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It started with a surprising partnership around the Big 12 Conference and continues with this week’s planned announcement around the Catholic 7. The amount of collaboration between ESPN and Fox Sports over the past two years has resulted in a partnership that is unprecedented in sports media as the two formerly bitter rivals have united on some of the biggest media rights deals.
The unlikely bond has been topic A in sports media circles for a year. NBC executives have started to refer to the ESPN-Fox combo derisively as “FOSPN” inside their 30 Rock office.
A lot of the speculation in the sports industry suggests that the building relationship is a way for ESPN and Fox Sports to keep NBC and its stable of sports channels at bay, more so than CBS, which has not been as aggressive pursuing sports rights. However, executives who have done business with ESPN and Fox say the industry shouldn’t mistake their close ties to mean that they are joined at the hip.
One key is that ESPN’s John Skipper (left) and Fox Sports’ Randy Freer have a good relationship, sources say.
Photo by:SHANA WITTENWYLER
Still, the number of partnerships the two rivals have forged during the past two years is eye-opening. The most recent collaborations will come this week, albeit behind the scenes, as Fox Sports formally announces the pending launches of two national sports channels, Fox Sports 1 and Fox Sports 2, that instantly will become ESPN’s biggest competitors.
At the press conference announcing the channels, Fox Sports also will unveil its 12-year, $500 million media rights deal for the Catholic 7, the group of basketball schools that is negotiating to break away from the Big East to set up its own conference. As part of that deal, Fox already has held informal talks about sublicensing a package of games to ESPN. That move follows ESPN’s six-year, $130 million media rights deal for the Big East. In that deal, ESPN already has held informal talks about sublicensing a package of games to Fox Sports.
While industry executives describe ESPN and Fox Sports’ relationship as a marriage of convenience, many onlookers have noted that NBC Universal Sports & Olympics has been the odd network left out.
Interestingly, ESPN has talked with both Fox and CBS about sublicensing Big East games, and Fox has talked to both ESPN and CBS about sublicensing Catholic 7 games. Thus far, NBC has not been part of either discussion, according to several sources.
It doesn’t end there. ESPN and Fox Sports partnered on a winning bid for the Pac-12 Conference against NBC in 2011. They partnered on a losing bid for the English Premier League against NBC last October, and the two have a formal relationship to share Big 12 rights.
An indelible image of the unique bond between these two came in the summer of 2011, when ESPN and Fox executives traveled to Switzerland to complete bids for the Olympics’ media rights. While NBC executives holed up in their suite at Lausanne’s Palace Hotel waiting to hear if they won the rights, ESPN and Fox executives socialized together in the lobby bar, laughing with each other and swapping stories.
“I think that it’s a recognition that the sports media market is big enough to handle two big media companies, like ESPN and Fox,” said Chris Bevilacqua, a sports media consultant with Bevilacqua Helfant Ventures, who worked on the Pac-12 and Big East deals. “ESPN has been dominant and entrenched for a long period of time. It seems clear to me that Fox has been the most aggressive to rival ESPN.”
Part of the reason for the ESPN-Fox Sports bond comes down to personality. ESPN President John Skipper has a good relationship with Fox Sports co-Presidents Randy Freer and Eric Shanks, according to several sources.
How good? After ESPN lost the 2018 and 2022 World Cup rights to Fox in the fall of 2011, Skipper reached out to congratulate Freer and invited Fox executives to watch how ESPN produces the World Cup in Rio in 2014. It’s rare to see this type of cooperation, particularly from a media company that had just lost rights to the event.
Conversely, Skipper had a notoriously prickly relationship with the former heads of NBC Sports, Dick Ebersol and Ken Schanzer. Ebersol and Schanzer are no longer with NBC, and Skipper’s relationship with NBC Sports Group Chair Mark Lazarus is much better. Even then, the two sides have not had any discussions about setting up similar partnerships between ESPN and NBC, sources said. Nor has NBC had discussions with Fox about that type of arrangement.
NBC executives do not believe the ESPN-Fox pairing has hurt the company. In an industry where incumbents have a huge advantage in renewing media rights deals, NBC has picked up EPL rights from ESPN, MLS rights from Fox, and Formula One rights from Fox. The only property it has lost in the past several years was Wimbledon, which ESPN picked up.
