First Look podcast: World Congress 2017 PBC plots path to maximize distribution NBA Turnstile Tracker Baseball returns to Kinston, N.C. David Stern investing in tech startups NBA regular season sees ratings drop Faces and Places at World Congress Are sponsors wary of outspoken athletes? On Deck With: Mike Unger, USA Swimming Labor & Agents: Rosenthal takes charge
SBJ/April 30-May 6, 2012/MediaPrint All
IMG is in talks to invest $6 million to $8 million in Bloomberg Sports, a move that would give the global sports and entertainment company a minority stake in Bloomberg’s fast-growing fantasy and professional sports management group.
If completed, the deal will value Bloomberg Sports at more than $20 million and give IMG roughly a third of the company, according to sources familiar with the talks.
IMG declined to confirm or deny whether it was in talks with Bloomberg Sports, but sources with knowledge of the situation said the two parties have had conversations. Bill Squadron, who heads Bloomberg Sports, declined to comment on IMG.
“We’re having a lot of success with the business and looking at all different options to grow, but it would be premature to discuss anything specific,” said Squadron, who worked at IMG from 2004 to 2006 as head of IMG Media’s interactive operations in North America.
Bloomberg began developing sports-related products in 2008. The goal was to develop a system that gave baseball general managers and fantasy sports enthusiasts access to high-end research and analytics comparable to the wealth of real-time financial data Bloomberg offers financial firms.
The company holds data and marketing partnerships with both MLB.com and NFL.com on its fantasy products, Decision Maker and Front Office, and more than 20 MLB clubs use a professional-grade version of Bloomberg analytics to evaluate players and opponents. Earlier this year, Bloomberg signed an extensive deal with the Chicago Cubs, the company’s largest with any individual MLB club, in which the Cubs will use the Bloomberg platform along with video assets to scout both major and minor league players on a wide variety of digital platforms. Bloomberg also offers a tablet-based application that baseball players can use to analyze a pitcher’s or hitter’s habits and that provides real-time data during games to broadcasters like Fox and Turner Sports. While Bloomberg Sports continues to see strong inroads with its professional side of the business aiding teams and networks, there remains by definition a finite number of potential customers. The consumer-based fantasy sports side of the business, as a result, remains the larger potential avenue for growth.
Bloomberg Sports executives always have seen the U.S. as a starting point and have long thought the company has a big opportunity to grow by expanding internationally into sports such as soccer and cricket. That’s part of the reason taking on IMG as a minority partner makes sense, sources said.
IMG has offices worldwide and can help Bloomberg Sports make connections to expand into international markets. Those global opportunities are largely what appealed to IMG about the deal, sources said.
Expanding into international sports could be lucrative for Bloomberg Sports, beyond the mere reasons of additional scale and the significant global popularity of soccer and cricket. Betting on sports is legal in the United Kingdom and other countries, and though sources said Bloomberg Sports would never itself become a platform for betting, its up-to-the-minute analysis and information on sporting events could be a major asset for bettors overseas.
The company plans to launch its first international product this summer when it debuts a fantasy data tool for English Premier League fans. Though not as firmly established as American fantasy football based on NFL play, fantasy soccer based on the EPL has seen a strong increase in fan interest in the last two years.
“Internationally, you’ve got a much greater scope in a lot of sports like soccer, cricket and Formula One,” Squadron said. “We’ve been interested in that from the beginning.”
IMG could integrate Bloomberg Sports data into the 20,000 hours of media it produces from events like Wimbledon and rugby and distributes to global broadcasters. It also could use it to develop a fantasy offering for the Indian Premier League, the cricket league it helped develop in India.
The San Antonio Spurs own the NBA’s highest local TV ratings for the second consecutive season.
A week before the end of the season, Spurs games on FS Southwest were averaging an 8.00 rating, well above the second-place Miami Heat. Despite the top rating, the Spurs are down 21 percent from last year’s mark.
Tim Duncan and the San Antonio Spurs
buried the competition in local ratings.
