In an environment in which operators are dropping networks and developing skinny bundles with fewer channels, Lazarus and NBC have managed to reach distribution deals putting the service in 40 million households.

The Olympic Channel is the latest sports entity in the growing NBC Sports Group portfolio that includes linear channels Golf Channel, national sports network NBCSN and several regional sports networks, as well as five new direct-to-consumer digital subscription services launched since 2016 under the NBC Gold umbrella to super-serve fans of such sports as soccer (the English Premier League), rugby, motocross, track and field and cycling.

With long-term content deals with the National Hockey League (through 2020-21), NASCAR (2024), the NFL (2022), the Rugby World Cup (2023), pro golf tournaments The British Open (2028) and The Ryder Cup (2030) — as well as the Summer Olympics (2032) and the Winter Olympics (2030) — Lazarus has positioned NBC Sports Group to be a major player in the national sports arena for the foreseeable future.

Related: Live Sports Still Score Big-Time on Cable

“Mark has been willing to look around corners and see where things are heading and not necessarily be stuck in a way of doing things just because they were done that way before,” sports media consultant Lee Berke said. “He continues to come up with innovations and approaches that continue to make those properties increasingly valuable.”

Lazarus, honored as the Multichannel News Sports Executive of the Year for 2017, talked about the ongoing success of NBC Sports Group as well as the future of sports television in a wide-ranging interview with Multichannel News programming editor R. Thomas Umstead. Here’s an edited transcript.

MCN: With all that NBC Sports Group accomplished over the past year, what was the biggest surprise for you?
Mark Lazarus: I think with the Olympics, we learned that the consumption of sporting events is changing. Overall, consumption of the games was about where we thought it would be, but how we got there — the combination of linear television, digital viewing, social-media viewing — was a little different than we thought, so we had a lot of learning there. What was incredibly satisfying about the Olympic Games was that we had the most-consumed games ever, and that its relative dominance over the competition was by the largest margin ever. The total viewership for the games on average on any given day, when you take the broadcast, cable and digital together, was higher than the other three broadcast networks combined by the largest margin ever. We call it consumption and dominance. It sounds egotistical, but it’s just dominance in terms of how it works versus the competition, so that was gratifying for us.

Related: Lazarus in Middle of NBC Sports' 'Championship Season'

MCN: You mentioned the increase in the Olympics audience across multiple platforms, but specifically linear viewing was down from past Olympics. What does that say about the importance of linear viewing and how and where viewers watch live sports programming?
ML: I think the overall strategy is to make sure they’re watching on one of our platforms, whether that’s linear television, broadcast, cable, digital or the social deals that we do. The most important thing in this for us and what was most important for Rio is that every advertiser got what they paid for in the Olympic Games. So, whether it was a little more on linear or a little less on linear or a little more on digital, our commitment is to make sure we deliver for our advertisers and within the Olympic Games. The reason the advertising community supported us through Rio even though linear was a little softer — and then continued to support us going into the next games — is because we gave them exactly what they paid for and then some. Yes, linear was off a little bit compared to the Olympics in Rio [compared with the 2012 London Games], but it would have been the No. 1-rated show on television with its 14.4 linear TV rating. And when you think about a 14.4 rating, it was across 18 nights for roughly three hours a night for some 50-some odd hours. It’s more than any primetime show in terms of hours, so it’s a really important piece of real estate and a really high rating.

MCN: Having said that, I’m sure you guys were very excited to hear that Los Angeles is now going to host the 2028 Olympics.
ML: We’ll go through the [2018 Winter] Games here in South Korea shortly and then the next four … games are in Tokyo [summer 2020], Beijing [winter 2022], Paris [summer 2024] and Los Angeles [summer 2028]. It’s hard to find four global cities that are as important as that all in a row, so we are very excited about the lineup. We are obviously excited to have games here in the states, and I think that’s important to continually revitalize the Olympic movement here in the United States. For Los Angeles, this will be their third Games and it’s such a great Olympic city.

MCN: I wanted to switch over to Sunday Night Football. It’s been the No. 1-rated show on television for a record six straight seasons, tying American Idol, yet year-to-year the ratings were down as part of the much-discussed decline of NFL ratings last year. How do you rebuild momentum for the games in a very competitive environment?
ML: It’s a combination of what we do and what the National Football League does with regards to the schedule that we get. We are excited about our matchups this year and we think we will continue to market and try to broaden our audience.

Last season, our first three games ran up against some headwinds: We had to have the [defending champion Denver] Broncos in the first game, since they won the championship, and we knew [quarterback] Peyton [Manning] was retiring, so that was expected. But [New England Patriots quarterback] Tom Brady, in our second game, was suspended. For our third game, [Dallas Cowboys quarterback] Tony Romo was hurt, and Dak Prescott wasn’t a big star yet, and then one of our games went up against a presidential debate.

