Game Theory

Distributors Gripe, But Networks See Paydirt In TV Sports
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Who says TV sports aren’t getting more expensive?

NASCAR just put the finishing touches on $8.2 billion in rights deals covering the 2015 through 2022 stock-car seasons, concluding a second pact with Fox and bringing NBC Sports Group into its pit row, with ESPN and TNT putting the brakes on their relationships.

Meanwhile, Fox Sports shook up golf’s TVnetwork establishment, holing a 12-year deal with the United States Golf Association for the U.S. Open. The deal, which tees off in 2015, is worth a reported $100 million annually — more than double the combined $37 million NBC Sports and ESPN have been allocating.

Escalating sports costs have been the white-hot issue for consumers carping about bills and calling for a la carte carriage of cable networks. Why should they have to pay for national and regional sports networks that they don’t watch?

It is the bane of TV distributors who doggedly fight sports network increases. And it is the largest and most telling indicator of the health of the pro leagues.

The cost of sports is part of the rhetoric in the retransmission-consent dispute between CBS and Time Warner Cable, with the broadcaster citing the MSO’s multibillion deals for regional sports networks, anchored by the National Basketball Association’s Los Angeles Lakers and their neighbors, Major League Baseball’s Dodgers. And some media analysts say that CBS and TWC may not settle their retransmission-consent dispute until the National Football League kicks off next month.

Needham & Co. analyst Laura Martin predicted that if the cry to unbundle were heeded and ESPN put on a tier, a lot of value would evaporate. The resulting ESPN “super fan homes” would have to purchase a suite of sports programming at much higher rates for the worldwide leader to maintain its revenue levels, and the pay-TV industry could lose $13 billion because many customers would, in turn, punt on their entertainment packages.

Meanwhile, the market is ripe with opportunity for those with a big enough checkbook. That’s because for all the talk about the soaring costs, sports is a unique product. Sports programming is DVR-proof for fans — 97% of viewing occurred live in 2012, according to Nielsen.

The opportunity to expand revenue is at the heart of Fox’s Aug. 17 launch of national sports service Fox Sports 1, which is being converted from Speed; and Fox Sports 2, from Fuel. Fox Sports Media Group co-presidents Eric Shanks and Randy Freer said they expect Fox Sports 1 will be profitable by 2016.

Thus as summer turns to fall, the following is a scorecard for TV sports, a fall preview of what viewers can expect from programmers in college and pro sports, the costs involved and the winners and losers.

College Football

Continuing its recent game plan, ESPN will open the season with a blitz of 42 games across linear, regional and digital vehicles from Aug. 29 through Sept. 2.

“A couple of years back, we really decided to plant a flag on Labor Day weekend with high-profile games on multiplatforms,” ESPN senior vice president of college sports programming Burke Magnus said.

Last season, ABC, ESPN and ESPN2 combined to reach more than 187 million viewers, with those services and ESPNU averaging nearly 2.02 million watchers for 216 regularseason games. ABC’s Saturday-night primetime series set the pace, scoring 6.52 million viewers on average.

Showcasing Big 12, Pac-12 and Conference USA contests, Fox outlets will televise 100 national games, across the broadcast network, Fox Sports 1, FSN and Fox College channels, plus another 50 contests on various regional sports networks. FX, whose ratings fell 40% as contests were shifted to Fox broadcast, is now on the sidelines.

Fox Sports 1 jumps into the fray right away, with Utah- Utah State on opening night Aug. 29 and Kansas State- North Dakota State on Aug. 30. Typically, Fox Sports 1 will air a Thursday primetime contest and Fox College Saturday, the two-hour pregame show hosted by former ESPNer Erin Andrews, will lead into either a doubleheader or tripleheader.

Fox broadcasts begin on Sept. 7 with West Virginia- Oklahoma in the first of five successive Saturday primetime games, with its coverage culminating with the Big Ten Championship Game on Dec. 7 and the AT&T Cotton Bowl on Jan. 3.

CBS has the highest-rated overall package — 6.17 million viewers for 13 telecasts, down 10% from the 2011 campaign — with the Southeastern Conference, whose members have captured the last seven national titles.

Scheduled to air 16 SEC contests, including the conference championship game, CBS also has the highest-profile early-season game — provided Heisman Trophy winner Johnny “Football” Manziel’s eligibility has not been compromised — when Texas A&M hosts two-time defending champion Alabama on Sept. 14.

CBS Sports Network, with 50 million subscribers, has added more Mountain West action and will televise 51 contests from the MWC, Conference USA and service academies, up from 44 in the 2012 campaign.

