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SBJ/May 28-June 3, 2012/Media
Nontraditional nets eye sports as way to boost subscriber fees
Published May 28, 2012, Page 12
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 firstname.lastname@example.org. Follow him on Twitter @Ourand_SBJ.