Photo by:NBAE / GETTY IMAGES
“There are great story lines throughout the league and viewers are responding in kind,” said Jeff Krolik, executive vice president of Fox Sports Net.
Nationally, TV ratings were mostly strong. ABC, TNT and NBA TV had record high viewership for their NBA schedules. ABC pulled a 3.3 rating/5.42 million viewers for 15 games; TNT drew 1.7/2.6 million for 41 of its games; and NBA TV averaged 337,000 for 96 games. ESPN experienced a mixed bag compared with last year’s record-setting post-Christmas numbers. Its rating is up slightly to a 1.3 rating (from a 1.2), and its viewership is flat at 1.9 million viewers over 71 games.
2011-12 RSN Overall Ratings
Top 5 TEAM RSN AVG. RATING CHANGE AVG. NO OF HOUSEHOLDS San Antonio Spurs FS Southwest 8.00 -21.5% 70,000 Miami Heat Sun Sports 6.59 27.0% 104,000 Oklahoma City Thunder FS Oklahoma 6.58 131.7% 47,000 Chicago Bulls CSN Chicago 5.85 38.6% 204,000 Los Angeles Lakers FS West 4.64 -2.7% 258,000 Bottom 5 Detroit Pistons FS Detroit 1.51 -6.8% 28,000 Atlanta Hawks SportSouth 1.39 13.0% 32,000 Washington Wizards CSN Mid-Atlantic 0.88 -30.2% 21,000 Charlotte Bobcats SportSouth 0.82 -24.1% 9,000 New Jersey Nets YES 0.41 41.4% 30,000
Note: Does not include data from Utah Jazz telecasts (on Root Sports), New Orleans Hornets (Cox) or Toronto Raptors (Rogers Sportsnet and Sportsnet One).
The Timberwolves’ rating dropped in the second half of the year after star rookie Ricky Rubio was hurt in March. Timberwolves games are averaging a 2.95 rating; but at the season’s midway point, their games averaged a 3.63 rating.
Conversely, Thunder ratings grew during the season’s second half to finish the season with a 6.58 rating.
Knicks games on MSG (up 118 percent) also saw a significant ratings increase this season. The team has had a strong second half on TV, even as draw Jeremy Lin got injured. Knicks games are averaging a 3.32 for the season. At midseason, the Knicks were drawing a 2.02 rating.
The TV story was not so good in Boston, where viewers seem less engaged with an aging Celtics team, as games on CSN New England pulled in their lowest rating in at least five years. The 3.24 rating/77,000 homes is down 33 percent from last year.
The Nets owned the league’s lowest rating for the third straight year. The team is pulling a 0.41 rating for its last season in New Jersey, a figure that is up 41 percent.
But the NBA’s lowest TV draw is easily in Charlotte, where only an average of 9,000 homes per game are watching the Bobcats’ historic bad season — a figure that is down 24 percent from last year.
Editor's note: This story is revised from the print edition.
NBC may own the rights to the Olympic rings, but that won’t stop its competitors from snagging some of the network’s digital audience and advertising dollars.
FoxSports.com, Sports Illustrated, USA Today Sports Media Group and Yahoo! Sports have all rolled out London 2012 websites and editorial content.
“It’s a great event, and it’s the biggest opportunity to showcase your site and add audience,” said Dave Morgan, USA Today Sports Media Group’s senior vice president of content and editor-in-chief.
FoxSports.com is preparing its most extensive Olympic coverage.
IOC sponsor P&G already has committed to advertise on Yahoo!, while U.S. Olympic Committee sponsors Citi and DeVry have bought advertising with Fox Sports, and non-Olympic sponsor Lexus is advertising with Sports Illustrated.
Yahoo!’s approach to the Olympics in recent years has become a blueprint of sorts for the entire industry. The company hired writers and developed dedicated sports pages filled with original content during the 2006 Torino Games. The effort delivered more unique visitors to Yahoo! than NBC-Olympics.com attracted, according to comScore Media Metrix. This summer Yahoo! will build on that by taking its strategy international. It will customize content for 25 countries in dozens of languages and offer it on Yahoo! portals around the globe.