The Big Ten Network starts its seventh season with a record slate of 47 games, up from 42 in 2012, including 12 in primetime. Over the first four weeks, the network, now counting 52 million subs, will feature Big Ten teams and opponents from the SEC, Pac-12 and Atlantic Coast Conference. With its launch on Comcast in late June/ July, TV Everywhere service BTN2Go has scored almost complete distribution with its carriers.

NBC hit Nielsen paydirt with Notre Dame’s unexpected run to the national championship game, tackling a 67% jump to 4.38 million viewers over seven telecasts in 2012. Seven games also are on the slate for 2013, highlighted by Sept. 28 matchup with Oklahoma and primetime contests versus Arizona State and USC on Oct. 5 and 19, respectively.

NBC Sports Network will offer 11 Colonial Athletic Association and Ivy League contests, highlighted by a tripleheader on Oct. 12 and doubleheaders on Nov. 9 and Nov. 23.

In its sophomore season, Pac-12 Networks will air 35 conference home games. The network recently inked a deal with Google Fiber for its main service and its six sub regionals and secured a rollout with Comcast’s Sports Entertainment Package in the Midwest.

Pac-12 commissioner Larry Scott said it’s unlikely that DirecTV will add the service this year. But that hasn’t stopped Pac-12 Networks, which has deals with 50 distributors, including three of top four, from launching a multimedia “Compare” campaign, armed with university-specific creative, aimed at urging the top satellite provider’s subscribers to switch providers.

National Football League

The NFL’s TV partners are getting set to kick off their final season of their current rights contracts, under which ESPN, Fox, CBS and NBC will pay a combined $3 billion in 2013. Next season, the rights fees will jump to just under $5 billion.

With the exception of NFL Network, which rode expanded distribution and an increased slate to 13 games from eight in prior seasons to a record average audience of 7.3 million per contest, the league’s ratings were down in 2012. That included the playoff s, which saw some game windows drop by double digits. Even the Super Bowl reported a drop in audience for the first time in seven years, although it still averaged 108.4 million viewers, making it the third-most watched television program in U.S. history.

Despite the decreases, pro football’s Nielsens are to die for. NBC’s Sunday Night Football was the most-watched show in all of television for a second consecutive season, averaging 21.4 million viewers and an 8.2 rating in the 18 to 49 demo, off from 21.5 million and an 8.4 in the 2011 season. NBC kicks off the season on Sept. 5 with a rematch of last year’s playoff battle between the Super Bowl champion Baltimore Ravens and the Denver Broncos.

On cable, ESPN’s Monday Night Football reigned as the medium’s top show for a seventh straight year, averaging 12.8 million viewers and a 5.1 in the demo, down 3% and 6%, respectively, from 2011. Per usual, the worldwide leader opens with a doubleheader: a big-market battle between coach Chip Kelly’s Philadelphia Eagles and the returning quarterback Robert Griffin III’ s Washington Redskins, followed by Houston-San Diego on Sept. 9. Other potential key games: Chicago-Green Bay on Nov. 4, San Francisco- Washington Nov. 25 and Dallas-Chicago on Dec. 9.

CBS, wielding its smaller-market AFC package, averaged 17.7 million viewers, a 4% decline from 18.4 million from in 2011. This season, CBS, which will be flanked by a new four-hour NFL pregame show on CBS Sports Network, should benefit from a Manning brothers matchup in week two, as Peyton and the Denver Broncos come calling on younger brother Eli and his New York Giants at MetLife Stadium on Sept. 15.

Speaking of the New Jersey venue, it’s the site of a possibly snowy Super Bowl XLVIII on Feb. 2. Earlier this month, during Twenty-First Century Fox’s investor day, Fox Sports Group co-president and chief operating officer Eric Shanks said that ad sales for the title game were “progressing quite well,” although it should be noted that the past two broadcasters didn’t sell out until much closer to the event.

Fox, which is welcoming SNY’s Kevin Burkhardt to its play-by-play roster this year, averaged 19.8 million viewers and a 7 rating among the 18-49 set during the 2012 regular season, down 1% and 4%, respectively.

NFL RedZone, the league’s companion channel that provides whip-around coverage of every game on Sundays, will debut a brand-new set this year, including a new video wall that will allow for host Scott Hanson to provide new and faster ways to present all the action.

The league will also offer a redesigned version of its official mobile app from Verizon Wireless, which will now be available on all major platforms.

DirecTV has launched a new “most powerful NFL” ad campaign for its “NFL Sunday Ticket” out-of-market package. The satellite leader, currently in the third of a four-year deal that ends with the 2014 season for which it pays $1 billion annually, is discussing a renewal with the league under which it may or may not retain Sunday Ticket exclusivity.

