Sports, most programming executives say, triumphs over the DVR. The drama and the outcome of the competitions millions of Americans love to watch live are unpredictable and can’t be paused, even to zap commercials.
The same captivating qualities can be ascribed to the sports-TV industry.
Mirroring the ascension of cable over the past quarter century, the role of TV sports can’t be underestimated. If everyone wanted their MTV, many also craved ESPN, which emerged as its own cultural touchstone. With the $2.4 billion, six-year addition of the National Basketball Association in 2002, ESPN became the first network to televise games of the four major U.S. pro leagues in the same year.
CHAFING AT COSTS
But along with those and other high-profile properties, ad avails and channel extensions have come monthly costs that make it the programmer operators love to hate.
Nowhere did that acrimony spill over more than when Cox Communications Inc. engaged ESPN during 2003 in a very public squabble over the sports network’s monthly rate card, which, via 20% annual increases over a long-term deal, had pushed ESPN’s monthly license fee north of $2.60.
In February 2004, the parties, prodded by Congress, agreed to a nine-year deal, whose per-year increases average around 7%.
Despite the leveling of license fees — similar agreements have been reached with most distributors — ESPN will still command upward of $4 per month early in the next decade, cable’s highest price this side of premium channels.
Other networks, notably sister services Turner Network Television (NBA, NASCAR and the Professional Golfers’ Association) and TBS (Major League Baseball’s Atlanta Braves, college football); WGN Superstation (Chicago White Sox, Cubs and Bulls); USA Network (U.S. Open tennis, PGA, World Wrestling Entertainment); FX (NASCAR, MLB playoffs) and Spike TV (Ultimate Fighting Championship and Total Non-Stop Action Wrestling) use sports and sports entertainment fare to attract large numbers of male viewers.
If you count poker, add GSN (which also has billiards), Travel Channel and Bravo into the national sports mix.
David Hill, the leader of Fox Sports and DirecTV Entertainment, believes many sports events will remain on broadcast television, even if the rights-holders have been awash in red ink on many sports properties of late.
“Sports needs broadcast television probably more than broadcast television needs sports. What broadcast has the ability to do is to attract the peripheral fan,” he said. “Just look at the NBA and the NHL. Both locked themselves into a [virtually] cable exclusive world and their ratings are declining.”
Kagan Associates analyst John Mansell takes a different view. “The trend is toward continued proliferation. To those who speak to the diminution of ratings, there are more sports on more networks now. There are also more sports viewers; they now just have so many more choices.”
Those choices also include rooting for the home team. Today, Fox Sports Net president Bob Thompson estimates that the nation’s 30 regional sports networks air about 80% of MLB, NBA and National Hockey League games, with FSN’s 20 owned or affiliated services controlling the lion’s share of those rights — 62 out of 82 U.S. pro clubs in those sports.
But that position has not come easy or cheaply. Last year, Comcast Corp. teamed with four Chicago-based pro teams to launch Comcast SportsNet Chicago; the NBA’s Sacramento Kings moved to Comcast SportsNet West; and two Denver-based pro teams formed Altitude Sports and Entertainment.
FSN last year also fended off possible defections of MLB’s Houston Astros and Colorado Rockies and the NBA’s Houston Rockets and Memphis Grizzlies at the costs of hundreds of millions of dollars for long-term deals.
Earlier this month, FSN Pittsburgh re-signed MLB’s Pirates to a long-term extension and dribbled past a press from Comcast to lure the NBA’s Utah Jazz from FSN Rocky Mountain.
“This is a business we like and one we plan on being in for a long time,” said Thompson. “These are valuable properties. We would be naïve to think that there isn’t always going to be competition for rights.”
CEO Jack Williams said Comcast SportsNet will continue to scan the horizon to supplement the aforementioned networks in Chicago and Sacramento, as well as services in Philadelphia and the Washington/Baltimore area.
Comcast also runs dedicated team services with the NFL’s Dallas Cowboys and MLB’s Atlanta Braves, plus the college-centric, 4.5 million-subscriber Comcast/Charter Sports Southeast.
“We have staked out areas where Comcast is the dominant cable operator. A lot of the teams are under contract, but we will keep an eye open for opportunities,” he said, noting he’s not averse to working with clubs/leagues on more dedicated channels where they make sense.
