SBJ/July 18-22, 2011/MediaPrint All
Faced with an expiring broadcast TV deal, the IndyCar Series and Indianapolis Motor Speedway extended their exclusive negotiating window with ESPN for rights to the Indianapolis 500 and four other races.
The exclusive negotiating window, which was set to end in June, was extended until the end of July. IndyCar officials are optimistic that they will be able finalize a new deal by the end of the month. Their clear preference is to keep the races on ABC, which has held the rights to the Indy 500 for 46 consecutive years. The parties held their first negotiations in late April for a new deal to replace the $6 million a year agreement that is set to expire this year.
Negotiating a new deal has been challenging for IndyCar. In 2008, the sanctioning body signed over exclusive cable rights to Versus, which televises 12 races annually as part of a 10-year, revenue-sharing agreement. The deal means that all races that are part of the package ESPN buys must be aired on broadcast television.
But ESPN has been spending the past two years moving sports off of its broadcast outlet onto cable. Earlier this month it signed a deal to move all live action of Wimbledon to cable. In January, it set cable viewing records when it moved the BCS to cable. And last year, it moved the British Open from ABC to ESPN.
IndyCar CEO Randy Bernard said that Versus’ cable exclusivity will not make an agreement with ESPN/ABC harder. The series is trying to add races to its broadcast schedule, which it believes will provide more content for ABC and increase the series’ network exposure. But ESPN is primarily interested in the Indianapolis 500 and does not relish the prospect of adding smaller races to its broadcast schedule.
“We believe Versus is a very solid partner,” Bernard said. “What we will try to do now is determine how we can best have a network deal to complement [cable].”
If ESPN does not close a new deal with IndyCar, the series will have to look elsewhere. NBC Sports, which includes Versus, has expressed some interest in getting the races for NBC, sources said. Fox, which has been at the table for many recent rights deals, has not showed much interest. Bernard said he expects the series to have a new deal by October at the latest.
Barry Frank, IMG Media executive vice president, who is advising IndyCar, said there’s nothing to read into the extension of ESPN’s exclusive negotiating window. He said IndyCar wanted to give its longtime partner more time to make a decision.
“We want to do the right deal,” Frank said. “There’s no need to hurry it.”
Viewership for IndyCar races are up 14 percent this year. Through eight races on ABC and Versus, the series is averaging 1.832 million viewers, up from 1.606 million in 2010, according to Nielsen. That excludes one rainout this year and one rainout last year.
Bernard has been outspoken about the need to improve ratings, going so far as to offer to resign if it doesn’t earn a 1.2 Nielsen rating for its last race of the year in Las Vegas on Oct. 16, broadcast on ABC. That means it would have to quadruple the 363,000 viewers the race drew on Versus last year, which Bernard is confident it can do because the race is on network TV this year.
“I love what I’m doing, but if I can’t drive our ratings up, I’m not the right person,” Bernard said.
ESPN hasn’t embraced sites like Twitter, so far. For the most part, ESPN executives would rather bring fans to ESPN.com than have its reporters interact on Twitter.
But that is starting to change.
ESPN is targeting fans who use sites like Twitter as a supplement to their TV viewing. ESPN also is using Twitter as a news-gathering tool, committing editorial staffers to follow 2,000 sports industry figures. And ESPN is starting to realize the promotional power Twitter has to publicize its own stories.
Twitter was particularly engaging during last month’s NBA draft, when non-ESPN NBA reporters posted news and actual selections well before they were announced on ESPN. That night, Yahoo! Sports NBA reporter
News of NBA draft picks was tweeted by other news sources before ESPN could announce the actual selections.
It seemed like ESPN should have been irritated by his tweets that night. While ESPN held the media rights to the NBA draft, Wojnarowski owned Twitter during the draft.
But ESPN is setting up a system in which it will use Wojnarowski’s tweets — and tweets from others like him — to fuel its own online social media efforts.
“Twitter is a news feed, and we want our reporters to be part of that mix,” said Patrick Stiegman, ESPN.com’s vice president and editor-in-chief. “The two-screen experience is real. It’s how a lot of people are following live events now.”
ESPN will start using that news feed more aggressively on ESPN.com, probably later this year, Stiegman said. The site is going to start making tweets from both ESPN sources and non-ESPN sources available on ESPN.com. On ESPN.com’s Pittsburgh Steelers page, for example, ESPN will aggregate tweets from about 40 sources, including local and national media, Steelers players and team officials.
“There is a huge opportunity there,” Stiegman said. “We are actively working on that. We started creating lists and are assembling the tools.”
ESPN isn’t the only one. Turner Sports is using a similar strategy for its broadband shows, such as “TNT Overtime” and “TNT Race Buddy.” The site typically uses alternate camera angles and online chats to supplement the telecast. “About two years ago, we started to push the fact that these were companions to the broadcast,” said Matt Hong, senior vice president and general manager of sports operations for Turner Sports.