Soccer

Given that European TVsports contracts usually run for three seasons, the soccer rights ball bounces often. England’s Barclays Premier League is now on the feet of NBC Sports Group in the first of a three-year, $250 million deal that triples the outlay of former holder Fox Soccer, which sublicensed some matches to ESPN2.

Doubling last season’s presentation, all 380 premiership matches will air on linear television (and be streamed live to authenticated subs) with NBC Sports Network in the lead with 154 matches, flanked by mun2, Telemundo and NBC, as well as other NBCUniversal cable outlets.

Premier League Extra Time, an ad hoc group of channels that pay TV providers are opening up, will also provide viewer access in the busy Saturday 10 a.m. (ET) window. Last season, Fox Soccer averaged 207,000 viewers over 131 matches, while ESPN2 netted 243,000 with 49.

Telemundo, which will run 10 BPL games this year, holds the right to Mexico’s away World Cup qualifiers, and outbid Univision to become the home to FIFA World Cup tournaments from 2015-22.

Fox Soccer Channel will be converted to comedy-centric FXX on Sept. 2, and will no longer offer premiership action, but Fox Sports still will serve up plenty of fútbol fare via Fox Sports 1, Fox Sports 2 and premium service Fox Soccer Plus. UEFA Champions and Europa League, FA Cup and England’s men’s national team World Cup qualifiers rank as the prominent live and exclusive properties. Fox, which also holds rights to array of CONCACAF events, is building toward the FIFA World Cup — it gained English-language rights from 2015-22, beginning with the women’s tournament in Canada in 2015.

Also out of the Premier League game, ESPN2 will wind down coverage of domestic circuit Major League Soccer’s 2013 season. Ahead of its final FIFA World Cup from Brazil next June-July, the sports giant will present the final cycle of World Cup qualifying for both the U.S. and Mexico (via a sublicensing pact for English-language from Univision) men’s national teams this fall. For its part, ESPN Deportes is trebling its match coverage of Liga BBVA Bancomer MX to 65 and will televise 35 CopaMX regular-season and playoff matches. The network, which also continues with its presentation of Dutch and Brazilian leagues and MLS, also has at least 25 European World Cup qualifiers on tap.

The largest soccer-league audience in the U.S belongs to Spanish-language media leader Univision, which will end its run with FIFA fare with the 2014 World Cup from Brazil next June-July. Coverage of Liga BBVA Bancomer MX, Mexico’s top circuit averaged 602,000 viewers across broadcast networks Univision and UniMas and cable service Galavisión in 2012. Amidst a host of other properties, Univision Deportes also holds the rights to World Cup qualifiers and Mexican, U.S., German, French national team matches.

Upstart beIN Sport, which launched last August with DirecTV and Dish Network, has added Comcast, Verizon Communications, Time Warner Cable, Bright House Networks, Advanced Cable Communications, Atlantic Broadband and Liberty Cablevision of Puerto Rico over its rookie year. The unit of Al Jazeera Sports’ soccer lineup features matches from Spain’s La Liga, Italy’s Serie A, France’s Ligue 1 and Russia’s Premier League, as well as action from World Cup Qualifiers and Copa America tournaments.

Gol TV kicked off its coverage of Germany’s Bundesliga, Europe’s second-best circuit and home to Bayern Munich, kingpins of the national circuit and the Champions League, and runner-up Borussia Dortmund on Aug. 9. The hybrid service, which offers Spanish- and English-language feeds, has added a game of the week from the Dutch Eredivisie, including top clubs AFC Ajax and PVC Eindhoven.

One World Sports presents weekly action from four Pacific-Asian soccer leagues: Japan’s J.League, Korea’s K League Classic, the Chinese Super League and the A-League in Australia, as well as select international fútbol competitions. The global sports network, which counts Dish Network, Cablevision Systems, Mediacom Communications and Google Fiber as affiliates, also offers home match coverage of the rebooted New York Cosmos, and has picked up encore rights to Premier League stalwarts Chelsea and Arsenal, as well as the Bundesliga’s Bayern Munich.

National Hockey League

A 48-game rush to the postseason and then a taut Stanley Cup Finals between two “Original Six” teams helped boost NBC Sports Group to the best National Hockey League ratings in a generation during the 2013 campaign.

The question is now whether the puck sport can maintain the momentum from a lockout-shortened campaign that iced 40% of last regular season, or will NBC Sports Network and NBC sustain Nielsen declines like the NBA experienced last season following its own labor-truncated 2011-12 campaign.

