SBJ/March 28-April 3, 2011/In Depth

WCOS: A la carte cable in the plans?

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SHANA WITTENWYLER
Attendees listen closely to a discussion with NBA Commissioner  David Stern.
The 2006 World Congress of Sports moved to The Pierre in New York City with the theme “The changing dynamics of sports business.” Panelists talked about how properties are adjusting their marketing and the way they do business as the demographic and ethnic profile of the United States continued to change. They also discussed which sports youth were playing and which ones they were watching on television.

One panel took on the topic of teams becoming developers of real estate around their venues, and another discussed the “dot-com comeback” as booming online advertising had again made online properties hot commodities.


A la carte cable in the plans?

Lucy Calautti, a senior adviser with Baker Law, which works with MLB, addressed the issue of a la carte cable programming, which at the time was building steam on Capitol Hill.

SHANA WITTENWYLER
Lucy Calautti discussed the latest hot topics on Capitol Hill.
“Don’t only watch Congress. Watch the FCC. … The leadership there has changed, and the FCC has gone from being opposed to being very much in favor of a la carte.”

Sports attorney Phil Hochberg said a la cart posed a major threat to league revenue because it could trigger a decline in TV viewership.

“If viewership goes down,” Hochberg said, “ad revenue goes down. If ad revenue goes down, rights and payments go down.”
Despite the heightened alert among panelists, the federal government has not pressed for a la carte cable programming.

He called it on interest from Mexico

MLS Commissioner Don Garber said he expected to see a lot more interest from Mexican companies.

SHANA WITTENWYLER
MLS Commissioner Don Garber (center) said the league was seeing increased interest from Mexican companies looking for sponsorship opportunities.
“We just had Bimbo bread, which is one of the largest baked goods manufacturers in the world, spend time looking at opportunities here in the United States, looking at possibly buying the naming rights to one of our stadiums here in Los Angeles.”

The following year, Mexico-based paint company Comex Group signed a deal to be Chivas USA’s jersey sponsor through 2009. Mexican convenience store Extra took over in 2010. Then, in January of this year, Mexican beer maker Grupo Modelo said it would be the team’s next jersey sponsor, through the company’s Corona Extra brand.

As for Bimbo Bakeries, in January of this year the company signed a deal to be the jersey sponsor of the Philadelphia Union.

Brand identity


Jeff Shell, then president of programming at Comcast, talked about the renaming and rebranding of OLN due that summer, and said he intended to pursue more exclusive rights to major sports in an effort to grow the property.

“There’s a place for tentpole programming, elements of exclusivity that we can build around,” Shell said.

Still, he was not overtly optimistic that build-up would include an acquisition of MLB rights, with a part of the league’s cable package up for bid at the time.

“If something is available at the right price, we’ll take a look at it, but that’s the question, is it the right price?”

OLN became Versus and obtained rights to the NHL, IndyCar Series and the Ultimate Fighting Championship. As Shell suspected, Versus struck no deals with MLB.

Still high on high-def?

Rich Bilotti, then Morgan Stanley Dean Witter managing director, said he had a clear picture on the future of high-definition television, calling it “the biggest technology nobody wants to talk about.”

Said Bilotti: “Consumer awareness of this technology is abysmal right now, but that will change once people figure out how to monetize this.”

Land grab: Teams, leagues eye development around venues

Teams hoping to expand revenue growth in the future will increasingly turn to nontraditional sources like owning and developing land near their stadiums or buying into radio stations that broadcast games.

That was the prediction from then St. Louis Cardinals President Mark Lamping, during a session called “The growing portfolios of sports ownership and operations.”

Andy Dolich, former Memphis Grizzlies president of business operations, said he believed that sports franchises’ investment in real estate could expand following the completion of New Jersey Nets owner Bruce Ratner’s arena project in Brooklyn. If that project succeeded, Dolich said, expect a surge in real estate investment.

Phoenix Suns President and COO Rick Welts said the team planned to build a hotel and condominium complex beside their arena.

NASCAR also was considering land ownership in the future after witnessing the value its Kansas City track brought to the 450 acres around it, said International Speedway Corp. President Lesa France Kennedy. “We bring a lot of people in and we feel like that is something to spin into.”

Later that year, NASCAR scrapped plans to build a track on land it bought on Staten Island, New York, due to political resistance. As for the Suns, the hotel and condo project has yet to materialize.

Karmazin gets down to Sirius business

SHANA WITTENWYLER
Sirius Satellite Radio’s Mel Karmazin (right) outlined the company’s revenue and subscriber projections.
During a one-on-one interview with Sirius Satellite Radio’s Mel Karmazin, it was revealed that the company projected to reach revenue of $1 billion in 2007, up from $242 million in 2005 and $600 million in 2006.

Said Karmazin: “We ended the year with about 3 million subscribers; the amount of advertising revenue that we’ll have this year will be dwarfed in 2010 when we’ll probably have 18 to 25 million subscribers.”

Sirius posted 2007 revenue of $922 million. At the end of 2010, more than two years after merging with XM Satellite Radio, the company had 20.2 million subscribers and its revenue for the year totaled $2.8 billion.

Linking media rights to language

When asked about future marketing trends, F1 special adviser Michael Payne said, “I think you will see a permanent change in the management of media rights.

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Michael Payne
“Internationally, the traditional basis of rights has been on territorial footprints. I think within five years that’s going to change as we adopt a language footprint. In Europe, you’ve probably got more Turkish [soccer] fans outside of Turkey than in Turkey. And the ability in each of the communities to be able to access their sport back home is going to become a key issue and trend across the world. Rights and everything are going to get put on a language and a cultural footprint, rather than a traditional footprint.”
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