“We have dominated the last few Olympics, but we haven’t put these things together holistically as a company before,” said Ken Fuchs, the company’s head of sports, entertainment and games.
As Yahoo! did in 2006, FoxSports.com is preparing its most extensive coverage of the Olympics. Last May, MSN approached Fox because it wanted to “go big” on the Games, said Marla Newman, Fox Sports senior vice president of digital sales. Fox-Sports.com responded. It launched a special site last week devoted to the London Games. Fox has told advertisers that it expects 40 million unique visitors during the Games.
Sports Illustrated took a more official approach to its Olympic coverage and sales than competitors. It signed an agreement with the USOC making it a preferred advertising outlet for USOC sponsors. It will roll out an iPad app, unrelated to its USOC deal, called “Live from London” that is sponsored by Lexus.
USA Today’s effort is spearheaded by Morgan, who worked at Yahoo! from 2006 to 2011. A total of 80 people will be working for Gannett on the Olympics. The staff will contribute to Gannett’s 81 newspapers, 24 TV stations and 500 websites. It will publish an Olympic preview in July and produce a daily sports section in London throughout the Games.
For its part, ESPN says it plans to treat the Olympics online and on mobile the same way it treats other big sporting events to which it does not hold the media rights. ESPN believes it has become the default digital home for any live sporting event, whether it is on ESPN or not.
“It’s not different from what you would normally expect from ESPN,” said John Kosner, ESPN Digital Media senior vice president and general manager.
The rivalry between the Mets and Yankees is always smoldering in New York, but it has cooled in recent years, since the Mets haven’t fielded a winning team since 2008. But this season’s brand campaign for the Mets’ SportsNet New York regional sports network should rekindle competitive sparks between the two. It includes a takeover of the Bronx subway stop at 161st Street and River Avenue — yes, the Yankee Stadium stop.
To be sure, there won’t be any Mets branding during July and August, when SNY plans its “station domination,” an accepted industry term for ad buys that envelop a transit stop. SNY’s campaign is squarely behind “Geico SportsNite,” its nightly local sports wrap show.
Sports memorabilia is pushed to the edge in SNY’s campaign.
In four TV ads breaking in early May from Real Art, a bobblehead, licensed toothbrush, sports-themed cake and aquarium ornament express their disdain for fans that watch TV newscasts, national sports nets, or even rival MSG Network, for their nightly fix of Big Apple sports news.
A forlorn bobblehead in pinstripes and an “NY” cap bemoans his owner’s habit of getting “sports from the weather lady,” then pushes himself off a window ledge. In another ad, a basketball player-shaped cake has the same complaint. A New York Jets-logoed electric toothbrush decries his owner’s preference for MSG Network (“the channel that seems to think there are only two New York teams”) before vibrating itself off the sink and into the toilet bowl. An aquarium ornament bubbles disdainfully as its owner watches a national sports highlights show, a la “SportsCenter,” instead of “SportsNite.” “Get Your New York Sports Here” remains the tag for the network, which adds a line advising fans, “Keep Your Sports Stuff Happy” by watching “SportsNite.”
“Anybody can say they are New York sports,” said SNY President Steve Raab. “This is to get the point across that we are where New York sports are covered comprehensively.”
The TV portion of the campaign runs for a month on local broadcast and cable outlets, including MLB Network, NBC Sports Network, Cartoon Network, FX, Comedy Central and even some Yankees games on New York’s WPIX.
SNY’s station domination at the Yankee Stadium subway stop will feature truncated versions of the campaign during July and August. One reads, “Don’t bum out your bobblehead by getting your sports from the weather lady.”
“We had to think about whether Yankees fans would accept this messaging,” said Marie DeParis, SNY’s vice president of marketing and business development, “but we think it’s clear that it’s not going up against them.”
National cable operators did not want it to succeed, worried that it would start a trend and they would wind up spending more on other teams that would break away from their regional sports networks.
One of the biggest local cable operators, Cablevision, did not want the channel to succeed, as it risked the company’s sports monopoly in the country’s biggest media market.
