SBD/August 5, 2013/MediaPrint All
Red Sox Owner John Henry "entered into an agreement early Saturday to buy The Boston Globe, a deal that will put the 141-year-old newspaper, its websites, and affiliated companies into the hands of a personally shy businessman with a history of bold bets," according to Beth Healy of the BOSTON GLOBE. The impending purchase for $70M "in cash marks Henry’s first foray into the financially unsettled world of the news media." Henry said that he "would disclose more details about his plans for the company in coming days." He added, "This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future." Healy reported Henry "bested a field of more than a half dozen bidders." He also will "acquire the Worcester Telegram & Gazette newspaper and its website, as well as the Globe’s direct mail business and a 49 percent interest in the Metro Boston commuter newspaper." The deal brings "under one owner two Boston institutions that have been connected before." The Times Co. owned a minority 17.5% stake in the Red Sox from '02-12, "reaping a $150 million profit on the investment." The deal is "sure to spark debate in journalism circles and among Globe readers about whether the Globe’s coverage of the Red Sox, which regularly includes critical commentary, will be affected." Globe Editor Brian McGrory said, "We have no plans whatsoever to change our Red Sox coverage specifically, or our sports coverage in general, nor will we be asked. The Globe’s sports reporting and commentary is the gold standard in the industry." The Times Co. is selling the Globe for far less than the $1.1B it paid for the paper in '93, "when the business was highly profitable and the Globe fetched a record price" (BOSTON GLOBE, 8/4).
DEPRECIATED VALUE: In N.Y., Christine Haughney noted the sale returns the Globe "to local ownership after two decades in which it struggled to stem the decline in circulation and revenue." But the sale price represents "a staggering drop in value for The Globe." Henry is buying the media group "without partners through his acquisition company; under terms of the sale, he does not have to assume The Globe’s pension liabilities." The all-cash sale is "expected to close in 30-60 days" (N.Y. TIMES, 8/4). In L.A., Andrea Chang wrote the "low price underscores the continued troubles plaguing the newspaper publishing industry as advertisers spend less on print and readers turn to free online content" (L.A. TIMES, 8/4). The BOSTON GLOBE's Healy noted Henry "prevailed over a half-dozen rival bidders for two main reasons: He was rooted in Boston and had plenty of cash." Henry said, "I became concerned a number of years ago about the continued viability of our newspapers in Boston. I sat with various publishers and, in studying the challenges newspapers face across the country, I became extremely interested in potential solutions." Sources added that while Henry is "paying cash for the company, it’s likely that he would consider taking on minority partners in order to reduce his own stake and include other locals in his plans." Other "possible investors" include Red Sox Chair Tom Werner and Celtics Managing Partner Steve Pagliuca (BOSTON GLOBE, 8/4).
HENRY NOT THE HIGHEST BIDDER: The BOSTON GLOBE's Healy reports three of the groups that lost out in the bidding for the paper said that their offers "were higher than" Henry’s winning $70M bid, prompting them "to question the New York Times Co.’s sales process." BusinessWest magazine publisher John Gormally said, "The process was not transparent at the end to the bidders." Several bidders have "suggested that Henry may have to get government approval to own both" NESN and the Globe. Henry said, "Now that I have a prospective role in Globe leadership, if I were foolish enough to try to influence Sox coverage by the Globe, I would only succeed in diminishing the value of both great institutions" (BOSTON GLOBE, 8/5). San Diego Union-Tribune CEO John Lynch said, "We bid significantly more than Henry. At the end of the day, I’m certain our bid was higher and could have been a lot more higher if they had just asked." He also "questioned whether control over the Globe’s sports pages could help the Sox at other sports teams’ expense." Lynch: "Someone in the Red Sox at one juncture told me there are two organizations they hate -- the Yankees and the Patriots -- and they didn’t want the Patriots to get the Globe. They certainly can influence the coverage a team has" (BOSTON HERALD, 8/4). Gormally said that his was "the highest-end" $80M offer. He added, "I think The New York Times intended to sell this to John Henry no matter what. If they had sold it to anyone else, the story would have been, 'Times loses 1 billion dollars of stockholder value.' By selling it to John Henry the story then becomes, 'Red Sox owner saves Globe" (BOSTON HERALD, 8/5). In N.Y., Haughney & Carr note the reaction to the sale around Boston "was cautiously optimistic" (N.Y. TIMES, 8/5).
