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SBD/March 5, 2013/Media
Long-Awaited Announcement Of Speed Rebrand To Fox Sports 1 Expected Today
Published March 5, 2013
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LONG-TERM INVESTMENT: DEADLINE.com’s David Lieberman reports News Corp. COO Chase Carey “assured investors" this morning that the introduction of FS1 is "a smart long term strategy, even though it will result in losses for the next few years.” The company is making "a ‘manageable investment’ while it tries to ‘ramp up the rate’ that cable and satellite companies pay for the existing service.” Carey said the new channel in the end could become “a multibillion dollar franchise.” He added it will be “a natural fit” since sports “has been a huge part of the growth of Fox for 15 years.” Carey: “It’s a place where we can bring expertise, synergies and for us is part of growing and adding a new dimension to our business.” He added the “key” to the effort is to “not try to beat ESPN.” Carey said that the strategy is “especially important for Fox Sports to create compelling shows around the games” (DEADLINE.com, 3/5).
GIANT SLAYER? In N.Y., Sandomir & Chozick write News Corp. Chair & CEO Rupert Murdoch’s effort is “a long shot to topple ESPN, or at least take a huge bite out of it.” Not only will Fox “face the dominance of ESPN, but NBC and CBS have their own sports channels, which are struggling for viewers and identities.” The four major pro sports leagues, Big Ten and Pac-12 have “created their own networks,” and the SEC is “planning one.” Still, News Corp. has a “companywide faith in sports as a DVR-proof way to attract viewers -- especially young men -- and a belief that their new sports channel will differentiate itself from the competition.” The channel’s success “might not have to come as a result of beating ESPN at its game.” RBC Capital Markets analyst David Bank said that FS1 “would be a success ‘from Day 1’ and could, in future years, bid against ESPN for NBA rights and any cable package of NFL games that might come to market" (N.Y. TIMES, 3/5). USA TODAY’s Michael Hiestand wrote the “big question” is “while there are plenty of niche sports channels, is it too late to take on ESPN when it comes to on-air sports buffets?” Fox has “created a formidable pantry it can tap for TV tonnage to support” FS1. Credit Suisse analyst Michael Senno estimates that FS1 “will try to get cable operators to pay monthly fees of $1.25 per subscriber -- a big jump" from the current estimate of 26 cents it charges for Speed. Hiestand noted that “wouldn’t be anywhere close to the revenue produced by programming on ESPN” (USA TODAY, 3/4). In N.Y., Bob Raissman writes unlike “any other piece of entertainment programming, sports delivers predictable audience levels and advertisers willing to spend.” Achieving success on the cable side “can bring a new guaranteed revenue stream.” For execs there is “no such thing as oversaturation or overexposure of sports” (N.Y. DAILY NEWS, 3/5).
WELCOME OPTION: BROADCASTING & CABLE’s Jon Lafayette writes the “proliferation of cable sports channels means additional games to sponsor and new shoulder programming -- highlights and studio shows -- that will help advertisers” to reach fans at lower cost. Media buyers said that ESPN “should not be too concerned, at least not yet.” Zenith National Video Managing Dir Neil Vendetti said, “The impact from a budget standpoint across the marketplace to ESPN is going to be minimal until these networks establish themselves and until ratings are relatively consistent. But five years down the road, maybe there are one or two legitimate competitors to ESPN. I just don’t think in the infancy stages these other networks are going to make that big of a dent.” SNL Kagan “sees success ahead” for FS1 “whether or not it takes a bite out of ESPN.” SNL Kagan analyst Derek Baine “forecasts that ad revenue will jump” from Speed’s $100M last year to $122M in ’13, then “skyrocket” to $244M in ’14 and $423M in ’15. With subscribers and license fees rising as well, Baine expects that FS1 will generate $431M "in cash flow" in '15, up from Speed’s $100M in '10 (BROADCASTING & CABLE, 3/4 issue).
BOON FOR CHARLOTTE? In Charlotte, Mark Washburn wrote it is “not clear what the impact will be on Speed’s modern production hub” in the city, but it “will probably grow.” A “broader variety of programming should result in more production from the center.” Speed is renovating its largest Charlotte studio and has “75,000 square feet of space,” a third of which “has not yet been built out.” Washburn: “Whatever happens, Fox can be expected to continue using Charlotte as its major NASCAR hub, with motorsports contracts running years into the future” (CHARLOTTE OBSERVER, 3/2).