Programmers did not want it to succeed, worried that YES Network’s high cost — it started at about $2 a subscriber per month — would mean less money for other channels.
I covered the launch as a reporter for cable industry trade publication CableFAX Daily and seemed to field daily calls from distributors across the country that had two things in common: They actively rooted against YES Network, and they were anxious to trade information about the negotiations and how they were going.
There are lots of reasons why the channel succeeded in the face of so much opposition. Obviously, YES likely would not have been successful without the strength of the Yankees brand. But in my mind, a big reason for its success comes down to the strength of the executive team at launch, a group that was filled with cable industry veterans who had the resolve to see the channel through.
As YES Network turns 10, it’s interesting to see where that executive team has gone and the roles they have played in setting sports media trends. If YES Network started the trend of team- and league-owned channels, many members of Leo Hindery’s executive team played a big part in shaping the way sports media looks today once they left YES Network.
Hindery led the group at the time as YES Network’s chairman and CEO. He was the most visible executive and proved to be a lightning rod for criticism about the channel. If cable operator executives hated YES Network, they felt betrayed by Hindery, whom they previously had viewed as one of their own. After all, Hindery ran the biggest cable operator in the 1990s, Tele-Communications Inc., where he actively worked to keep programming costs down.
Hindery left the channel in April 2003, soon after it signed a carriage deal with Cablevision. He’s now chairman of InterMedia Partners, a private equity company that invests in sports channels like Magic Johnson’s Aspire, The Sportsman Channel and Universal Sports.
Hindery took a lot of his YES Network team with him to InterMedia, including general counsel Mark Coleman, finance vice president Jerry Letter, executive vice president of operations Craig Fischer and executive vice president of communications Bob Davis.
Others on Hindery’s YES Network team moved to the distributor side, where they have stayed in the middle of the expansion of league- and conference-owned channels that followed YES. Hindery’s top lieutenant at YES was Derek Chang, who has spent the past six years trying to keep programming costs down as executive vice president of content strategy and development for DirecTV. Under Chang’s leadership, DirecTV was the first distributor to cut deals with new networks such as Big Ten Network and MLB Network.
Hindery’s top distribution executive was Matt Bond, who left YES Network late in 2002, before the Cablevision deal was finalized. Bond became executive vice president of programming at the country’s largest cable operator, Comcast, where he led negotiations with programmers and signed carriage deals with NFL Network and Big Ten Network.
Bond is now back on the programming side as executive vice president of content distribution for NBC Universal.
One executive on Bond’s current team is Dana Zimmer, who was senior vice president of distribution at YES Network. She left in 2004, when Comcast hired her to help launch another RSN, SportsNet New York, in the New York market.
Hindery hired David Krone as executive vice president of marketing. He left to become a top lobbyist for the National Cable Telecommunications Association and, later, Comcast. He’s now chief of staff for Sen. Harry Reid (D-Nev.).
YES Network’s current president, Tracy Dolgin, worked on YES’s behalf in the early years with the investment bank Houlihan Lokey. YES hired him in 2004 as president and CEO.
The guile and fortitude these executives showed at the infancy of YES Network is one reason why so many team- and league-owned sports channels exist today.
John Ourand can be reached at firstname.lastname@example.org. Follow him on Twitter @Ourand_SBJ.
The U.S. Golf Association has teamed with former HBO Sports boss Ross Greenburg for its first film production, a one-hour documentary on Jack Nicklaus’ first U.S. Open victory 50 years ago.
“1962 U.S. Open: Jack’s First Major,” will air June 17 on NBC prior to the broadcast of the U.S. Open’s final round from Olympic Club. The film tells the story of Nicklaus’ win over Arnold Palmer.
“Core to our mission is to preserve and celebrate the history of golf,” said Sarah Hirshland, the USGA’s senior managing director of business affairs. “We have tremendous assets available to us through our archives and they provide a great opportunity to build and create content that brings these stories to life.”
The Royal Bank of Scotland, a USGA corporate partner from 2008-11 and a longtime Nicklaus sponsor, jumped onboard
The documentary will focus on Nicklaus’ victory at the 1962 U.S. Open, where he beat Palmer.
