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SBJ/October 24-30, 2011/MediaPrint All
In his biggest management moves since taking over as chairman of NBC Sports, Mark Lazarus has named his top lieutenant and decided to move most of NBC Sports’ operations to Connecticut.
Longtime Comcast executive Jon Litner was named a group president overseeing several businesses, including the Comcast SportsNet regional sports networks and all of NBC’s golf businesses. Golf Channel President Mike McCarley will report to Litner and will see his role increased to include all of NBC Sports’ golf business across the broadcast network and Golf Channel.
Litner will oversee several businesses.
Lazarus told his senior staff about the moves late last week. He’s planning a town hall-style meeting this week to alert the rest of NBC Sports’ staff.
Also at that meeting, Lazarus will announce plans to move almost all of the NBC Sports operations — more than 300 people — to Stamford, Conn.
Currently, NBC Sports, Versus and Comcast SportsNet operate out of several offices in Manhattan, Connecticut and Philadelphia. Golf Channel’s operations will remain in Orlando.
PAUL DRINKWATER / NBCMcCarley’s role will increase.
Versus already operates a studio out of Stamford and NBC Sports’ digital and Olympics Web team has offices there, too. NBC is building a studio for the NHL in Stamford, as well.
NBC would join other media companies in Stamford, including WWE, which has its headquarters and studio there, and YES Network, which has a studio in the city of roughly 125,000 people.
Sources said NBC Sports was attracted by tax breaks Connecticut offers to the TV and film industry. Plus, NBC Sports should save a significant amount of money moving employees from high-rent areas in Manhattan and downtown Philadelphia to a building just off of I-95.
Much of NBC Sports’ senior staff will move out of NBC’s famed 30 Rock offices and be based out of Stamford, which is around 35 miles from New York City and a 45-minute ride on MetroNorth to Grand Central. All NBC Sports sales executives will remain in New York, and there will be some offices in 30 Rock to allow executives to work out of Manhattan on occasion.
The move puts two major sports broadcast operations — ESPN and NBC — in Connecticut. Fox and CBS remain in Manhattan.
The move is viewed as a positive one for Litner, who eight months ago was named president of Versus and the RSNs by former NBC Sports Chairman Dick Ebersol. His move is significant in that it puts a longtime Comcast executive — rather than an NBC one — in a position of power at NBC’s sports group.
It also allows Lazarus to focus on better integrating Versus with NBC Sports. Versus will be renamed NBC Sports Network on Jan. 2, and it’s expected to share more programming and talent with the broadcast network.
Ebersol, who had led NBC Sports for 22 years, left as chairman in the spring, returning at the start of the NFL season in a consultant role. Former NBC Sports President Ken Schanzer, who had been with NBC Sports for more than two decades, left the network at the end of the summer.
Jon Miller, president of programming for NBC Sports and Versus; John Miller, president of marketing for NBC Sports and Versus; Sam Flood, executive producer for NBC Sports and Versus; and NBC Olympics President Gary Zenkel will continue to report into Lazarus.
Earlier this month, Lazarus hired former Turner Sports executive Greg Hughes to oversee NBC Sports’ communications department.
Three years ago, ESPN agreed to pay the Southeastern Conference what was thought to be a premium rights fee, in part, to prevent the league from starting its own network.
Now, with the conference adding new schools, the concept of a conference channel is back on the table. Several industry sources say the SEC and ESPN are expected to explore such a channel over the next year or two as they modify their media rights deal to account for the addition of Texas A&M and, potentially, Missouri.
The SEC’s deal with ESPN came in 2008, before schools began to switch conferences — and before the Pac-12’s $250M-a-year deal came about.
Neither the SEC nor ESPN would comment. But sources said the launch of any channel still is years away because the SEC has deals in place to distribute games to Fox Sports Net, Comcast SportsNet and over-the-air channels via the syndicated package. The conference needs those games to start a channel.
The SEC’s newfound interest in its own network marks a stunning turnaround from the summer of 2008, when the SEC and ESPN agreed to $2.25 billion over 15 years, or $150 million a year. Back then, the future of the Big Ten Network, which launched in 2007, wasn’t as bright, as it struggled for distribution. Plus, no one anticipated the Pac-12’s blockbuster $250 million-a-year deal.
The SEC looked into starting its own network, as well. But its ESPN agreement, combined with an earlier CBS deal, both signed in 2008, had the conference poised to collect an average of $205 million a year over the 15 years.
