Disney, News Corp. May Write Down Book Value Of NFL Asset

Walt Disney's ABC and ESPN, and News Corp.'s Fox "may write down the value of their contracts to broadcast [NFL] games by as much as $1[B]," according to analysts cited by Rick Westhead of BLOOMBERG NEWS, who noted a writedown of NFL rights "would be the first by a network in seven years." Credit Lyonnais Securities' Richard Read said that "such a move would be an admission that the broadcasters, along with Viacom Inc.'s CBS, paid too much" when they signed a $17.6B, eight-year TV deal with the league in '98. Read added that Disney "might write down at least $600[M] and Fox might write down as much as $400[M]." Read: "Sports may help promote prime-time (programming) and draw younger viewers, but the economics don't make sense anymore. The possibility of writedowns is a signal that we're at the beginning of a correction for sports rights." Meanwhile, CBS said that it "doesn't plan a writedown because its NFL broadcasts are profitable" (BLOOMBERG NEWS, 1/30).

THE CABLE THREAT: Fox Sports President Ed Goren, speaking yesterday to reporters in New Orleans for the Super Bowl, "warned ... competition from cable networks is slowly killing sports" on over-the-air TV. Goren, noting his net's "excellent ratings" this past year with MLB and the NFL, said, "All in all, I should be feeling great, and I don't." Goren added that the four major broadcast nets "may no longer be able to afford to bid" for pro sports rights in the future. Goren: "As long as other cable networks get $1.60-$1.70 a month (in license fees from cable operators), we're working on one revenue stream." Goren said sports are "very healthy compared to the rest of the marketplace, but at some point, a bean counter is going to say, 'Yes, we understand that, but at what price?'" Meanwhile, Goren "confidently predicted" that viewership for this year's Super Bowl "will rise over last year's game," which drew a 40.4 rating on CBS. Goren acknowledged that his net is not sold out for the game, but said, "We're going to be sold out. There may be a couple of spots left, which is not unusual. CBS had the same situation a year ago" (HOLLYWOOD REPORTER, 1/31). More Goren, on the state of sports broadcasting: "We've seen what's happened at NBC. ABC Sports is not what it was. You could make an argument right now there are only two really healthy (over-the-air) network sports operations" (RICHMOND TIMES-DISPATCH, 1/31). For more on TV rights deals, please see Media Notes.

NOTES: USA TODAY's Rudy Martzke reports on cost-cutting efforts by Fox and writes that for this year's Super Bowl, the "pregame set's cost was slashed $200,000, from $350,000 in Miami to $150,000 in New Orleans." Goren: "Last time it looked like a three-bedroom condominium. Now it looks like a TV set" (USA TODAY, 1/31).

Super Bowl Halftime Gets Some Elevation From U2

An E-Trade spokesperson, on this year's company sponsored Super Bowl halftime show: "U2 was named band of the year by Rolling Stone, and E-Trade has won awards, too." In Atlanta, Mark Bradley: "See the connection?" Meanwhile, U2's The Edge said, "Sports and rock n' roll are like rival tribes," to which Bradley writes, "If so, it's clear which side is winning. The entertainment side has left sports in the dust" (ATLANTA CONSTITUTION, 1/31). U2's Bono: "Can you imagine what it feels like to be Irish and be at this most American of occasions. It is really overwhelming." ESPN's Mark Schlereth: "They have no idea what's going on, do they?" ("NFL 2Night," 1/30). In CO Springs, Kamon Simpson, on Fox' efforts to make sports viewing more interactive via the Web: "To think, some Fox Sports executive was credited with this innovative idea for making the game more 'interactive,' which is a marketing term for, 'Keep people tuned in for more commercials.' Just a guess here, but the geeks who feel the need to vote 800 times in response to the question, 'Mike Martz: boxers or briefs?' probably aren't in the market for a Nissan Altima" (CO Springs GAZETTE, 1/31).