Some believe ESPN-Fox-style partnerships will become standard in sports media.
Pilson said rights holders already are demanding that their main broadcast partner sublicense games to other networks, ensuring that most of their games are televised. Networks used to “warehouse” rights, Pilson said, which means that channels would opt to simply not show games rather than sell them to other networks. In the past, warehousing typically occurred in rights deals when media companies didn’t have the space or the platforms to show all of the games. Pilson said leagues and conferences will not tolerate that anymore.
“That’s a big difference from even 10 years ago,” Pilson said. “The pressure for these types of multiple deals come from the rights holder.”
Editor's note: This story is revised from the print edition.
Doug Perlman recalls taking an early morning train from his Connecticut home to New York City in September 2008. It started as a regular day commuting to work, but he vividly remembers how it ended up having a dramatic impact on his future.
Doug Perlman’s understanding of the convergence of digital and TV have helped his consultancy stand out. “Doug was a guy who tied it all together,” NASCAR’s Steve Herbst says.
That morning on the train, Perlman was focused on headlines about the collapse of the venerable Lehman Brothers. He realized the effect the largest bankruptcy filing in U.S. history would have on his new company. Sitting on the train, he thought of the impossible task of raising a first-time fund just as the country’s financial markets were drying up.
“The timing was comically bad,” Perlman said. “I was thinking, ‘This is not good.’”
He paused for a moment, and then he added, “Timing in life is everything.”
That timing pushed the then-39-year-old executive to figure out what was next. About a year after that September morning, he and his longtime mentor, Steve Solomon, left Accrue, and Perlman put his years in the sports industry to the test. He opened his own consultancy business, called Sports Media Advisors. Rather than trying to raise money for investments, the SportsBusiness Journal/Daily Forty Under 40 “Hall of Famer” decided that his new company would rely on the expertise and relationships he developed during his two decades in the business.
“As we went through the process, we saw that it was going to be difficult to raise that fund,” he said. “The premise was to flip that model on its ear and focus on the advisory side and look to take equity stakes in emerging companies opportunistically, as opposed to through raising a fund, which was a lot of time and administration.”
Perlman set up shop in his hometown of New Canaan, Conn., in August 2009. He leaned on Solomon, speaking to him daily for counsel, and began networking like any startup executive. Soon, his phone started ringing. HBO Sports called asking for ideas on expanding its “24/7” series. Goldman Sachs was looking for advice on making strategic sports investments. Omnigon Communications and Atomic Moguls needed help and hired Sports Media Advisors within the company’s first three months.
Now, more than three years later, Perlman’s firm has grown to a team of six, complete with 401(k) plans and health care benefits. It has consulted with roughly 25 clients over its three years, with eight to 10 active, Perlman said. Clients generally are kept on a retainer basis and include the likes of NASCAR and the U.S. Tennis Association.
“It’s not a small business,” he said. “We’re competing with the big boys. We’re getting engaged with clients that any of the biggest players would want to get.”
Part of the firm’s success, according to both Perlman, 44, and the executives he’s done business with, comes from the strength of his Rolodex. After graduating from Virginia’s law school in 1993, Perlman started doing sports law at Proskauer, where he developed contacts at most of the big sports leagues. From there, it was nearly 11 years at the NHL, where he focused on the league’s digital and traditional media businesses. He left the NHL for a stint at IMG that lasted about a year.
The connections he made in each of those places are serving him well in launching his own business.
IMG Sports & Entertainment President George Pyne hired Sports Media Advisors three years ago to find digital opportunities for IMG’s college properties and its IMG College group. “When I think about Doug Perlman, two things come to mind for me. One is that he’s a really good person. He’s also a very bright guy,” Pyne said. “When you get a good guy who’s a bright guy, you have a winning combination.”
At the NHL, Commissioner Gary Bettman said he noticed the executive’s entrepreneurial spirit early in his career and he wasn’t surprised to see Perlman start his own company.