Hong said Turner has been experimenting with aggregating tweets around a specific event on one of Turner’s channels. During the NCAA tournament, it hired a staff of 10 to 15 people to pick out relevant tweets that it featured on an online site that was sponsored by Coke Zero. But Hong cautioned about the volume of available tweets being a potential obstacle. “The challenge about tweets and Facebook posts is that it’s like a firehose,” he said.
That firehose fuels another aspect of ESPN’s social media strategy. From an editorial standpoint, the number of athletes who tweet has led to stories ESPN would not have had in previous years.
ESPN’s editorial department follows 2,000 Twitter accounts from athletes and sports executives for potential stories. Stiegman referenced the case of Steelers running back Rashard Mendenhall, who, after Osama bin Laden’s death was announced, tweeted, “What kind of person celebrates death? It’s amazing how people can HATE a man they have never even heard speak. We’ve only heard one side ...”
The tweet created a mini-controversy that ESPN covered online and on TV. Stiegman said the Mendenhall flap is one of ESPN.com’s top 15 trafficked stories in the last year.
“That’s an example of a story that would not have happened pre-Twitter,” Stiegman said. “If we’re plowing through athletes’ accounts, we will find those types of stories.”
ESPN also believes the social media firehose can provide a huge promotional platform that didn’t exist a couple of years ago. Stiegman mentioned a 10,000-word Wright Thompson story that ESPN.com published in March called “Why You Should Care About the Cricket World Cup.” The story produced a good number of page views when it was published — about 750,000.
About a week later, it produced another 1 million hits. ESPN credited the massive bump to an investment banker in India who tweeted the link to his 1 million followers.
“We can exponentially grow traffic around past stories if we disseminate the information in the right way,” Stiegman said. “Stories can become viral.”
John Ourand can be reached at email@example.com. Follow him on Twitter @Ourand_SBJ.
A high-powered group of sports and media executives and entrepreneurs this fall will start a new kids sports TV and digital network called The Whistle, seeking to reach a youth audience that the founders believe is underserved in traditional media channels.
Primarily targeting children ages 6-16, The Whistle was formed by longtime entrepreneur John West, founder of environmental engineering outfit Enstrat and management solutions firm Silver Oak Solutions; Jeff Urban, former senior vice president of sports marketing for Gatorade; and Kit Laybourne, former executive producer for Nickelodeon, MTV and Oxygen. West will be the chairman of the venture, Urban the chief marketing officer, and Laybourne the chief creative officer.
But the marketplace for launching any new network is filled with obstacles. The Whistle has yet to sign any TV distribution deals, however West said they are in advanced discussions with several cable and satellite operators. Facing an uphill fight for distribution as an independent entity, the network hopes to have a presence on digital networks operated in conjunction with video game consoles.
The founding trio has attracted a star-studded array of investors, including Gatorade endorsers Derek Jeter, Peyton Manning and Mia Hamm; former MLB President and COO Bob DuPuy; and Bob Pittman, Clear Channel chairman of media and entertainment platforms, among others.
West declined to disclose financials based around The Whistle’s launch, but said he has raised millions for the venture, almost none of it from institutional entities. He also declined to outline what he is seeking to charge potential TV distributors per subscriber, though advertising sales will be more of an initial focus. The Whistle’s founders are not seeking carriage on dedicated sports tiers and instead aim for placement on broader cable tiers.
“The premise is pretty simple: Why is there no comprehensive sports offering out there for kids?” West said. “There is a huge market of U.S. kids playing organized sports, more than 50 million, and we see a significant opportunity there.”
Programming will include instructional shows, behind-the-scenes elements with pro athletes, sports-oriented game and cartoon shows, and user-submitted video. The Whistle will not seek any live game rights from pro leagues, but is seeking to develop programming in cooperation with properties.
“In my view, the biggest challenge for every sports entity is staying relevant to the next generation, and there hasn’t really been anybody out there trying to be the Nickelodeon of sports,” said DuPuy, now a partner with Foley & Lardner and a senior adviser to Creative Artists Agency’s investment banking affiliate, Evolution Media Capital. West has been a Foley & Lardner client, providing his initial introduction to DuPuy.
“So I think they’ve got a terrific concept, and I think this can help open up a whole new battery of sponsorship opportunities around sports,” DuPuy said.
Even with The Whistle’s industry connections and financial resources, however, starting a new, independent cable channel is an increasingly difficult proposition. Startup networks are now often owned and operated by large, established media corporations that already dominate channel lineups. But industry analysts said The Whistle could still find an audience, provided it keeps programming costs down.
“This sounds like an interesting concept and a reasonable niche to target,” said Lindsay Gardner, senior adviser to Oaktree Capital Management and a longtime cable industry executive. “Sports programming, however, can be very expensive to acquire and develop. If they keep control on that and temper some of their initial expectations [with regard to distribution], there could be an opportunity.”