CONFLICT OF INTEREST? In N.Y., Peter May wrote under the header, "Red Sox Owner's Purchase Of Boston Globe Worries Journalists." Boston Globe columnist Bob Ryan said, "This was the last circumstance anyone would want. It's nothing anyone would wish. It's scary, to say the least." May noted the news that Henry was acquiring the Globe "resonated most profoundly in its sports department." Globe Sports Editor Joe Sullivan said that the newspaper "might need to include disclaimers when writing about Henry, as it did when The Times had an ownership stake in the team for 10 years." Globe Columnist Dan Shaughnessy said, "All we can hope for is that everyone is allowed to do his job professionally and that we are able to keep our independence." The Red Sox have received "mostly positive coverage in The Globe since Henry’s group bought the team" (N.Y. TIMES, 8/4). Newsonomics analyst Ken Doctor said, "The problem is that no matter what the Globe does, readers are going to wonder about the credibility of the Red Sox coverage." Boston Univ. journalism professor Lou Ureneck: "Will the Boston Globe become an extension of the Red Sox public relations machine? That would be my big concern" (BOSTON HERALD, 8/4).
NEED FOR OBJECTIVITY: In Boston, Abel & Panzar noted Henry buying the Globe has "sparked a mix of optimism and concern from civic leaders to fans of both the team and the paper." Former Boston Mayor Raymond Flynn said that he had "heard some doubts and questions, from whether the 141-year-old newspaper would continue to challenge the Red Sox about its perennially steep ticket prices and question the team’s commitment to remaining in the championship hunt." Others "worried about Henry acquiring too much power in town" (BOSTON GLOBE, 8/3). BOSTON SPORTS MEDIA WATCH's Bruce Allen wrote the sale to Henry "makes sports coverage in this town a whole lot more complicated, and pretty much all coverage of the Red Sox will be viewed as coming from a certain vantage point." Coverage of the other local teams also will "be in question as to whether it is hurting or helping the aims of the owner and his other investment" (BOSTONSPORTSMEDIA.com, 8/2). USA TODAY's Rem Rieder writes, "Let's hope Henry is disciplined enough to let his new acquisition cover his older one the right way" (USA TODAY, 8/5). In Boston, Howie Carr wrote the "first thought that comes to mind" about Henry's purchase of the Globe is that there is "a sucker born every minute" (BOSTON HERALD, 8/4).
A UNIQUE CHALLENGE: In Boston, Ross & Borchers wrote besides the "obvious difficulties of running a struggling company in a volatile industry, Henry faces a challenge unique to this purchase: ensuring the Globe continues to provide objective coverage of his baseball team." Henry like any sports owner has "periodically chafed at the treatment of his team by local news media, and the Globe’s coverage of the Red Sox’s epic 2011 collapse particularly rankled him." Former ad exec Jack Connors, who also bid for the Globe, said, "I don’t think he’s going to dictate. John is very analytical. He loves data and he loves modern technology, and I think you’ll see him want to make investments on the dot-com side." The Celtics' Pagliuca said that Henry "may be interested in a multimedia approach, involving NESN and Globe sports coverage." He added, "There could be mutual benefits for the television property and the news operation to combine forces" (BOSTON GLOBE, 8/3). USA TODAY's Rick Jervis writes Henry's purchase is "the latest headline-grabber in the life of the sports-loving billionaire equally described as a tough negotiator, impulsive leader and gentle manager." Those who know Henry said that his management style is "equal parts quiet consensus builder and detail-oriented." Padres President & CEO Mike Dee, a former Red Sox COO, in a '11 Boston Globe profile of Henry said, "His quiet nature would sometimes confuse people. When he truly wants to get something done, he'll put his mind to it and find a way to get it done" (USA TODAY, 8/5).
A blackout of CBS' flagship net on Time Warner Cable systems in N.Y., L.A. and other markets "dragged on through the weekend with no sign of any resolution," according to Ramachandran & Stewart of the WALL STREET JOURNAL. The companies by yesterday afternoon "couldn't even agree on whether any talks were under way." A TWC spokesperson said negotiations were "ongoing," while CBS said "there are no negotiations taking place at this time." About 3 million subscribers are "affected by the blackout, which covers CBS Corp.'s Showtime premium channel as well as the CBS network." TWC broadband subscribers also are "blocked from watching CBS.com, one of the outlets the cable operator had suggested to its subscribers as an alternative for some primetime CBS programming during a blackout" (WALL STREET JOURNAL, 8/5). In L.A., Joe Flint reports in the L.A. area, more than 1 million TWC subscribers "lost access to CBS properties." TWC said that it would "provide customers a credit for the loss of Showtime but not CBS." Both companies "continue to take shots at each other in the media." Sources said that CBS currently is "getting less than $1 per subscriber, per month" from TWC and "would like to get that figure into the $2 neighborhood over the life of its next contract." Some consumers are "taking to Twitter and elsewhere to express their anger about the blackout." TWC "appears to be taking more heat than CBS, although many customers are angry at both companies" (L.A. TIMES, 8/5).