The numbers were mind-boggling at the time, high enough for the SEC to put its channel plans on the shelf. In fact, its agreement with ESPN included a vow by the conference not to start its own network.
But industry insiders say that conference expansion will put those issues, as well as an increased rights fee, back on the table for negotiation.
Since the SEC signed its deals with ESPN and CBS, its total revenue has been trumped by the Pac-12’s deal with ESPN and Fox. Sources say the SEC also has a growing realization that the Big Ten will have an increasing revenue advantage in coming years as the Big Ten Network matures.
All of those factors threaten the SEC’s position as a revenue leader among the conferences and have led to renewed discussions about a channel.
Big Ten schools will receive close to $21 million each in revenue from the conference, based on what schools in the league have budgeted this year. That revenue comes from all of the Big Ten’s deals with CBS, ESPN and the conference network, as well as other revenue from bowls and the NCAA.
The SEC distributed $18.3 million in revenue to each school this past year, not including revenue from third-tier rights. That third-tier revenue varies from school to school, but it can be anywhere from $1 million to $4 million. That puts the SEC roughly around the same per-school number as the Big Ten now.
But as the Big Ten Network matures, that gap is expected to widen, and by the end of the SEC’s current 15-year contracts with ESPN and CBS, it could face a significant deficit in revenue against the Big Ten and potentially the Pac-12. Subscription fees for the Big Ten Network, which is now fully distributed in the conference footprint, could grow by 4 to 5 percent a year, according to industry standards.
Even if it’s not on the immediate horizon, an SEC-branded network would become a programming powerhouse for a conference that fills stadiums for spring football scrimmages. College insiders believe that such a channel would put the SEC on better footing to increase revenue in coming years.
The conference, however, has obstacles that must be cleared, which is why the launch of a network could take years to iron out. If it wants to launch a channel, the SEC would need to regain all of the game inventory not taken by CBS or ESPN. Sources believe it would take about three years to reclaim those games from FSN, Comcast and syndication.
The SEC’s schools also would have to turn their third-tier TV rights over to the conference. Those third-tier rights include any games — in any sport — that are not picked up by one of the network partners. Schools monetize those games by televising them on pay-per-view or streaming them on their athletic website.
Currently those rights are held by companies such as IMG College and Learfield, but that wouldn’t prohibit the conference from starting a network. For example, the Pac-12, which is in the process of starting its own channel, has to pay multimedia rights holders for those third-tier rights, and those negotiations have been ongoing since the summer.
Conference- and university-branded channels have taken many different shapes. The Big Ten went into partnership with Fox Sports to launch Big Ten Network in 2007. Fox owns 51 percent and the Big Ten Conference owns 49 percent, with Fox operating the channel.
The Pac-12’s channel will be wholly owned and operated by the conference. Pac-12 Enterprises has been created to oversee the channel, its distribution, ad sales, sponsorship sales and digital.
Meanwhile, ESPN teamed with the University of Texas to create the Longhorn Network. ESPN fully owns the channel and pays the school a rights fee of $300 million over 20 years.
Fantasy sports operation Fastpoint Games is now for sale as its direct business-to-consumer games have been shut down and its funders seek an exit.
Formerly known as RotoHog, the five-year-old company over the past two years has focused primarily on building fantasy games on a white-label basis for other media and league clients such as Major League Soccer, NASCAR, Sports Illustrated and Us magazine, among many others.
Kelly Perdew was hired in 2008 but will not stay with the company after it’s sold.
“We started taking a long look at the operation over the summer with our partners, and at this point, Mission is looking for an exit,” said Kelly Perdew, Fastpoint Games chief executive. “We expect to see a lot of interest in the assets. We’ve proven this business can work.”
Mission Ventures executives were not available for comment. A sale is expected by the end of the year.
Perdew, a former U.S. Army Ranger and winner of the second season of NBC’s Donald Trump reality show “The Apprentice,” will not stay with the company after the sale. Hired in 2008 from mixed martial arts website ProElite.com, Perdew was brought in to retool company operations and build its scale.
Having done that, Perdew is beginning to work on several other ventures, including digital media consultancy The DuMont Project, where he will be managing partner; online advertising technology outfit TargetClose, where he is co-founder and adviser; and TroopSwap.com, an e-commerce site that arranges discounts on goods and services exclusively to military families, where he is an investor.
Golf Channel’s carriage deal with DirecTV expired at the end of 2010, and the two sides have yet to agree on a new one, according to several sources.
