SBJ/May 28-June 3, 2012/Media

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  • Is Cox changing sports strategy?

    At a time when cable operators are actively trying to pick up local sports rights, Cox Communications is taking the opposite approach. The cable operator essentially has decided to get out of the sports rights business, opting not to compete with Fox Sports for the rights to the New Orleans Hornets in exchange for a long-term carriage deal with Fox’s regional sports network, according to multiple sources.

    The decision mirrors what the cable operator did in San Diego with the Padres, as Cox decided to strip its local channel in New Orleans, Cox Sports Television, of sports and pull out of bidding for the Hornets rights.

    Hornets games on Cox Sports Television were
    available to only 37 percent of the New Orleans DMA.
    Photo by: NBAE / GETTY IMAGES
    As a result, Fox was the only serious bidder for the Hornets rights; there was no bidding war, sources said. Sources peg the rights fee in the low to mid eight figures, comparable to the amount Fox pays for the Bobcats’ rights in Charlotte.

    Fox has not decided which of its RSNs will carry the Hornets, but it appears likely that Fox will launch a New Orleans feed off of FS Southwest, which also holds the rights to the Texas Rangers, Dallas Stars, Big 12 and Conference USA. After securing Oklahoma City Thunder games, Fox launched an FS Oklahoma feed off of FS Southwest.

    Cox followed similar strategies in San Diego, where it operated an RSN, and Oklahoma City, where it opted not to bid for the Thunder when the team moved into the market in 2008. In both cases, Cox dropped out of the bidding early, leaving Fox as the sole serious bidder for the rights. Cox’s Channel 4 San Diego is still operating with locally produced programming.

    A cable industry source familiar with the cable operator’s strategy said that Cox was able to sign Fox’s RSNs to long-term carriage deals in each of these markets, predicated on Fox being able to secure the rights at a certain price.

    For Cox, this presents a way for the cable operator to keep sports rights increases in check without bidding up rights and launching RSNs.

    Using a loophole in federal regulations, Cox did not make its RSNs available to its satellite and telecommunications competitors, which hurt the team’s distribution in both markets. Recently, federal regulators abolished the loophole, but Cox still wasn’t able to reach a carriage deal with DirecTV.

    Hornets games on Cox Sports Television were available to only 37 percent of the New Orleans DMA. It had no deal with DirecTV (which controls 25 percent of the market), and Charter (which holds 21 percent of the market) charged subscribers an extra $5 for access to Hornets games.

    Fox’s pitch was that it could secure better distribution because it has long-standing relationships with distributors that Cox does not have. Most of Fox’s RSNs have full distribution, though the one it just launched in San Diego has not been able to work out a carriage deal with one of the market’s biggest cable operators, Time Warner Cable.

    Cox’s moves have surprised cable industry veterans, coming at a time when the two biggest cable operators are making big bets on local sports rights in markets where they operate cable systems.

    Comcast and Time Warner Cable, in particular, have been buying up rights to local teams and launching RSNs to support them.

    As opposed to Cox, Comcast and Time Warner believe they are better able to manage their sports costs if they control them — even if they are bidding up the cost of sports rights.

    Comcast’s stable of Comcast SportsNet RSNs is one of the most profitable parts of the company. It is in the process of launching a new RSN in Houston, having outbid Fox for the rights to the Astros (starting in 2013) and Rockets (starting next season). The teams will own a majority of the RSN.

    Time Warner Cable is a recent entrant into the sports rights business. It is launching two RSNs in Los Angeles — one in English, one in Spanish — with programming from the NBA’s Lakers and MLS’s Galaxy.

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  • Talk now, action later on deals for TWC RSN

    Editor's note: This story is revised from the print edition.

    Don’t expect Time Warner Cable to cut significant carriage deals for its planned Los Angeles RSNs until November, at the earliest.

    While negotiations have officially started for Time Warner Cable SportsNet and Time Warner Cable Deportes, distributors who attended last week’s Cable Show in Boston consistently said that they don’t expect talks to heat up until just before the NBA Lakers’ season opens in the fall.

    Distributors said not to expect talks to warm up until the Lakers are back in action in the fall.
    Photo by: NBAE / GETTY IMAGES
    Because they are actively negotiating with Time Warner Cable for the channels, the distributors did not want to speak on the record. It is standard practice in the cable industry to wait until just before or just after a channel’s launch to cut a carriage deal.

    The channels — one in English and one in Spanish — are scheduled to launch Oct. 1, but their critical programming starts about a month later, when the Lakers’ regular season begins. That is the date distributors have circled.