Photo by:USGA (2)
Hirshland said the USGA began discussions with Greenburg about the project after the USGA Museum brought up the anniversary of Nicklaus’ 1962 championship. The USGA calls its museum the first major sports museum in the country, dating to 1935. Its collection of footage, artifacts and other elements of the game has sometimes been loaned to other film projects, but until now has gone untapped for a USGA production.
“I feel like we’re giving birth to a whole new area for the USGA,” Greenburg said. “To me, this is a great way to lift the brand for the USGA and the U.S. Open. There are so many great stars and great moments, and starting out with 1962 makes so much sense because you’re talking about Nicklaus and Palmer, at a time when television coverage was just taking off.”
Greenburg, who left HBO in July and formed his own production company that works with NBC, the NHL and other properties, came onboard late last year.
Footage from 1962 is interspersed with current-day interviews of Nicklaus and Palmer to create the documentary. The USGA also is arranging for Palmer and Nicklaus to meet on May 17 at Oakmont in Pennsylvania, site of their 1962 showdown. Video from that meeting will be used in the film that runs on June 17.
Hirshland said the USGA is purposely limiting the commercial interruptions on NBC. RBS, as the presenting sponsor, will have ad units, and USGA corporate partners IBM, Lexus, Rolex and American Express could have an advertising presence, as well.
The USGA will stage a private screening for the film in San Francisco on June 13, the night before the U.S. Open starts.
San Francisco-based online video game developer World Golf Tour has rebranded itself as WGT after an expansion from golf into baseball, and plans to launch games in other sports later this year.
The new baseball entry, which launched earlier this year in a beta phase, has quickly gained more than 200,000 monthly
“We always wanted to do more than golf and have a full portfolio of games in various sports,” said YuChiang Cheng, WGT co-founder and chief executive. “The golf initially took for us, and we’re now looking to have the same kind of trajectory in baseball and other sports.”
“WGT Baseball: MLB” will be free to users, with the revenue
“WGT Baseball: MLB” is a socially oriented game on Facebook that features MLB teams, ballparks and players. The game has gained 200,000 monthly users during its initial beta phase.
Financial terms of WGT’s contracts with MLBAM and the MLBPA were not disclosed, but WGT’s MLBAM deal involves both a front-end licensing component and revenue-sharing provisions.
Cheng declined to outline plans for the additional games planned for 2012, but said the company’s development staff has recently been increased to handle the expanded focus. WGT employs about 40 people, the largest it has been in company history.
The shift to the WGT branding occurred internally with no use of an external branding or marketing agency.
“It was very much a natural thing,” Cheng said. “People were constantly referring to us by the acronym anyway, so once we formally ventured beyond golf, it was the logical step.”
In June, WGT will again revive the Virtual U.S. Open Championship, its online video golf tournament held in conjunction with the real-world U.S. Open, played on the same course as the real event. The tournament, an outgrowth of a long-term partnership between WGT and the U.S. Golf Association, will enter its fourth iteration this year with The Olympic Club in San Francisco.
Wimbledon this summer will produce a daily five-hour-plus webcast for online and mobile consumption, one of the most aggressive digital pushes to date among major sporting events.
Unlike the model often employed in the United States, the Wimbledon model employs only a smattering of live-event streaming. Instead, the focus for Live @ Wimbledon is on free, original shoulder programming.
The so-called “second-screen” experience is designed to coexist with TV broadcasts and compete instead with social media outlets such as Twitter and Facebook that often engage fans during event hours. In outlining the new initiative last week, the All England Lawn Tennis and Croquet Club, Wimbledon’s organizer, even appeared to at least indirectly take a swipe at those events that stream entire competitions: “Live @ Wimbledon will complement, rather than compete with, existing broadcast partners.”
The U.S. Tennis Association applauded Wimbledon’s efforts but said its research showed that streaming the entire U.S. Open did not detract from its broadcast partners. “Streaming doesn’t cannibalize TV; it reinforces,” said Phil Green, the USTA’s senior director of advanced media.
