SBD/Issue 161/Sports Media

Tennis Channel, ESPN Complete Deal For U.S. Open TV Rights

ESPN, Tennis Channel Ink Six-Year Deal For
Cable Rights To U.S. Open, U.S. Open Series
The USTA today announced that ESPN and Tennis Channel have signed a six-year deal for the cable TV rights to the U.S. Open and the Olympus U.S. Open Series beginning in ’09. The mult-platform deal also includes promotional, int'l and production rights to the event (USTA). SPORTSBUSINESS JOURNAL's Ourand & Kaplan report the deal is worth $140M and gives both nets rights to all four tennis Grand Slam tournaments for the first time. The deal also marks the first time the U.S.Open Series tournaments "will not have to buy their way onto TV." About $15M of the $140M "represents the cost savings the [USTA] and the events enjoy from not paying production costs" for the tournaments, as Tennis Channel will pay for production. Sources said that the $140M also "includes non-cash items, like marketing." It is unknown how much each net is contributing to the deal. As part of the agreement, ESPN "obtains a massive amount of digital rights" to the U.S. Open and the U.S. Open Series, which "has been consistent with its recent property deals and are a key aspect of any negotiation going forward." Ourand & Kaplan write the deal is "significant for the USTA, which aimed to keep its rights deal at the same $22[M]-per-year level that USA Network had been paying previously." USA "made an initial offer that represented a decrease in its annual rights fee," and the net "ultimately decided to get out of the sports business entirely." Versus "also was a serious bidder until the end," posting a final bid that sources said was "competitive with ESPN" (SPORTSBUSINESS JOURNAL, 5/12 issue).

FOUR SCORE: In N.Y., Richard Sandomir reports the deal also will allow ESPN and Tennis Channel to "carry studio programs and highlight shows," and their Web sites, including ESPN360.com and tennischannel.com, along with usopen.org, will have video streaming rights. Tennis Channel Chair Ken Solomon said of the net having rights to all four majors, "Two years ago, we had no majors. We're a little punch-drunk, and I feel like the guy who's asked how you feel winning the Super Bowl. It hasn't sunk in." ESPN has had rights to the Australian Open since '84 and the French Open and Wimbledon since '03, and Senior VP/Programming & Acquisitions Len DeLuca said, "We see that the whole is greater than the parts." USTA Chief Exec of Professional Tennis Arlen Kantarian said that "despite the Open's long, successful run on USA, it was important to move the tournament to ESPN." Kantarian: "We've measured the properties ESPN has taken on, and they take on a younger audience. We need that in our sport. We think more sports fans will find tennis than ever before." He added, "This is the end of our five-year mission to reinvent the TV and digital side of tennis. It gives us much more consistency." Sandomir notes USA's lead analysts Mary Carillo and John McEnroe are "expected to follow the Open" to ESPN; Carillo already does some work for ESPN (N.Y. TIMES, 5/12).

LEVERAGE WITH CABLE OPERATORS: MULTICHANNEL NEWS' Mike Reynolds reports with the deal, Tennis Channel "should have more leverage as it looks to roll out on more systems." The net, which will celebrate its fifth anniversary on Thursday, is currently in around 25 million HHs (MULTICHANNEL.com, 5/12). SPORTSBUSINESS JOURNAL's Ourand & Kaplan note most MSOs "carry [the net] on a sports tier," and Tennis Channel execs "hope the presence of two months of Grand Slam programming will convince cable operators to move the channel to a better level of service" (SBJ, 5/12 issue).

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