    That means a long, hot summer of bickering over a proposed license fee that distributors already are complaining is among the highest of all regional sports networks. In its initial offer sheet to distributors, Time Warner Cable has proposed a tiered system, where cable systems within the Los Angeles DMA pay $3.95 per subscriber per month, according to a source who has seen the offer sheet. Cable systems in outlying areas — north to Fresno, south to San Diego, east to the Arizona border — would pay $1.25.

    Averaging all of the zones together, the license fee would be more than $3 per subscriber per month.

    According to figures from SNL Kagan, five RSNs cost more than $3, including Comcast SportsNet Mid-Atlantic ($4.02) and New England Sports Network ($3.56).

    The channels will launch with rights to the Lakers, which had been on FS West. They’ll also have MLS Galaxy games, which were on FS West and Prime Ticket last year and have been on a local over-the-air station this year.

    Last year’s move to pick up the Lakers’ rights was a bold stroke by Time Warner Cable and served to announce its interest in bidding for sports rights in markets where it operates cable systems. Time Warner Cable has around 2 million subscribers in Southern California, which accounts for 40 percent of the pay-TV market in the Los Angeles DMA. The channels will be carried in those homes at launch.

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  • ‘Honor the game’: NBC Sports happy to play it straight for Stanley Cup Final coverage

    As the opening of the Stanley Cup Final on Wednesday draws near, NBC Sports executive producer Sam Flood is both excited and confident.

    “We’ll do well because of our approach to the game,” said Flood, who will oversee the Cup coverage, which calls for Games 1 and 2 on NBC (along with Games 5 through 7, if necessary), with NBC Sports Network carrying Games 3 and 4. “We’re not interested in a lot of bells and whistles. We honor the game.”

    NBC’s Stanley Cup ratings have fared well on its networks this year. NBC Sports Network and CNBC had averaged a 0.5 rating/846,000 viewers through 61 games. That’s a flat rating but a 5 percent viewership gain from last year. On NBC, playoff games were averaging a 1.4 rating through 12 games, up from a 1.2 average across eight games in 2011.

    Both the NHL and NBC were optimistic for a Stanley Cup Final that will feature the Los Angeles Kings against a team from the New York market, either New Jersey or the New York Rangers.

    “With NBC, we’re seeing the realization of the full potential of the Stanley Cup playoffs,” said NHL Chief Operating Officer John Collins. “Every game has been on one of the NBC networks. They’ve done a terrific job of telling the story of the teams and the players.”

    For the Final, NBC’s pregame and postgame shows will originate from the site of the games. “NHL Live” will air a half-hour before the start of each game — all start at 8 p.m. ET — on NBC Sports Network. When NBC’s game coverage is over, the “Bud Light Post Game Report” will air immediately on NBC Sports Network.

    On the marketing side, the “Every Game. Every Night. Because It’s The Cup.” campaign will continue to run across NBCUniversal outlets. Paid media will remain in place until the Cup is won. So will the collaborative marketing efforts with the league for media integration and messaging across all channels, from in-arena to on-air.

    TV ad inventory for the Final is sold out. Since NBC, like most networks, sells only for the first five games of a final series, new inventory would open up for a potential sixth or seventh game.

    NBC has sold virtual advertising for the Final in the past but is not doing so this year, satisfied with having key sponsors on the dasherboards.

    In a deal signed last July, NBC assumed ad sales responsibilities for NHL broadcasts on its networks along with the NHL’s TV and digital properties.

    “The NBC deal has created depth and scale for the league, and during the playoffs, everyone knows which network has all the games,” said John Tatum, CEO of Dallas-based Genesco Sports Enterprises, which facilitates deals between sponsors and leagues. “Sponsors recognize the buzz and want to be part of it.”

    There is also the synergy between league and network. With Jay Leno in Los Angeles and Jimmy Fallon in New York, do not be surprised if NBC’s late night hosts jump on the NHL bandwagon.

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  • Nontraditional nets eye sports as way to boost subscriber fees

    John Ourand
    Much of the talk in sports media circles these days is about when the likes of Microsoft, Google or Apple will start spending on sports media rights. But there’s another group that has been taking a look at sports rights and actually has kicked the tires on various packages: non-sports networks.

    Take Discovery, for example.

    Last spring, as the NHL was negotiating its media rights deal, the company known for producing high-quality documentaries set up several meetings with the league to see if it could carve out a live-game package, according to several sources.

    At the time, Discovery was in the process of launching a network for young men called Velocity. The channel debuted in October. Sources said Discovery’s executives were looking into some sort of NHL package that they could use to attract viewers and drive Velocity’s affiliate fee.

    Ultimately, Discovery dropped out of the negotiations early and never submitted a formal bid. In April, the NHL signed a 10-year deal with NBC worth $1.9 billion.

    A&E is another example.