DirecTV and Golf Channel have signed month-to-month extensions every month since. These short-term deals have kept the channel on the country’s biggest satellite operator at its old rate.
But while the two sides are continuing to negotiate, they have made little progress on a new deal, sources said.
DirecTV and Golf Channel are in dispute over price and distribution. Golf Channel charges distributors a rate of about 27 cents per subscriber per month, according to SNL Financial. It’s not known what rate DirecTV pays for the channel or the rate it is seeking.
Golf Channel is on DirecTV’s Choice Extra package, which goes to about 16 million of DirecTV’s 19 million homes. Golf Channel wants to be moved to DirecTV’s Choice tier, which is where NFL Network and MLB Network reside.
DirecTV has complained about the network’s viewership, sources say. While improving, ratings this year have remained stuck in the bottom half of the 95 Nielsen-rated cable networks. Since January, Golf Channel has averaged 92,000 total-day viewers (12 a.m.-12 a.m.) and 140,000 viewers in prime time.
With more than 19 million subscribers, DirecTV is the country’s second-biggest distributor behind Comcast. Golf Channel, which is owned by Comcast, is in 83 million homes, according to the most recent Nielsen estimates.
DirecTV also is negotiating with Fox, which saw carriage deals for 26 of its channels — including its RSNs, Speed, Fox Soccer and Fuel — expire at the end of September (SportsBusiness Journal, Oct. 10-16 issue).
Negotiations with Fox are expected to heat up over the next several weeks, as DirecTV’s deal with the Fox broadcast network wraps up at the end of the year. Fox is likely to use the leverage of its coverage of the NFL playoffs in January to get that deal done.
Fox has been looking to increase the amount of retransmission consent revenue its broadcast network gets from its distributors, with sources saying that Fox has been cutting deals worth up to $1 per subscriber per month for it.
It appears that Texas football is not creating the kind of leverage that Longhorn Network was seeking with local cable and satellite distributors.
The Oct. 29 game against Kansas is notable, since both teams are part of the Big 12 Conference. But Kansas was 2-4 at deadline, and is hardly considered a marquee matchup for Texas.
Longhorn Network’s previous football game was a 34-9 Texas win over Rice in early September.
The channel, which launched in late August, signed several carriage deals before the first game, including ones with Verizon and Grande Communications. The network is in 4 million homes nationally.
The channel costs around 40 cents per subscriber per month in a four-state region that includes Texas, Louisiana, New Mexico and Oklahoma.
Sources say some of the bigger distributors are waiting to see what the Big 12 Conference will look like once the most recent round of realignment shakes out. At deadline, Missouri was expected to apply to move to the Southeastern Conference, which would leave the Big 12 with nine teams. Cable and satellite operators are reluctant to commit to a channel like Longhorn Network when the conference still is in so much flux, sources said.
SportOn, a small Swedish company that turns sports highlight clips into cellphone video ring tones, will launch its mobile phone application in North America and Europe on Wednesday.
The company has signed separate video content deals with the NHL, Red Bull Media House and Major League Lacrosse, as well as with a handful of minor soccer, badminton and table tennis leagues in Europe and Asia. A source familiar with the company said it is in talks with the NBA, MLS, NASCAR, WWE and the Big Ten Network to use video content.
Micke Jansson, CEO of SportOn, said the expanding video ring tone market is a natural space for sports highlights.
“Sports leagues are interested in video exposure, and we tell them if the phone rings five times a day, that adds up to 1,800 exposures a year,” Jansson said. “That means they have a whole other media channel.”
Jansson declined to discuss the terms of the deals with SportOn’s respective clients. A source familiar with SportOn’s deal with the NHL said it is a revenue share with no licensing fee.
The applications will be available for download for BlackBerry, Android and Nokia’s Symbian operating systems. Jansson said SportOn is in discussions with Apple to get the application onto the iPhone platform.
The application is free but customers pay for each video-tone download. In North America, a 10-second clip will cost $7, and a package of four clips will cost $14. “Based on the content the leagues provide we may change [the price],” Jansson said. “It may be too high.”
Jansson said SportOn now has 3,500 available video clips to download and that it adds 50 clips a day to its archives. The company is based in Stockholm and has a staff of six programmers. Retired Swedish hockey star Peter Forsberg has joined as a company partner and spokesman.
Christopher Golier, vice president of mobile marketing and strategy for the NHL, said the deal with SportOn represents another way to put video content into the hands of hockey fans. “We’re enabling fans to customize their experience on the most personal of mediums,” Golier said.