November 13, 2012
10 Cable Sports Business Stories to Watch This Fall
By Kaylee Hultgren
In light of recent billion-dollar deals, it's clear that the sports rights market is as healthy as ever. And it shows no signs of slowing down. Whether your preferred topic is RSNs, TV Everywhere rights, or the constant, looming threat of disruption, there's plenty to talk about this fall. Here's a list of 10 stories to keep an eye out for.
1. The Bid for LA Dodgers Rights.
Fox is currently in exclusive negotiations with the Dodgers for a new billion-dollar media rights contract. If an agreement is reached, the new deal will replace the current agreement with Fox—made with the team’s former owner Frank McCourt in 2011—and is likely to exceed its $3 billion price tag.
But if a deal isn’t made, expect Time Warner Cable to swoop in and bid on the rights. The baseball package would be a handsome edition to the MSO’s English and Spanish-language Lakers’ RSNs it launched October 1. Fox needs the Dodgers desperately—particularly in the wake of being outbid by NBC for the rights to air the English Premiere League soccer games—so the bidding is likely to reach scary heights. Meanwhile, the Dodgers continue to buy up players, the most recent being 25-year-old pitcher Ryu Hyun-jin of South Korea's Hanwha Eagles, whom the team paid $25.7 million for negotiating rights.
2. NBC Airing Premier League/Fox Soccer’s Evolution. Fox Soccer lost the bid for rights to air the English Premier League last month, which Fox Sports’ co-president Eric Shanks called “a huge bummer” at SBJ’s Sports Media & Tech Conference. But a rebranding is not in the net’s future, he said, and Fox is remains committed to soccer coverage. The Champions League, the World Cup, FA Cup still remain at the net. After NBC’s 3-year deal with the EPL is up, Fox will surely take part in the bidding wars. In the meantime, pay attention to how Fox will market its channel, which claims to air the most competitive soccer in the world. It will be difficult to do that without the English Premier League.
3. Futbol Shakeup. After buying up a boatload of international soccer rights in August, including the Italian league Serie A, Spain’s La Liga and US away games in the World Cup qualifiers, the Al Jazeera-owned newcomer has landed a series of carriage deals with distributors, like Time Warner Cable and Bright House, DirecTV (which promptly dropped GolTV from its Sports package after the net lost La Liga to beIN), Comcast and DISH. The newcomer net has proved that ownership of sports rights gives you major bargaining power.
4. RSN Model Evolving. RSNs are a hot topic, particularly when it comes to carriage deals. But the process distributors go through when deciding whether or not to carry an RSN is becoming increasingly complex. Take TWC’s RSNs, which DISH and DirecTV still have not agreed to carry. Meanwhile, others like AT&T are evaluating networks with “intensity of viewership” top of mind, said AT&T content & ad sales pres Jeff Weber at SBJ’s conference. Having the Spanish-language component played a “very important part” in sealing the deal, he said. Look for more dual-language RSNs in the future. Secondly, distributors see the Internet as an incubator for start-up sports channels. Time Warner Cable’s Melinda Witmer said it gives entrepreneurs a chance to build an audience online before coming to cable and that it might be a better bet for some of the smaller guys.
5. MLB Network’s Affiliate Fees. The league has cut many a deal in recent months, with ESPN, Fox and others, but soon it will start asking for more compensation for MLB Network. Tim Brosnan, evp, Business for MLB said at the Sports Media & Tech Conference that they might start using the “Extra Innings” package as leverage to negotiate higher fees.
6. Streaming Games in Local Markets. NBA commissioner David Stern expects streaming games in local markets to happen this season, while NHL COO John Collins is optimistic about hockey finally reaching a deal this season. “We’ve been very close for a long time,” he said at the Sports Media & Technology conference. “This is probably the year when it goes over the top.” Fox Sports’ Shanks said that though it’s clear that local fans are the most passionate, the process of delivering a consistent experience for both the leagues (which are carried on different RSNs) and the consumers is a tricky business. So no timeframe there.
7. TVE Marketing. More programmers are expected to get on board with TVE in the next 6-12 months. But as for cutting deals, everyone seems to be on their own timetable—which is dictated by when the next set of negotiations come up. For TVE to be accepted by consumers, that has to change. An industry-wide marketing campaign is sorely needed, execs agree. When it comes to monetizing TVE, the lump sum paid to programmers for these added set of rights simply gets bigger. It grows the money pot, but assigning a specific value to it is moot.
8. Internet Companies Bidding on Sports Rights.
Some execs say there’s no way tech companies will move into the content business by bidding on sports rights (like ESPN’s John Skipper), but others, like Tim Brosnan, MLB’s evp, Business say these companies are indeed “sniffing around.” DirecTV defined itself with the NFL property, NBA commish David Stern reminded attendees at SBJ
’s Sports & Media Conference last week, and so Internet companies like Apple or Google could certainly do the same. The prospect appears to be immanent. Meanwhile, AllThingsD reports that YouTube, acting something like a cable network, is reinvesting in just 40% of the 100 channels
it financed last year.
9. Sports Rights Fees Will Climb. There is no ceiling in sight, because sports rights for live games are seen as extremely valuable. It’s the last appointment viewing, sports execs agree, and the price will continue to rise as long as they prove to be worth it. Watch for more cable providers trying to cut out the middleman as Comcast and TWC have done, and also expect to see middlemen like Fox look increasingly to build value.
10. Customer-First Models. Collectively, the industry believes it will come down to this: At a certain point customers will change providers when they do not have access to particular sports property. We’re not there yet, but it’s coming. So the question becomes, what moves the dial? Time Warner Cable’s strategy with its RSNs entails focusing on the customer’s perspective. The nets now stream to the Korean community, because it “benefits our business on the ground,” said Witmer. The next step is figuring out “what causes them to move…It’s changing and in an environment where consumers’ economics are challenged.”