The U.S. Open does have limited shoulder programming during its event, but nothing compared with Wimbledon’s plans. Live @ Wimbledon will have its own studio on site and there will be two roving reporters who produce content from around the grounds.
Live @ Wimbledon will be available in the U.K. and the Americas and appear as a link on wimbledon.com as well as being accessible via mobile devices.
IMG, longtime commercial partner of the All England Club, is producing the digital offering. Any sponsorship would come from existing event partners and not from outside, a tournament spokesman said.
If Wimbledon succeeds with this second-screen experience, it will be unique among major sporting events, said Tom Richardson, president of Convergence Sports & Media.
“Most of the other events I am aware of are doing event apps to fill out non-viewing time,” he said. “This is really trying to capture the second-screen engagement.”
At least, that’s what former MSG President Bob Gutkowski recalls about the first time he pitched Yankees owner George Steinbrenner on building his own cable network instead of just taking a check from the highest bidder.
In the case of the New York Yankees, that was already a very large check. MSG roiled the cable and sports industry in 1988, when it paid $493 million for the rights to telecast the Yankees on cable from 1989-2001. At the time, those fees were considered by many to be so extraordinary that they would lead to the ruination of both a developing cable television business and baseball itself, since the deal brought the Yankees wealth that no other team could imagine.
Instead, the MSG deal actually set a foundation for regional sports networks like YES Network, since it moved the rights of the top MLB team in the No. 1 market off of SportsChannel’s exclusive pay tier to a more widely distributed network.
“A reporter called me that day and asked me how it felt to be the man who ruined baseball,” said Gutkowski, who negotiated the Yankees/MSG deal and who is now a consultant, and a partner at private equity firm Innovative Strategic Management.
Seven years later, after leaving MSG, Gutkowski met with Steinbrenner, and recalled the Yankees owner wanting to do things in the usual way.
“He wanted to get a billion from Cablevision for his rights, and in our first meetings he said no [to building a regional sports network],” Gutkowski said. “We showed him that he needed his own deal either as leverage against Cablevision or to use team equity to create distribution equity.”
Those early meetings netted Gutkowski’s Marquee Group a consulting fee of $25,000 for a network now valued at more than $3 billion.
Yankees officials long have maintained that the idea for YES was Steinbrenner’s. Gutkowski later sued the late Yankees owner, litigation that was eventually dismissed when a federal judge ruled the claims were too late and unenforceable.
As often happens, history is remembered in different ways with the same clarity.
"We were looking at short words that started with Y. Once we saw YES and said it out loud, that was it."
Former YES Network Chairman, seen in a photo taken shortly after the channel made a deal with Cablevision in 2003
Photo by:AP IMAGES
Leo Hindery, the former YES Network chairman and CEO, remembered that he and Bob Davis, then working for Rubenstein Public Relations, were leafing through a dictionary in an attempt to name the network. “We were looking at short words that started with Y,” Hindery said. “Once we saw YES and said it out loud, that was it.”
Davis’ memory of naming the new baby is altogether different.
“They didn’t like any of the names being suggested and said there would be big bucks for anyone who came up with one,” said Davis, who now runs his own PR shop. “I called my wife to talk about it and we still disagree over which one of us came up with it. But I emailed the name to Leo and it stuck right away.”
The reward was a bottle of single-malt scotch.
There are many different recollections from the first employees of what eventually became America’s biggest regional sports network, some more lucid than others. Many concern the considerable toil involved in building a network from scratch in six months. The most indelible memories stem from the fact that YES was announced the day before 9/11 — one of the most unforgettable days of this century.
“The next day the world as we knew it changed, but we still had to hire around 150 people and be on the air March 15,” Hindery said.
Hindery’s first hire was John Filippelli, the YES president of production and programming, who had produced MLB games at NBC, The Baseball Network and Fox.