CBS IN DRIVER'S SEAT? Flint noted the dispute "covers only CBS-owned channels." CBS affiliates carried by TWC are "not part of this fight." CBS' channels may be off TWC "for a while, given the wide gulf between the two companies." A CBS source said, "We will not blink, I promise you that." But some analysts "don't think the fight will last long." Pivotal Research Group Senior Research Analyst Brian Wieser said, "The broadcasters will win. They have the most clout. Time Warner Cable will pay more money, and CBS will make more money. The only question is how long the signal will be off" (L.A. TIMES, 8/3).
NFL IS THE CRUX: In N.Y., Bill Carter cited sources as saying that the dispute could last "about 10 days to as long as six weeks." The later date is "associated with the start of the NFL season, a package of programming that everyone involved agrees cannot be denied to subscribers" (N.Y. TIMES, 8/5). Carter noted the upcoming start of the NFL season "might be a driving factor in why Time Warner Cable acted now." BTIG Research Media Analyst Richard Greenfield said that TWC was in "'a once-in-a-lifetime position' to fight this battle because at the moment it does not face the overwhelming leverage of NFL games and the most popular prime-time shows." However, CBS does have the PGA Championship this weekend (N.Y. TIMES, 8/3). TWC VP/Public Relations Maureen Huff in an e-mail wrote, "CBS is trying to delay this negotiation right up to [the] NFL season, which is not fair to our customers. We've accepted numerous extensions at this point, but it's become clear that no matter how much time we give them, they're not willing to come to reasonable terms" (THE DAILY). UBS analyst John Janides yesterday in a report wrote that the CBS net going dark in TWC markets "could cost CBS Corp. about $400,000 per day, including lost retransmission revenue and a loss of advertising dollars at both the network and the stations" (HOLLYWOODREPORTER.com, 8/5).
VOX POPULI: In N.Y., David Carr writes making the standoff "worse is the suggestion by both sides that they are only trying to stick up for us." Carr: "Here's an idea for both parties: Leave us out of it. ... Pretending that you are fighting on our behalf rather than in the interests of your shareholders and executives is infantilizing and unbecoming" (N.Y. TIMES, 8/5).
TV ON THE NET: Cablevision President & CEO James Dolan on Friday said "there could come a day" when his company stops offering TV service, making broadband its primary offering. The WALL STREET JOURNAL's Ramachandran & Peers note if cable TV operators "drop TV service, charging only for broadband, channel owners would have to sell directly to the public or through Web outlets." Dolan in a 90-minute interview said that "on the rare occasions he watches TV, it is often with his young children, who prefer to watch online video service Netflix, using Cablevision broadband" (WALL STREET JOURNAL, 8/5).
The Univ. of Alabama has "decided to renegotiate its multimedia rights contract," as the school is "taking advantage of a look-in provision that began July 1 and runs through Aug. 31," according to Michael Smith of SPORTSBUSINESS JOURNAL. The provision gives Alabama the "opportunity to renegotiate with the current rights holders, Learfield Sports and IMG College, for more money, or to receive bids from competitors." Learfield and IMG, which "jointly run the Crimson Tide property and sell sponsorships, advertising, signage and other inventory, have the opportunity to match any offer." Unique to this contract, Learfield and IMG also manage Alabama’s "concessions, pouring and isotonic beverage rights, which are not usually included in multimedia rights deals." Learfield President & CEO Greg Brown said that these types of "look-ins are not typical in the multimedia rights space, but Alabama insisted on it." The current deal began in '08 and runs 10 years at a total value of $75.8M. Industry experts said that new round of talks "could land the Crimson Tide one of the country’s most lucrative multimedia rights contracts." Alabama is scheduled to make a minimum of $7.9M in the upcoming '13-14 academic year. The school is eligible to "make more than that if Learfield/IMG hit certain sales thresholds, which they normally do." Learfield/IMG and Alabama "share 50/50 any gross revenue that exceeds" $13M (SPORTSBUSINESS JOURNAL, 8/5 issue).
