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November 15, 2013

What Bubble? Execs Say Sports Rights Increases on Par With Demand

Is there a sports rights bubble that's destined to burst? Survey says... nope. At least if you're asking a bunch of sports execs. "I don't think there's a bubble. We'll maybe see a leveling off... or controlled growth," said SNY pres Steve Raab at the Covington & Burling Sports Media & Technology conference last week. Big Ten Net pres Mark Silverman agreed, adding that ratings are up, fans are "clamoring" for the content and, when it comes to premiere properties, they're simply worth more.

Sports Media Advisors founder/CEO Doug Perlman piped in that it's a mistake to consider the escalation of prices "irrational exuberance." The elevation follows "very basic market dynamics," and it's happening all over the world, he said. Even the numbers guy on the panel agreed. The reality is that the increase in prices is small compared to the added access subs are getting, said David Bank, RBC Capital Markets ' managing dir, global media and Internet research. "The consumer is getting a lot more utility out of this," without paying much more, Bank said.

None of this means that sports rights aren't imposing real challenges to the ecosystem, though. Echoing comments from DirecTV chief Mike White at the conference the day prior, Reagan Feeney, the satcaster's vp of content, said her company's preoccupation is with "delivering content to the sports fans," but also to the non-fan. Everyone is looking at the value proposition, which leads to making "tough decisions" about not carrying certain networks.

So, what would create a sports rights bubble? A "structural transformation of the ecosystem" would have to occur, in the form of a player like Aereo or a-la-carte pricing, said Bank, warning that "if TV Everywhere does not get traction soon, that's where you could lose to OTT." Asked at what point a network like Big Ten would work with an OTT partner, Silverman said it comes down to dollars: "We have a rate. If they want to be in home they have to pay our rate." Raab added that reach is huge as well. "It's really a business decision... When it comes to distribution, size matters." Both were adamant about protecting the cable business model, with Silverman pointing to the growing revenue from his authenticated product.

The panel agreed that an OTT player purchasing a set of sports rights is unlikely to happen until the next cycle of deals—possibly longer. "For the short-term, those are not viable outlets," Perlman surmised. "Economics are such that the new entrants wouldn't be able to secure those rights today."

ED NOTE: This story originally appeared in
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Comments (1) for "What Bubble? Execs Say Sports Rights Increases on Par With Demand"
1.
Actally, the real facts indicate interest in sports is declining due to demographic attrition. The gen X and Gen Y demographics are not the same as the sports worshipping boomers.

Mr. \"they have to pay our rate\" Silverman is headed to the bread line and everybody knows it which is why such mouth pieces are trying to pump it up like a coach trying to convince his team they are not about to lose the big game.
Posted by Clinton Gallagher @v on Wednesday, November 20, 2013 @ 03:15 PM

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