So we are bullish that, with most of those factors being out of play, that we’re going to rebound nicely this year. And we think we’ll get off to a very strong start in just about three weeks.

MCN: We talked about declining linear viewing numbers and the fact that viewers are increasingly viewing live sports on all platforms. Was the changing marketplace the catalyst for NBC Sports offering more live programming on digital platforms, including through NBC Sports Gold?
ML: That movement actually predates me. We’ve been doing what is known as TV everywhere and showing our games digitally for a long time. But while we continue to do that and it grows, 97% of the viewership of the Sunday Night Football game is still on linear television. What Nielsen hasn’t been able to do is capture fully all the people who are watching out of their homes, but they’re getting closer to it, and we think we will soon get credit for that.

Related: NBC Sports to Launch 'Premier League Pass' OTT Service

What I would say is our digital products have evolved with the way audiences have evolved. Our digital business is broken up into really four areas: We have what I’d call our core video area, which is essentially streaming everything that we run on TV. People who pay for their television product should be able to get it on their devices, and that’s the biggest part of our digital video business. The second part is our news and information — our articles, stats and scores, score apps and those things. The third part is NBC Gold, which is our direct-to-consumer product that now has four verticals in it — one being cycling (Cycling Pass), another being motocross (Pro Motocross Pass), three being track and field (Track and Field Pass), four being rugby (Rugby Pass) and five now being Premier League (Premier League Pass).

Related: NBCSN Tallies Top Morning Premier League Audience

We have products directly for the fans who love those particular sports and they are able to buy directly a deeper relationship with those sports through us on a direct-to-consumer pay model. The final one is our transaction business, which is unrelated to video. All of it, we think, wraps into what sports fans, consumers and participants expect from a sports media company today.

MCN: Is that an imperative to survive in this new multiplatform environment?
ML: Yes, you have to diversify. We are not going to survive alone on buying a property and selling advertising; we are going to have to diversify our revenue mix. Retransmission consent and subscription television for cable has long helped make those businesses healthy, but in a time when subscriber trends are going down we have to be creative with other revenue sources around the products that we represent and can create like our transaction businesses.

Related: Comcast Enhances Sports Guide for X1

MCN: Yet having said all that, NBC decided to launch a new linear cable channel, the Olympic Channel, in July.
ML: Yes, how about that.

MCN: Why did you feel this could be successful in an environment where there is virtually no momentum for new linear cable services?
ML: [laughter] Gosh, you make it sound like such a bad idea. What we believe in is the Olympic movement, their values and their ideals. The IOC [International Olympic Committee] has made this an important agenda item. They have created the backdrop so that we could take events that we already had contracted for or could expand with the federations to create for the people who are super fans of Olympic sports an opportunity to see national and international championships. That being said, the business model is interesting. As part of our deals with cable operators, they get the Olympic Channel; it’s part of what they pay us as a company. There’s no real fee attached to it, so they agreed to launch it for us.

Right now, we’re somewhere between 40 million and 50 million homes, which has exceeded my expectations, candidly. Our content distribution team really got behind it and I praise the cable operators and satellite guys for really understanding the value of this. In a world of craziness, the Olympic movement and its ideals are a good thing, and they got behind it.

MCN: I want to take a broader look at the TV sports business in general. Do you see a limit to the rise of sports rights costs as cable sports networks continue to struggle to pay for those costs through traditional subscription fees and advertising fees?
ML: I sure hope so. [Laughter.] We’ve been saying that the balloon has to burst since you and I probably first met some 20 to 30 years ago, and it hasn’t. It does feel like there will be a time when the stress levels and the value exchange may reach a point where there’s not always going to be another buyer for every product. And there may be a buyer, but at what price? Right now, most of the big deals are in place for a period of years, but you will see some smaller properties that are coming to market over the next few months where I think we may see some of what I’ll call downward pressure on their expectations.

MCN: So, as a sports group, are you satisfied with the current lineup that you have of sports content rights? Is there anything out there that you would aggressively want to go after?
ML: What I would say is that we don’t wake up on any day and say, “I wish we were someone else.” We don’t covet what other people have. We love the lineup we have, and we have chosen that lineup because that’s what was available and because of we were aggressive about going out and getting. We think our product has value to distributors, whether they’re broadcast affiliates or cable MVPDs or [digital] MVPDs. We think there is value to marketers and to viewers with the product we have. We go very deep and get people as close to and as intimate with the sports that they love. We have such a huge golf presence, we have the EPL [English Premier League] exclusively, we have the NHL exclusively. We have the second half of the NASCAR season, where we crown champions in NASCAR, Indy Car and Formula One, so we are obviously big in the motor-sports space. The Olympics are ours exclusively. So I think when you take that sort of accumulation of content and the exclusivity that we have with it and the value that it has to those constituencies as exclusive product, we like the position we are in.