TEAMS GET NETS TO OWN
After working with the ownership ranks of the Chicago teams to poach the rights from FSN Chicago, the batting order was flipped, in a way, on Comcast SportsNet Mid-Atlantic, where the arrival of the Washington Nationals baseball team from Montreal this season has resulted in the formation of Mid-Atlantic Sports Network. MASN carries the former Expos’ games and will add the Baltimore Orioles in 2007. Comcast has been involved in litigation over the Orioles rights and is currently not offering MASN.
The Orioles/Nationals network, of course, is not the only team-driven regional making news these days. The New York Mets, in a venture with Time Warner Cable and Comcast, will break away from FSN New York and Madison Square Garden Network to form their own channel next March. Metro New York-area sports fans could face a dose of déjà vu all over again should the RSNs’ owner, Cablevision Systems Corp., engage in a carriage dispute like it did with Yankees Entertainment & Sports Network.
Those disputes shut out the New York Yankees from Cablevision viewers during YES’s rookie 2002 season.
While the Mets figure to join the Yankees in building a regional, other recent attempts by the likes of the Houston teams, MLB’s Minnesota Twins, the NBA’s Memphis Grizzlies and Charlotte Bobcats, owned by Black Entertainment Television founder Bob Johnson (Carolinas Sports Entertainment Television), came up short.
“If you go back over the past 25 years, there have always been around five or six team-owned channels,” said Thompson. “Some of the players have changed, but others are still there like MSGN with the [New York] Knicks and Rangers and NESN.” New England Sports Network’s owners include the Boston Red Sox and Boston Bruins.
Also, Cablevision and News Corp. this year revamped the ownership structure of their shared sports holdings under Regional Programming Partners, 60% owned by the former and the balance by the latter. The deal changed the ownership structure of various RSNs, which some observers believe could facilitate their sale, should Cablevision elect to move out of this business.
Comcast, in particular, is said to have interest in FSN Bay Area and FSN Chicago.
Joining the ranks of Comcast’s The Golf Channel, Fox’s Speed Channel and horseracing channel TVG, the past few years have borne witness to the launch of a host of sport-specific services.
In particular, 2003 was busy as hunting/fishing proponent The Sportsman Channel, The Tennis Channel, and extreme sports channel Fuel all bowed. Since then, NBA TV has become a linear service, joined by NFL Network. MLB and the NHL are also eyeing their own networks.
Following the bow of College Sports Television in April 2003, the college arena heated up significantly with the conversion of a trio of Fox Sports Digital networks to college fare last fall, as Fox College Sports, and the tipoff of ESPNU in March.
Elsewhere, Fox Sports World was converted to Fox Soccer Channel this past February, where it joins Gol TV (offering both Spanish- and English-language feeds), Fox Sports en Espanol and ESPN Deportes in the hunt for Hispanic viewers.
Conversely, other attempts to start channels centered on ice skating (The Ice Channel), martial arts (Black Belt TV), pigskin play (The Football Network) and gaming (Casino & Gaming Television) lie in various stages of distribution dormancy or financial repose
The past five years have also seen attempts by FSN and CNN/SI to provide national sports new competition to ESPN’s SportsCenter juggernaut and its spinoff ESPNews fall by the wayside.
So did the cable-centric Women’s United Soccer Association, which expired shortly after completing its third season and about a week before the 2003 World Cup, in the wake of high start-up costs and a lack of sufficient sponsorship support.
Other major rights will come up for bid over the next year: PGA, MLB and NASCAR, with the latter likely to enjoy the widest interest.
“I think it says a lot about the maturity of NASCAR, just like with the NFL, that so many networks have interest, even if they may lose money when measuring advertising against the rights,” said Mansell.
The NFL, meanwhile, has concluded all but one piece of its TV deal, to staggering effect. In agreements reached last November and April, the league locked down its Sunday afternoon and Sunday- and Monday-night lineups, leaving ESPN with Monday Night Football and ABC out of the mix after 36 seasons. And DirecTV Inc. again kept cable at bay, holding onto the popular Sunday Ticket out-of-home package.
All told, NFL will generate a minimum of $23.9 billion in TV revenue over the next eight years. Aggregating some $3.7 billion annually, the NFL outstrips all of the other major sports properties combined.
Still up for grabs: a late-season package of Thursday/Saturday night primetime games, which could draw interest from a host of players, including TNT, ESPN, Fox, USA, EchoStar Communications Corp., the league’s own NFL Network and Comcast.