MUSTANG RALLY: SMU on Friday agreed to a seven-year multimedia rights deal with Learfield Sports, effective immediately, which will officially begin with the '13-14 athletic season. Learfield will establish Mustang Sports Properties (MSP) as a local entity to work with SMU AD Rick Hart and the athletics administration. SMU's in-house staff handling the rights will transition to the Learfield team. MSP will manage every aspect of rights, including signage, sponsorships, hospitality, event marketing, media and web advertising (Learfield Sports).
The Big Ten is expected to "distribute about $26.4 million per school after 2013-14 -- and more than $35 million at the end of the 2016-17 academic year," according to Mike Carmin of the Lafayette JOURNAL & COURIER. Those payouts, which include a projected $30.1M in '14-15 and $33.3M in '15-16, will be "sent to the core 11 Big Ten schools -- minus Nebraska, Rutgers and Maryland." Nebraska, which started competition in '11-12, "isn’t receiving a full share." Maryland and Rutgers also "won’t receive a full slice when they officially become members on July 1." The current $25.4M per school "leads the nation, ranking ahead" of the Big 12 ($22M for eight schools), and the SEC ($20.7M for 14 schools) (Lafayette JOURNAL & COURIER, 8/4). Carmin noted Purdue has received more than $39M from the Big Ten Network in the last six years. Television currently "accounts for nearly 74 percent of the revenue." However, during the '16-17 school year it will "account for 65 percent as revenue from the upcoming College Football Playoff and the league’s new bowl agreements increases." The Big Ten’s deal with ABC/ESPN "comprises about 50 percent of the league’s television revenue, with BTN generating" about 35%. IRS documents showed in '06-07, the year before the BTN launched, each conference school "received roughly $14 million from the Big Ten." During the BTN’s first year, revenues "increased to $18 million for each school" and have been "climbing ever since" (Lafayette JOURNAL & COURIER, 8/4).
DOWN TOBACCO ROAD: North Carolina AD Bubba Cunningham said the formation of an ACC Network by '16 or '17 "is a logical time period." In Raleigh, Andrew Carter noted the ACC's borders as a 15-team league will "include more top-30 TV markets and more TV households than any conference." The population in the ACC’s footprint will be "greater than any conference." ACC Commissioner John Swofford said that by '30, 55% of the country’s population "will lie within the ACC footprint." Cunningham added, "We're going to be able to deliver ACC product within three to four years" (Raleigh NEWS & OBSERVER, 8/4).
PROCEED WITH CAUTION: CBS' Gary Danielson is the lead analyst for the net's SEC football coverage, and he said there is "some danger" in the proliferation of conference-specific networks. He said, "These networks, instead of buying the rights, are now partnering with the conference, and not just the SEC. They are sharing in profits. We are entering uncharted waters and all of us have to work harder to make sure we are telling the story as straight as possible" (SI.com, 8/4).
FS1 is "staffing up" for the '14 Sochi Games, hiring former U.S. Olympic figure skater Michelle Kwan and Hockey HOFer-elect Chris Chelios "to serve as Olympic analysts," according to Richard Deitsch of SI.com. Kwan and Chelios join "a roster that includes previous additions, Picabo Street and Andy Finch, who will work the Games onsite as well." The analysts "will focus on the sports in which they competed ... but they'll also be part of group discussions on general Olympic topics." Fox Sports Senior VP/News Rick Jaffe said that the Olympic analysts will do "features and interviews in addition to analysis for both Fox Sports 1 and FoxSports.com." Jaffe added that Chelios also will "be the NHL analyst" for FS1. Chelios will "work through the end of the Stanley Cup playoffs and will have an in-home camera when breaking news occurs" (SI.com, 8/4). Kwan said that she "has been encouraged" by FS1 to "report on sports outside the Olympics, as well, and is hoping to be involved in Fox's Super Bowl coverage" just before the Games. The AP's Barry Wilner notes Kwan is "hopeful of pairing up with Street on some assignments in Sochi" for Fox' TV nets, website and radio affiliates. Kwan "already plans to sit down" with Gold Medal-winning U.S. figure skater Evan Lysacek "as he attempts a comeback after missing the past three seasons, in part because of injuries." Interviews with U.S. ice dancers Meryl Davis and Charlie White also are "in the works" (AP, 8/5).