MCN: So with everything that you’re dealing with, is there one issue that keeps you up at night?
ML: Certainly, the changing consumer consumption behaviors that you pointed out. We’ve got to continue to find ways to make sports fans want to watch the games, not just follow them. It’s so easy to just follow a sporting event now through watching scores or highlights. What keeps me up at night is that people are satisfied just following sports and aren’t going to sit down and watch a game in its totality, which has been the way we all grew up doing and what we have gotten so much enjoyment out of. Why should sports fans be satisfied with the CliffsNotes? Let’s make them have to listen to the whole story.

MCN: Where do you see the future of the regional sports business, and do you see NBC looking to expand and maybe launching or purchasing more regional sports networks going forward?
ML: I would say first we have RSNs in very important markets that are important for Comcast and many markets where we not only have an RSN, but we have an owned-and-operated television station. So I would say we are satisfied with our footprint. Again, distribution has its challenges but there is nothing as powerful in a local market as following your local sports teams. It does incredibly high ratings, whether it’s hockey, basketball or baseball each and every night. And to the fans of that city and those teams, it’s an incredibly valuable service. That being said, with a push from the industry towards skinny bundles, I would say that there is a challenge to that business, and the leagues and the teams have been great beneficiaries of rights fees and ownership in some cases of RSNs. It’s a challenged model that we all have to be wary of and continue to find new opportunities.

MCN: Looking ahead, NBC Sports group has three-high profile events within the first nine months of 2018, including the Super Bowl, the Winter Olympics, and then Telemundo’s coverage of the World Cup. How do you keep your eye on providing the most comprehensive coverage of those events while managing costs and resources?
ML: Well the Super Bowl and the Olympics are right on top of each other, so that’s a logistical challenge and something that our team has been working on for years. We have a plan that we will execute and we feel very, very strongly about it. The Super Bowl is once every three years, so we know the resources that have to go into it. It’s the biggest single media event in the world as an individual day or event, and we are confident we know how to do that. With the Olympics, first, our team has a lot of experience and second, South Korea is technologically sound and ready, which has made it much easier than some of the other cities, like Rio and Sochi. The second part of that is we do more and more coverage from home. We were able, via technology, to not have as many people go as we have had to have in the past, even though we produce more content. The ability to send it back here through our Stamford facility and not have to re-create every piece of programming on the ground there makes it logistically feasible. So we have great plans for both.

And with [Spanish-language network] Telemundo for the World Cup, we just did the Confederations Cup so in Russia. Having just finished that and an Olympic Games in 2014, our team knows how to do business there and has been able to work with the folks there to make sure that we have everything we need and we can do it in an efficient way.

Numbers
16.5 MILLION
The combined linear and digital audience for NBC’s May 6 coverage of the 143rd Kentucky Derby, the largest Derby audience for the Triple Crown race since 1989.

NBC Sports Group at a Glance
The programmer’s wide array of assets include:

MAJOR SPORTS PROPERTIES
Summer Olympics (through 2032)
Winter Olympics (through 2030)
NASCAR (through 2024)
NFL Sunday Night Football (through 2022)
NFL Thursday Night Football (partial, through 2017)
Premier League (through 2021-22 season)
National Hockey League (through 2020- 21 season)
Notre Dame football (through 2025)
The Open (British Open, through 2028)
Ryder Cup (through 2030)
PGA Tour (through 2021)
Kentucky Derby (through 2025)
Preakness Stakes (through 2020)
Belmont Stakes (through 2020)

OWNED CABLE NETWORKS
NBCSN
Golf Channel
Olympic Channel: Home of Team USA*

OWNED/AFFILIATED REGIONAL SPORTS NETWORKS
NBC Sports Bay Area
NBC Sports California
CSN Chicago
CSN New England
CSN Northwest
CSN Mid-Atlantic
CSN Philadelphia
SportsNet New York (SNY)

DIGITAL
NBCSports.com
NBCOlympics.com
GolfChannel.com
GolfNow.com
NBC Sports app
NBC Sports Scores app
NBC SportsTalk app
NBC Sports Gold app
NBC Sports Radio app
Golf Channel app
GolfNow app
NBC Sports Regional Networks (websites and apps)

NBC SPORTS GOLD OTT SERVICES
Pro Motocross Pass: $49.99/year
Cycling Pass: $39.99/year
Rugby Pass: $59.99/year
Track and Field Pass: $69.99/year
Premier League Pass: 49.99/year

* Partnership with International Olympic Committee and U.S. Olympic Committee

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