“It was a Wild West show,” Filippelli recalled, from his office 30 floors above midtown Manhattan. “No matter what you did, you were weeks behind. I was here Christmas Eve and New Year’s Eve. We had no trucks, no cameras, and no satellites.” And, he said with a laugh, “They didn’t tell me the network was going to be 24/7 or that I was running programming until after I was hired. We didn’t even have offices. All I had on my first day was a yellow pad — and that was from a previous employer.”
It was a time of such profound change, no one was sure what anything was worth, even New York City real estate. Nonetheless, YES soon found office space in the Chrysler building, where Hindery already was based.
As a form of escape from the barrage of 9/11 news, Hindery bought “every VCR copy I could find” of the baseball movie “The Natural” and gave it to the limited number of staffers as an example of how to televise baseball. A new level of local broadcast quality was to be a hallmark of YES, such as using 10 to 12 cameras, instead of the usual five or six employed in a local broadcast.
“The expectations were Tiffany,” said Filippelli. “This had to be better than anything before.”
With four Emmys in the network’s first year and eventual growth to its current 14 million households, those lofty goals were realized.
While YES was launching, it was locked in a bitter dispute with Cablevision that resulted in the operator not carrying YES for the network’s first year. Cablevision eventually submitted to binding arbitration that compelled the cable operator to carry YES as an expanded basic channel. The bitterness was never far from the thoughts of those building YES.
“We had to prove right away to distributors that YES was for real, and of course we had to do that without Cablevision,” said Derek Chang, an early executive vice president at YES who is now DirecTV’s executive vice president of content strategy and development. “DirecTV [which was important as an alternative to Cablevision customers] did the first deal and then Comcast and Time Warner were they keys to adding legitimacy. Then Cablevision looked like the outlier.”
By not losing money in its first year, Hindery said, YES was able to wait out the year it took to get onto Cablevision.
“We had to put [Cablevision CEO] Jim Dolan aside in our thinking, which wasn’t easy. But we knew the only way it was going to work is if we had enough [carriage] agreements in place to be break even,” Hindery said. “Our big accomplishment was that when YES launched, it wasn’t making a nickel, but it wasn’t losing one either.”
The Cablevision/YES dispute was played out on the front pages during the network’s infancy, and it was a dispute with many manifestations of contentiousness. As a cable industry veteran, Hindery attended Dolan’s 2002 wedding, bringing as a present what Davis described as “the most expensive toaster on the planet.”
With the YES/Cablevision war raging, the wedding gift was later returned to Hindery.
In another manifestation of the dispute, now defunct electronic retailer “Nobody Beats the Wiz” signed on as a charter YES advertiser — until its parent company nixed the buy. That parent company was Cablevision.
Of course, there were the standard mixed feelings from anyone who worked for Steinbrenner, who was infamous for changing managers 20 times in his first 23 seasons. Billy Martin was fired and brought back five times, but Hindery said he can easily one-up Martin. After he refused to tell Steinbrenner the name of a YES employee embroiled in dispute with New York sports radio station WFAN, Steinbrenner fired Hindery six times in one day. Another night, he said, he was fired by Steinbrenner for refusing to order YES on-air talent to question the Yankees manager’s pitching change.
“George was important for baseball,” Hindery said, when asked to reflect on Steinbrenner. “He was responsible for a lot of big ideas and very philanthropic … He was also as cruel to people as anyone I had ever seen, so there were pluses and minuses.”
Observed Fillippelli: “It took me time to appreciate this — he wanted the best and no matter how good you were, it still wasn’t good enough. He ran the Yankees the same way. In the end, I think George drove us all to be better.”
At $2 per subscriber per month at launch, YES Network was the most expensive regional sports network in the country. (Interestingly, it’s no longer in the top five, according to research firm SNL Kagan, which says that YES’s rate, now $2.99 per subscriber per month, is the industry’s sixth highest for RSNs.) Distributors worried that imitators in other markets would hurt their bottom line.
The Royals set up the Royals Sports Television Network after the 2002 season, and the Twins rolled out Victory Sports One after the 2003 season.
