Sports entities develop flexibility to deliver their own content
Published July 28, 2008
As sports entities become content providers and develop their own networks, buzz is sure to follow. But as leagues, teams, conferences and events make their media moves, what’s worth watching?
Take a closer look at reports of a possible partnership between NFL Network and ESPN, along with a host of other recent deals: WCSN and NBC/Universal; NBA TV and Turner; MLB Network and a consortium of distributors; plus regional sports network partnerships with baseball and basketball teams. Then, pull back and connect the dots.
Regardless of the sport, all of these leagues, teams, conferences and properties are reaping the benefits that come from developing and distributing their own programming. Working out of the same strategic playbook, they gain the flexibility to make choices by balancing a range of factors to establish viable, flexible distribution of their own content across an ever-growing range of screens.
The reality is that an increasing number of media distributors and technologies are chasing after a relatively fixed quantity of brand-name sports properties that can drive and retain viewers, subscribers, sponsors and, of course, revenue. Programmers, cable operators, satellite distributors, the telcos, wireless providers — the media list keeps growing, but the list of key leagues, teams and events that fans follow remains relatively fixed. Insatiable fan demand for this content gives these entities the opportunity to control at least some of their own programming destiny.
In today’s cable and satellite television marketplace, strategies for a sports content provider’s network are relatively well-established. With sufficient leverage (driven by exclusivity and consumer demand), pricing and patience, a sports network may choose to go it alone and attempt to succeed without outside assistance. Alternatively, the network can trade off some equity or operational control and upside in return for distribution leverage and/or increased revenue by partnering with one of two main groups: mega-programmers like ESPN, NBC/Universal, Turner and Fox that have substantial portfolios of must-have networks, or distributors like Comcast, Time Warner, DirecTV and the telcos. Partnering with the mega-programmers doesn’t guarantee distribution, but each network can build revenue and gain the leverage of being part of a portfolio of must-have networks. With distributor partnerships, a network gains eyeballs by definition, but that definition also includes the addition of at least one partner.
With the above playbook in hand, watch the recent and potential moves by these channels and you’ll see the patterns. Utilizing the strong regional appeal and leverage of one or more teams, some team-owned RSNs such as YES, MASN and NESN have successfully pushed forward on their own. Other RSNs are made up of team partnerships with distributors like Comcast and Time Warner Cable, trading off some equity and control for the value and security of near-immediate distribution. Either way, these RSNs have maximized their distribution, which in turn maximizes subscription and advertiser revenue.
As for national sports networks, several league- and conference-owned channels like MLB Network and Big Ten Network have partnered with distributors or mega-programmers from the beginning. MLB Network started with DirecTV and then added a number of cable operators to settle distribution battles. BTN partnered with Fox, but eventually had to adjust pricing to reach an important agreement with Comcast. NHL Network started and remained on its own, building distribution through a mix of providers and platforms. Other networks started out on their own, and then shifted strategies in varying ways:
NBA TV recently partnered with Turner, allying with networks that include, TNT, TBS and CNN;
WCSN recently decided to partner with NBC/Universal, the home to USA, Bravo and CNBC;
NFL Network may partner with ESPN and gain the clout of the ABC/ESPN suite of networks.
Key to the above moves is that most of these networks and their respective parent sports entities have maintained strategic flexibility and minimized risk by developing multiple media outlets along the way. Take a look at the context of the launch of Big Ten Network, which took place after the conference had locked up a long-term rights deal with ABC/ESPN. Many marquee matchups would be shown on national broadcast and fully distributed channels. The conference wasn’t completely dependent upon BTN for media distribution and revenue. So, when BTN ran into initial pricing resistance from distributors, the conference had the flexibility to make adjustments.
The same holds true for the NFL Network, which launched just as the league embarked upon a range of lucrative traditional and new media rights agreements. In this context, NFL Network is one of many different investments in the league’s media portfolio. Each has different levels of short- and long-term risk and reward. Thus, the NFL has the ability to be flexible with the structure of its network, as the league has already achieved tremendous media-driven success. These shifts are newsworthy, but their true importance stems from the NFL’s ability to address the demands of the marketplace. No matter which way the NFL Network-ESPN discussions turn out, the NFL, like other leagues and teams, will have the flexibility to choose how best to deliver its content.
The playbook is still being written for delivering content over broadband, wireless and other, newer technologies. There, the playing field is less defined, the roster of key players keeps shifting and growing, and the potential strategic options for content providers are nearly infinite. Moreover, change is even more of a constant for sports content providers utilizing these technologies, since today’s hottest platforms and screens can be obsolete tomorrow.
The key, though, is that the sports entities that have control, in whole or in part, over their own channels are able to distribute programming to whatever media platforms are popular. They have the flexibility to choose and re-choose how best to deliver their own content. Ultimately, for sports fans and advertisers, a screen is just a screen, no matter its size, shape or location. They just want to follow their favorites. In turn, if those favorite sports are able to follow their fans, then change will be an everyday occurrence for the league, team, conference and event networks that are becoming a permanent part of the sports media landscape.
Lee H. Berke (email@example.com) is president and CEO of LHB Sports, Entertainment & Media Inc.