“I gave him pretty wide berth — so wide that he decided to leave,” Bettman joked. “Talented people, and I’ve been fortunate to have had many that I’ve worked with, rise very quickly. Part of Doug’s entrepreneurial spirit is the reason that he decided to go out on his own.”
“We’re getting engaged with clients that any of the biggest players would want to get,” Perlman says.
“It is a nice point of difference for us,” Perlman said. “In a lot of the matters that we work on, we can speak to our clients’ needs from both a TV and a digital perspective. It’s critically important to understand both. That’s helped drive our success.”
As the industry figures out how to make real money in digital and from second screens, Perlman has been able to build a business. NASCAR officials credit his understanding of the intersection between TV and digital for helping it close a deal with Fox Sports last year for $2.4 billion over eight years. That deal included TV Everywhere rights for the first time, which will allow Fox to stream races live.
Steve Herbst, NASCAR’s vice president of broadcasting and production, said Perlman was instrumental in bringing the TV rights and the TV Everywhere rights together.
“Deals these days are very complex. They have many different layers to them,” Herbst said. “Doug was a guy who tied it all together.”
Herbst also cited a more than decade-long relationship that helped the two navigate a difficult deal.
It is those kind of long-standing industry relationships that helped Sports Media Advisors land one of its first clients. Ross Greenburg, who was president of HBO Sports at the time, is a longtime friend of Perlman’s. When he looked into expanding HBO’s “24/7” franchise beyond boxing, he said Perlman was one of his first calls. The result was a “24/7” series around NASCAR driver Jimmie Johnson and another “24/7” series around the NHL’s Winter Classic.
“I knew that Doug would have a unique perspective, having been in the leagues and having dealt with networks,” Greenburg said. “It’s all the Rolodex. You work with people you like and people that you trust and people that trust you. He’s built those relationships over all those years.”
It was Perlman’s background that also led the NFL to tab him as an expert witness during a media-related dispute with the NFL Players Association. The union in 2010 had brought a grievance against the league upon discovering that the NFL’s broadcast partners would pay the league a rights fee even if no games were played in the event of a lockout.
“We were looking for someone with strong experience in the media space and came to Doug because of the depth of his media background, his incredible knowledge of the industry and his well-known commitment to producing strong, analytical work,” said Brian Rolapp, chief operating officer of NFL Media. “In addition, we were looking for someone who would work hard and has a high level of integrity. Doug fit the bill.”
Perlman advised Major League Baseball on media matters related to the McCourt sale of the Los Angeles Dodgers, as well.
Beyond the advisory work, the other part of the business Perlman is developing is having Sports Media Advisors take equity stakes in companies. It has an equity stake in the digital production shop Omnigon. Omnigon executives called Perlman three years ago to find a way to expand their sports practice. Now, 90 percent of their business comes from sports, thanks to deals that Sports Media Advisors helped establish with the PGA Tour, Fox Sports, NASCAR and the U.S. Tennis Association.
“That’s a good example of where we have an equity stake in the business by virtue of our relationship with them,” Perlman said. He refused to disclose the size of the stake.
Perlman said his goal is not to sell out. He wants to build his business and expand his staff. He said he wants to run Sports Media Advisors for as long as he’s in the business.
He likes where he’s at, more than four years after that fateful ride on Metro North.
“Everything we’re doing is rooted in our business of TV and digital media and in our ability to help folks navigate the sports landscape,” he said. “We think we’ve been creative in how we’ve deployed the two.”
NBC will broadcast the Breeders’ Cup at Santa Anita Park during prime time again this year, but whether the network is able to do it in 2014 may depend on the host site for horse racing’s championship event, said Jon Miller, NBC Sports president of broadcasting.
“We encourage them to pick a site like Santa Anita to host it for 2014,” Miller said. “We have been clear with Breeders’ Cup that is a sure way to continue this [prime-time viewing] going forward.”
Santa Anita Park in California provides NBC with the opportunity to push the Breeders’ Cup Classic into prime time.
Photo by:GETTY IMAGES
But Miller noted if it is held at an East Coast or Midwest track in the future, inclement weather and the lack of lighting at some tracks for night racing could pose potential problems in airing an hourlong program featuring the Breeders’ Cup Classic race live in prime time.
