Industry wonders who will challenge ESPN

[TMC1982]

Industry wonders who will challenge ESPN

By JOHN OURAND
Staff writer

Published November 09, 2009 : Page 22
Much of the talk in the sports media world last fall centered on whether an effective competitor would step up to compete with ESPN.

ESPN had just outbid Fox by $100 million to secure the rights to college football’s Bowl Championship Series through 2014, thanks mainly to its dual revenue stream that has cable and satellite operators making a monthly payment of more than $4 per subscriber for the channel.

At the time, some sports league executives were fearful that ESPN would become a de facto monopoly that eventually would wind up driving the cost of sports rights down.

If a competitor were to emerge, it would have to do so between 2011 and 2014, when the TV deals for the NFL, MLB, NASCAR, NHL and MLS expire.

Yet a full year after ESPN scored the BCS rights, that national sports competitor still has not developed, and most network and league executives contacted by SportsBusiness Journal are skeptical that anyone will come forward to compete head-to-head with ESPN.

Network and league executives are skeptical if anyone will come forward to compete head-to-
head with ESPN.

“But I see lots of competition around the fringes for ESPN,” said one league executive.

That means ESPN should expect to see lots of competition from various entities, including the broadcasters, national cable networks, regional sports networks and league-owned networks.

Broadcasters have a multi-pronged approach for competing with ESPN for sports rights, starting with using retransmission consent rules to charge cable operators as much as $1 per month to carry their local stations (see story, page 1). Networks plan to use some of that money to compete with ESPN on sports rights.

But ESPN could see competition from some national cable networks. Some of these networks, like FX and Versus, have a surcharge clause in some of their contracts with small- to midsized cable operators (ones not named Comcast or Time Warner Cable). The surcharge gives the channels the right to charge an additional fee if they pick up rights to high-profile sports programming such as the NFL or the Olympics.

 

[meStevo]

Is there an assumption that competition in this case is good? This is speculation by what is just coming across as jealous industry competition.

ESPN is extremely successful, while they struggle. This is what happens in most segments in times of a tough economy.

What a consumer ignoring article... basically explaining that a lot of broadcasters are going to stick it to the content providers who are going to in turn stick it to the consumers.

Meanwhile ESPN's not going to lower it's rate... so we lose.

 

[SamCdbs]

Good points, meStevo.

What is in a bidding war, with my money, for me? If ESPN is pretty much the only game in town and it pays some reasonable amount to the various sports leagues for various rights, great.

In this case, competition is bad. It just drives up rights fees, which get passed on to me, and, as we are seeing with DirecTV - Versus, ends up with a situation where no one system has "all" the game on it.

 

[TMC1982]

Big deals, bigger questions

The need for broadcasters to push harder for a dual revenue stream was highlighted last year when ESPN outbid Fox by $100 million for rights to the Bowl Championship Series. Thanks to the amount of money cable and satellite operators pay ESPN each month (more than $4 per subscriber), ESPN already has a huge advantage over its rivals. Cable operators also pay ESPN additional license fees for its other networks, ESPN2, ESPNews, ESPNU and even the broadband channel ESPN360.

Broadcasters are seeking additional revenue to
help them better compete in the next big round
of major sports television negotiations from
2011 to 2013.

Without retransmission consent revenue, broadcasters would not be able to match ESPN’s bids for most sports rights. This is especially relevant over the next five years, as TV deals are expiring with the NHL (2011), NFL and MLB (2013) and NASCAR and MLS (2014).

Broadcasters say they need retransmission dollars to stay competitive in the sports rights marketplace. But they are quick to point out that even without the extra cash flow, they have some inherent advantages over their cable competitors.

The one most frequently mentioned is the breadth of their offerings, which reach 115 million homes, compared with ESPN’s 99 million.

That gap has been narrowing over the past decade and is expected to continue shrinking. But most leagues still place a high value on reaching those extra 16 million homes.

“I anticipate that in the next five years, the premier events that are currently on network television will remain on network television,” said Sean McManus, president of CBS News and CBS Sports. “I think the leagues still understand the value of having them on network television and how important it is to their viewership and their fans.”

NBC executives echoed McManus’ sentiment, saying that the bigger leagues make sure that they maintain a broadcast presence so they can reach more people.

“Yes, I think there are places where a network can compete and, in many cases, deliver significantly greater value than ESPN,” said NBC Sports President Ken Schanzer.

“Leagues need broad exposure. They need exposure to the right audiences to grow their fan base and they need exposure in the right time periods.”

Even ESPN executives acknowledge the power that broadcast television has on some of its rights holders. John Skipper, ESPN executive vice president of content, said the company would have had trouble signing deals with the NBA and World Cup if it didn’t have broadcast windows through ABC.

“We are not abandoning ABC,” Skipper said. “We are, right now, not looking to move other product off of ABC. We like having those windows.”

It’s not just the leagues that place a value on broadcasters’ reach. McManus predicted that regulators almost certainly would step in if some marquee sporting events, like the Super Bowl, were to migrate to cable.

“It’s a fine balance between taking advantage of the cable model, which has a dual revenue stream, but also protecting the network model, which still has great value for the biggest sporting events in America .”

 

[meStevo]

Whomever has the NFL, wins. ESPN is on every provider, all the time. The same can't be said for most competitors.

Nuff said.

NFL averaging 17 million viewers a game this season, highest it's been in 20 years, and the 5 most watched sports events since the Super Bowl are all regular season NFL games.

Bigger than the World Series, March Madness, bigger than anything else.

 

[Claude Greiner]

The issue here is that ESPN is already costing all of about $5 on our satellite bill already, and on top of that they raise their rates every year by as much as 20% which causes Dish and Directv to pass along the increases to us.

The competition is already here, look at the Yes Network, MLB Network, NHL Network, NFL
Network Etc.

I don't think we have to worry about 1 competitor, but more like 100 competitors as every little piss ant team out there tries to do what the Yankees did and launch their own network to carry their programming