    In 2011, A&E-owned History Channel signed a title sponsorship deal with Charlotte Motor Speedway for the track’s spring Nationwide Series race. It used the race to promote its show “Top Gear” and credited the race, which it called the Top Gear 300, with helping boost the show’s viewership by 24 percent in the 18- to 49-year-old demographic.

    History signed up again as the race’s title sponsor this year and shifted from naming the race after a single show to calling the race the History 300 because it wants to use it to promote multiple shows on the network, such as “Pawn Stars” and “American Restoration.” The move invigorated hopes that History would bid on a NASCAR TV package, though the network has not had any formal conversations about such a package yet.

    Nobody’s under any illusions here: We’re talking small deals, if they ever happen. But this type of interest is significant for a couple of reasons. It once again shows the increasing power of live sports, and it provides rights holders with new, creative ways to reach casual fans.

    Cable networks view sports as must-have programming if they want to increase license fees from cable operators.
    When FX decided to add sports to its schedule last year, Fox Sports Chairman David Hill said a main reason was to drive FX’s subscriber fee.

    Joel Lulla, a sports TV consultant who is a professor at the University of Texas, said nontraditional sports networks need live sports to grow revenue.

    “I think these nontraditional cable networks are serious about this. It’s hard to get subscription fees up unless you have live sports,” Lulla said. “Most of the time, TV ratings aren’t going to be any better, but the theory is that you’re hitting a more passionate fan base.”

    Sports channels like ESPN and regional sports networks command the highest subscription fees from cable operators. But RBC Capital Markets analyst David Bank pointed to TNT, which gets $1.21 per subscriber per month, according to SNL Kagan, and TBS, which gets 59 cents, as examples of entertainment networks that have used live sports to push those fees higher.

    “In that context, it’s going to increasingly make sense to have some sort of sports on your channel,” Bank said.

    In fact, one of the themes that came out of the recent upfront selling season was that broadcasters, in particular, are using live sports to accentuate their identity, Bank said. It makes sense for smaller cable channels to make similar decisions — on a much smaller scale, obviously — with sports rights, too.

    “Look at these channels now,” Bank said. “They’ve lost their original personality. You’re seeing similar unscripted formats on several channels.”

    Sports leagues also can use these types of deals to reach casual fans. Through its NFL Films subsidiary, the NFL has sold shows to channels like USA, truTV and A&E.

    “A lot of shows we do are dedicated to the casual fan,” said Ross Ketover, senior coordinating producer for NFL Films.

    John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.

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  • Top Rank punches up digital with BAM deal

    Top Rank Boxing has signed a deal with MLB Advanced Media in which baseball’s interactive arm will host the boxing promoter’s live online streaming, help develop subscription digital content and create mobile applications.

    The deal represents a move by Top Rank Boxing to better monetize its digital content and create a more prominent fan-facing presence to supplement its major fight cards on pay-per-view television.

    “We’re pushing to get boxing back into the mainstream and we were looking to partner with somebody that owns their own content and understands exactly what we’re experiencing and trying to do,” said Lucia McKelvey, Top Rank Boxing executive vice president.

    MLBAM and Top Rank Boxing will participate in an undisclosed revenue-sharing agreement on the partnership. A new website at toprank.com, developed in part by New York-based Web design firm Blue Fountain Media and featuring the MLBAM-built video assets, was slated to soft-launch last week. Top Rank previously worked with Plainview, N.Y.-based NeuLion on its online efforts.

    A series of apps for the Apple iOS and Android mobile platforms and several other connected devices is also under development.

    The first major Top Rank Boxing event to feature the new digital presence will be the June 9 welterweight championship fight between Manny Pacquiao and Timothy Bradley Jr. from Las Vegas. MLBAM will power a high-definition live stream of the fight, to be sold separately from the traditional pay-per-view telecast for a price of $54.95. The telecast will run $54.95 for standard definition and $64.95 for HD.

    Top Rank Boxing, as it has in the past, will stream a variety of related event content, including weigh-ins and undercard bouts.

    For MLBAM, the Top Rank Boxing alignment represents further expansion of its white-label digital work. Other clients include ESPN, Turner Sports and in-flight entertainment company Row 44 Inc.

    “This one is a little more soup-to-nuts given that we’re doing the video, developing the subscription products, handling the billing for that, and so forth,” said Kenny Gersh, MLBAM senior vice president of business development. “But fundamentally, it really leverages our expertise, particularly in video.”

    Top Rank Boxing for the Pacquiao-Bradley fight has also struck several affiliate partnerships, including ones with Yahoo Sports and Ustream in which they will gain access to some fight-related content, serving in part as a marketing vehicle for premium, subscription-based material being developed with MLBAM.

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