NBC prefers to run the Classic at night for many reasons, including that it has other sports programming, including college football, earlier in the day that time of year.
Miller was noncommittal when asked if NBC could broadcast the race earlier in the day on the network. “It depends on the day,” he said. “We will work with [the Breeders’ Cup] to try to find a window. But we have a pretty packed network schedule of live sporting events in the fourth quarter on NBC.”
Gary Quinn, NBC vice president of programming and owned properties, said: “The Breeders’ Cup knows what the playing field is. We made it clear what we have available on NBC and what we want to do in prime time.”
Peter Rotondo, Breeders’ Cup senior vice president of media, stated in an email in response to questions that officials are working toward host track agreements for 2014, and beyond, and expect to have details in place in the next several months.
“We feel our partnership with NBC got off to a very encouraging start in 2012 with a sensational telecast that captured the drama, prestige and excitement of the Breeders’ Cup and drew a very strong rating,” Rotondo said. “We have been in discussions with NBC on how we build and expand off 2012.”
Last year’s Breeders’ Cup Classic race held at Santa Anita was broadcast live between 8 and 9 p.m. ET on NBC and marked the first time a horse racing event was shown in prime time on broadcast television in years, if ever. It was considered an experiment, if not a risk, for NBC, which also owns the rights to horse racing’s Triple Crown — the Kentucky Derby, Preakness Stakes and Belmont Stakes.
But the broadcast did better than NBC expected despite the lack of a popular horse or story going into it. The broadcast earned a 2.0 Nielsen rating, drawing 3.1 million viewers on a Saturday night. NBC’s average Saturday night rating has been below 2.0, in the range of 1.6 to 1.7, and Miller said that prior to the broadcast NBC would have been happy with anything in the 1.6 to 1.7 rating range.
“A lot of people doubted our ability to make the Breeders’ Cup work in prime time,” Miller said. “But our entertainment division was thrilled with it. Advertising-wise it was supported by key sponsors of the Breeders’ Cup. It worked really well and our feeling was, ‘It was a good thing, let’s keep it going.’”
There has been talk for years of Santa Anita being named as a permanent site for the Breeders’ Cup, but that plan is not popular among some horse owners, breeders and racing fans on the East Coast and in the Midwest.
2K Sports will release “MLB 2K 13,” the latest edition in its troubled baseball simulation video game series, on Tuesday. But what consumers will see and how they will react remains a mystery.
"MLB 2K 13" came about only after an unexpected new deal involving 2K Sports, MLBAM and the MLBPA.
But 2K Sports ultimately returned, at licensing terms thought to be more favorable to the company, to produce a game for 2013. “MLB 2K 13” will be the only baseball simulation game available for the Xbox 360 gaming console, as Sony’s competing “MLB 13: The Show” is predictably for its own gaming platforms. The one-year 2K Sports contract extension is designed as a bridge deal until more is known about the next generation of gaming consoles, such as Sony’s recently announced PlayStation 4.
Little, however, is known about what “MLB 2K 13” will contain, as 2K Sports officials declined to discuss any details about the game or how it came to renew its deal with baseball. Tampa Bay Rays pitcher David Price is on the game cover, 2K Sports is reviving its $1 million Perfect Game Challenge for a fourth straight year, and the company is again offering a bundle deal at retail in which the game is packaged with the popular “NBA 2K 13” at a reduced price.
Beyond that, 2K Sports did not conduct any pre-release game demos with anybody, leading the gaming press to conclude the baseball title will be little more than a uniform and roster update from “MLB 2K 12.” The MLB-2K contract extension had been in the works since last fall, prior to the formal announcement. But even that did not provide anything close to a normal development cycle for an annual sports title like this.
Bob Bowman, MLBAM president and chief executive and a member of Take-Two’s board of directors, said the agreement to create “MLB 2K 13” was “the right deal at the right time.”
“This worked as well as could be expected. We’re clearly in a transition year in the industry, and you never want to be dark on a platform like Xbox,” Bowman said. “I credit a lot of people, particularly [MLB senior vice president of licensing] Howard Smith, for seeing this through.”