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SBJ/June 20-26, 2011/Media
NBC buys back Dew Tour stake from MTV
Published June 20, 2011, Page 3
The deal puts the Dew Tour back exclusively in the hands of the NBC Sports Group, which partnered with Live Nation to create the five-stop action sports series in 2004. NBC first approached Viacom, MTV’s parent company, about buying out MTV’s stake in Alli Sports in February. The parties came to terms on a deal earlier this month.
The Dew Tour expanded considerably during the three-year partnership between NBC and MTV.
“We thought with the impending Comcast merger it made more sense to have these assets under the same umbrella,” said Kevin Monaghan, senior vice president, NBC Sports Group. “Dick [Ebersol] believed very strongly we needed another partner. We didn’t have the cable platforms. They were focused on the lifestyle. We’d seen ‘The Life of Ryan’ and how it supercharged our crowds. But [Ebersol] thought post-merger we’d have the assets to leverage and grow this business. [Comcast executives] were very open to this, and they agreed it made sense to own 100 percent of this.”
Alex Ferrari, chief operating officer of MTV Networks Music Group, said the network acquired its stake in the Dew Tour at a time when it was looking to get into action sports. Its priorities have subsequently changed, and it has become more interested in developing scripted programs, which left it open to selling its stake back to NBC. The value of the company has increased since then from a reported $15 million to $30 million valuation in 2008 to a $40 million to $60 million valuation today. The size of MTV’s stake in Alli Sports remains unknown.
“It was opportunistic [when we bought it] in ’08 and it’s opportunistic now,” Ferrari said.
The Dew Tour will still air on MTV2 this summer, as well as NBC and USA Network. After that, NBC will look to shift the programming to Versus and Comcast regional sports networks, Monaghan said.
Ferrari said that MTV2, which is where most Dew Tour programming aired, will still show sports but the company has no specific plans in action sports.
During the three-year partnership between NBC and MTV, the Dew Tour expanded considerably. Its operators adopted the name Alli Sports, launched a new website, built an e-commerce business and added the Winter Dew Tour, AMA Motocross series and Gatorade Free Flow Tour to its portfolio of properties. Many of those initiatives were driven by Jeff Yapp, the former executive vice president of MTV Networks Music Group who left the network in 2009.
The efforts expanded the revenue of Alli Sports enough to double the value of the company in three years and increase its staff from 25 to 45 employees, but it required the company to grow fast during the height of the recession.
“Our core business is really healthy,” said Alli Sports President Wade Martin. “We’ve invested a lot in new businesses and some are moving along well, and some we’ll need to make decisions on. We knew those were new investments that would take time to mature.”
The Summer Dew Tour, which remains Alli Sports’ premier asset, reduced its size from a five-stop to a four-stop series for 2011. The move will yield a 20 percent cost savings for the tour, but it also will reduce its viewership and attendance total. It averaged 203,625 spectators for five events and 722,455 viewers on NBC in 2010.
The tour is in the middle of negotiating renewals with all of its title partners: Mountain Dew for the summer and winter tours; Gatorade for the Free Flow Tour; and Lucas Oil for the AMA Motocross Series.
In the wake of NBC’s acquisition, Allisports.com will move from an MTV-supported Web platform to an NBC-supported one. Monaghan and Martin said NBC is more equipped to provide that support today than it was in 2008. Since then, it has built a more robust NBCSports.com site. They added that doing so also gives Alli Sports access to NBC’s established digital sales and distribution teams, which they anticipate will help the site monetize its digital assets more effectively.
“That’s a layup and two years ago we couldn’t do it,” Monaghan said. “Now we have the resources to really, really help them.”
Monaghan said that he’s held discussions with NBC Sports Chairman Mark Lazarus about developing an Alli board that includes both internal and external executives. Martin would report to the board the same way he reported to the NBC- and MTV-led board featuring Monaghan, Ebersol, Ferrari, MTV President Van Toffler and Amy Singer, former MTV vice president of business development.
Monaghan said that NBC will be focused on developing new revenue streams for Alli Sports. He pointed to Comcast’s GolfNow.com platform, which sells tee times at golf courses nationwide, as an example of the type of new business he’d like to see Alli Sports develop.
“That’s our challenge moving forward,” Monaghan said. “The Dew Tour’s really good programming. It’s programming that works as well on the Web mobile tablets. It’s got a great target demo. We love the appeal and global interest. But what’s next?”