New York -- In the latest pricey sports-rights deal, Fox,
NBC and the latter's cable partner, Turner Sports, have wrested NASCAR auto racing
away from CBS Corp. and ESPN.
But while the amount paid for the popular programming will
skyrocket, the new rights-holders insisted that they would not pass along surcharges to
Still, Turner Sports and Fox Sports Net executives conceded
that they expected to pass along annual increases in the license fees that they charge
"We don't plan a surcharge per se for
NASCAR," Fox Sports Net president Jeff Shell said. "We do think NASCAR is a
powerful sport that will help to justify the programming cost and rates that we are asking
today and going forward."
News Corp.-owned Fox and cable partner FX, along with
General Electric Co.'s NBC and its cable partner, Time Warner Inc.'s Turner
Sports, won the racing-event rights last week after a spirited auction.
The National Association for Stock Car Auto Racing was the
real winner, though, securing close to $3 billion over eight years beginning in 2001,
according to a source involved with the talks.
Fox and FX will run NASCAR races from July through November
for eight years, while NBC and TBS Superstation will run events from February through June
during the first six years of the contract.
Sports programmers have hiked rates throughout the 1990s to
pay for multibillion-dollar rights deals with the National Football League, Major League
Baseball and the National Basketball Association. And while Turner, Fox and NASCAR
officials insisted that there will be no cable surcharge for this deal, MSOs will no doubt
be concerned about future rate hikes.
"Any time programmers pay substantially more for
product, there has to be a concern that it will get reflected in the prices we have to
pay," Time Warner Cable spokesman Mike Luftman said
The deal is a blow to CBS and The Nashville Network, but an
even bigger loss for ESPN and ESPN2, which carry 195 hours of NASCAR programming annually.
When ESPN outbid Turner Network Television to acquire the
full-season NFL contract in 1998, ESPN executives, while negotiating rate hikes that year
with cable operators, suggested that TNT offer MSOs a rebate since it no longer had
valuable NFL games.
Now, Turner executives are privately suggesting that ESPN
should drop its rate since it will lose the NASCAR contract.
ESPN -- which has raised its monthly license fee 25 percent
two years in a row -- has no plans to offer MSOs a rebate tied to the lost NASCAR
programming, senior vice president of programming John Wildhack said. "We will
deliver and continue to deliver the most compelling sports programming," he added.
ESPN will look to replace NASCAR programming with new
editions of SportsCenter, other news programming, additional National Hockey League
playoff games and more college football and basketball games. "We'll be
fine," Wildhack said.
With ESPN facing the prospect of losing its MLB contract
next year, "it behooves" the network to settle its lawsuit with that league,
International Marketing Group senior vice president Barry Frank told attendees at a Paul
Kagan Associates Inc. conference last Thursday, according to Kagan analyst John Mansell.
More than 70 percent of the races covered in the new rights
deal will run on Fox and NBC, and the network's cable partners will run ancillary
Fox and NBC will rotate coverage of NASCAR's premier
event, the Daytona 500. Fox has the Daytona 500 in 2001, 2003, 2005 and 2007, and NBC will
air the race in 2002, 2004 and 2006.
Racetrack owners had traditionally negotiated separate
rights deals with cable and broadcast networks. But in February, NASCAR announced a plan
to sell the rights in one large package, saying that it would keep 10 percent of the
rights revenue and distribute 65 percent to track owners and 25 percent to racing teams.
The move paid off, as NASCAR's annual combined haul
will rise from about $100 million to $400 million under the new deal.
NASCAR and network officials both said they expect ratings
to increase now that the rights have been consolidated to four cable and broadcast
players, which will heavily cross-promote the races.
This should lead to increased ad revenue, new Turner Sports
president Mark Lazarus said. "We think the pricing will follow the value, and the
value that we expect to deliver will be significantly higher," he added
NASCAR vice president of broadcasting and technology Bray
Cary said the new rights deal will boost NASCAR's plan to launch a cable channel,
tentatively called the NASCAR Channel, in 2001. The channel will feature NASCAR news
programming, in addition to races that currently aren't televised, he added.