Neither venture gained enough carriage deals to be successful. The Twins venture folded after about six months, and the Royals limped along until 2007, when the team sold rights back to Fox. But for the cable industry, the genie was out of the bottle. Rights holders — teams, conferences and leagues — now had another option for their rights, which meant their costs were certain to rise.
“When you’re a rights holder, you need to control your own destiny,” said Bedrocket Media Ventures co-founder and CEO Brian Bedol at a recent industry conference. “For many years, you had a limited number of channels, so your best deal was to go and make a deal with ESPN or the regional sports networks. Once the rights holders discovered that they could actually have a direct relationship with their fans, with their audience, the game was changed.”
YES Network executives, and others, see the launch of YES as being directly responsible for this rise in sports channels, from league-owned channels like NFL Network and MLB Network, to college conference channels like Big Ten Network and Pac-12 Network, to team-owned channels like the Mets’ SportsNet New York and the planned Los Angeles Lakers channels.
YES Network was not the first team-owned regional sports network. New England Sports Network launched in 1984 and is 80 percent owned by the Boston Red Sox. But, partly because of its backing by Goldman Sachs, it was YES Network’s 2002 launch that started the trend of team- and league-owned channels. Rights holders started to understand the amount of money that could be made from launching their own networks.
"I don’t think you would have ever had these networks owned by leagues, had not YES succeeded. I’m not sure NFL Network would have come to be."
YES Network CEO
Photo by:SHANA WITTENWYLER
Said media consultant Mike Trager: “It set the foundation for everyone else to look at a new model, both in large and smaller markets, and increased rights fees dramatically even for teams that didn’t want to set up [regional sports networks].”
Why did the early imitators fail in Kansas City and Minneapolis? Dolgin, who worked at Fox at the time with Ray Hopkins, now YES Network’s COO, said it was because those teams tried to apply the strategy that YES Network used in the New York market to their smaller Midwestern markets. Dolgin and Hopkins were intimately familiar with the Royals’ and Twins’ plans because, at the time, Fox had held local TV rights for both teams.
Dolgin believes the teams made critical mistakes at the outset by not tailoring specific strategies to their markets.
“Their thought process was that to a Twins fan, the Twins are the Yankees. Minnesotans care as much about the Twins as New Yorkers do about the Yankees,” Dolgin said. “You can’t be stupid about it. You can’t just say, ‘They did this, so I’m going to do this, too.’”
But the teams didn’t consider how their market size would affect negotiations with big, public distributors, like Time Warner Cable, Comcast and DirecTV, Dolgin said.
“It’s one thing to be in a dispute in New York or Los Angeles,” Dolgin said. “It’s another thing to be in a dispute in Minneapolis. It’s not going to affect the [distributors’] stock prices. It’s not going to affect Congress.”
Smaller teams did not have the finances or leverage to withstand the same bruising carriage battles that YES Network faced. As a result, their local rights strategies shifted and some began to seek out distributors as partners. Distributors such as Comcast, Charter, Cox, DirecTV and, now, Time Warner Cable have launched local sports channels. Comcast, in particular, began offering clubs ownership stakes in their networks.
This added competition is the main reason why local sports rights have become so expensive recently.
"It just got people thinking more about what these rights could be worth and the formula of team-owned media instead of media concerns owning teams."
DirecTV TV executive and
former YES Network executive
Photo by:SHANA WITTENWYLER
YES Network executives are quick to credit the strength of the Yankees brand in New York for the channel’s success in convincing cable and satellite operators to cut carriage deals.
The power of that brand, YES Network executives say, makes them feel a responsibility to innovate faster than other regional sports networks. For example, YES Network was the first regional sports network to launch its own HD channel in 2005. It was the first to launch an in-market streaming service in 2010. And it was the first to produce games in 3-D.
Dolgin and Hopkins say that’s a trend they plan to continue.
“Going by the history of the first 10 years, what does the next 10 years look like?” Hopkins said. “I’m sure there’s five or 10 things from a technology standpoint that we can’t even conceive today. I am pretty confident saying that with the Yankee brand that YES will always be a leader, wherever this industry takes us.”
Staff writer Terry Lefton contributed to this report.