NBC Sports Network averaged 332,000 viewers in 2013, up 18% over 2011-12, to make it the mostwatched regular-season on cable since ESPN averaged 474,000 in 1993-94. Results were led by a new “Wednesday Night Rivalry” franchise that averaged 646,000 viewers over the 14 games and also delivered the two most-watched regular-season games in network history.

Regular-season viewership on NBC grew 15% to 1.5 million viewers (excluding the canceled Winter Classic), the highest since 2005-06, when the Peacock regained NHL rights.

Eyeballs continued to track the puck throughout the postseason, which averaged 1.47 million viewers on NBC, NBC Sports Network and CNBC over 84 games, making it the NHL’s most-watched postseason since 1997. The Stanley Cup Finals, in which the Chicago Blackhawks topped the Boston Bruins in six games, averaged 5.76 million viewers, the most since Nielsen data became available in 1994.

The return of a pair of lockout casualties — the contest on the Friday after Thanksgiving (Nov. 29) between the New York Rangers and the Bruins and the Jan. 1 Detroit Red Wings-Toronto Maple Leafs Winter Classic — likely to draw 100,000 to the “Big House” of Michigan Stadium in Ann Arbor, Mich. — should give NBC an earlyseason audience boost.

NBC Sports Network will also skate outdoors, perhaps too often, with five “Stadium Series” contests.

The NHL players will break from Feb. 9-25 in pursuit of Olympic gold at the Winter Games in Sochi, Russia. The 2010 gold medal game —Canada won 3-2 over U.S. in overtime— drew 27.6 million, the biggest U.S. hockey audience since the Miracle on Ice at the 1980 Lake Placid Olympics.

“Despite the shortened season in 2013, we were able to continue the NHL’s momentum with the introduction of Wednesday Night Rivalry and cap the year with the most-watched Stanley Cup Final on record,” NBC Sports Group president Jon Miller said. “This full season looks even more promising.”

NHL Network, which counts some 40 million subscribers, will again show 78 live regular-season contests.

Major League Baseball

Like the NFL, Major League Baseball’s TV partners are in the last year of their current rights deals. And also like the NFL, its TV partners are hoping for a ratings turnaround after a down season.

Fox and TBS hope a return to October baseball for big-market teams like the Boston Red Sox and Los Angeles Dodgers — not to mention the Pittsburgh Pirates’ possible re-entry to the playoff s after a 20-year absence — improve upon last year’s low playoff ratings. One hindrance to that is the likely scenario of not featuring a team from top media market New York.

TBS’s coverage of the Detroit Tigers’ four-game sweep of the New York Yankees in the 2012 American League Championship Series averaged a 3.8 U.S. household rating and 5.92 million viewers. While that represented respective gains of 31% and 28% from TBS’s coverage of the six-game St. Louis Cardinals-Milwaukee Brewers National League Championship Series the year before, it marked the lowest-rated ALCS ever.

The postseason then finished with the lowest-rated and least-viewed World Series ever on Fox, as the San Francisco Giants tamed the Tigers in four games, averaging just a 7.6 rating, 12.7 million viewers and a 3.7 among adults 18 to 49. The sweep deprived Fox of any chance to build Nielsen momentum, not to mention additional ad sales monies.

TBS will have its usual Division Series coverage (giving two games to MLB Network), as well as the Wild Card round and the NCLS. Keith Olbermann will take a break from his upcoming ESPN2 show to helm the network’s studio coverage.

Given their alternate slots in the batting order, Fox will take the swings with this year’s ALCS before presenting the Fall Classic, with the junior circuit winner holding homefield advantage courtesy of its win as last month’s All-Star Game in New York. Despite a marquee setting at Citi Field and notable appearances from rising Mets star Matt Harvey and future Yankees hall of famer Mariano Rivera, Fox’s Midsummer Classic numbers failed to improve much over last year.

MLB Network, however, is finishing up a strong ratings season. Through early August, its regular-season game viewership is up 10% over 2012 with an average of 242,000 viewers per contest. Meanwhile, flagship studio show MLB Tonight has seen a 26% increase in viewers over the 2012 regular season. Sunday editions of MLB Tonight are up 44%.

Year-to-date, MLB Network’s average total day viewership is up 38% over 2012, including increases in every key demo. Viewership among men 18-34 rose 50%; among men 18-49 increased 28%; and among men 25-54, it’s up 32%. The service will present a pair of Division Series playoff games.

TAKEAWAY

As the fall sports season gets underway, TV viewers will see a shifting — and more pricey — playing field.

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