How distribution could work A different kind of labor leader UFC plans new digital net The Sit-Down: Dave Brandon Coors Light passes Bud for the lead In MLB's licensing spotlight Fox will sell for L.A. Coliseum ATP adding Michelob Ultra to U.S. nets Powdr buys ‘World of Adventure Sports’ From the Executive Editor
SBJ/April 1-7, 2013/MediaPrint All
Most of the people in the cabin of the chartered plane carrying Dick Ebersol’s family passed out from the G-forces when it began its fatal plunge shortly after takeoff in 2004.
But Ebersol’s son Charlie remained awake the entire time and has never shaken the memory of how he felt in that moment.
“Before the plane crash, I mistook being good at something for loving something. After the plane crash, I only did things I loved.”
Those thoughts haunt Ebersol and have driven him ever since. They pushed him toward an entirely new, but obviously familiar, career path of television production.
He was a Notre Dame student at the time. Before the crash, he started several businesses while in high school and college and, he says, made serious money. His lot in life, he assumed, was to continue chasing the almighty dollar.
Those feelings changed post-crash. That feeling of anger — the feeling that he was leading a life that felt unfulfilling — was something that caused him to take a second look at what he wanted to do for a living.
“Before the plane crash, I mistook being good at something for loving something. After the plane crash, I only did things I loved,” said Ebersol, whose 14-year-old brother Teddy died in the crash. “It changed my life. It changed my approach to everything.”
That theme of second chances has played a major role in Ebersol’s career since. He had been working in film production but decided to ditch it for the simple reason that he did not feel fulfilled.
“Movies are a very uninvolved business,” said the 30-year-old Ebersol. “If you’re a producer and you’re not the writer, you’re not the actor, you’re not the director, most of your job is just money. There’s no juice to it.”
Just 24 years old at the time, Ebersol recalled telling his dad about his new plan. “He said, ‘Don’t worry about it. Just go do what makes you happy,’” Ebersol said.
Ebersol decided to move deeper into the family business with TV production. Many of his projects did not focus on sports, such as the controversial NBC series “The Wanted,” which was panned by TV critics for espousing vigilante justice but was described by Ebersol as “some of the most amazing storytelling that I’ve ever been able to do.”
Ebersol, with father Dick and mother Susan Saint James, co-founded a production company specializing in reality series.
By 2010, he was ready to launch The Hochberg-Ebersol Co. with Justin Hochberg, a producer with whom Ebersol worked on “The Wanted.” Within the first six weeks, the company sold four pilots, he said.
Based in Los Angeles, The Hochberg-Ebersol Co. is best known for producing reality shows. It sold TNT its first reality show, called “The Great Escape.” It sold CNBC its first reality show, “The Big Fix,” which will debut this summer.
On April 11, USA Network will debut its first reality show, called “The Moment,” which is near to Ebersol’s heart. The show’s premise is based on giving people second chances, and many of the episodes have sports-related themes. The show is hosted by Super Bowl-winning quarterback Kurt Warner, who was given a second chance at the NFL after he famously took a job stocking shelves at a grocery store in Iowa. With Warner’s involvement, Ebersol had to negotiate to use NFL game footage for the show’s opening.
“The first 30 seconds of every episode has Super Bowl footage — complete with Al Michaels’ voice — which traditionally is outrageously expensive and also hard to come by because they don’t traditionally like having it on off-networks,” Ebersol said, referring to networks that are not NFL broadcast partners.
Ebersol’s company is working on two projects for the NFL. They still are in the development phase, so Ebersol could not talk specifically about them. But he mentioned them to underscore the importance of the long-standing relationships he has developed with the league and to show why he’s happier fostering the established relationships he has in TV rather than acting as a money man for movies.
Thanks to the fact that his father produced NFL games for decades, Ebersol has known NFL executives like Roger Goodell and Howard Katz since he was a child. He points to those relationships, and his ability to navigate the NFL’s hierarchy, as a reason his company has cut deals with the country’s most popular sports league.
“The NFL is all about two things,” Ebersol said. “They want people who will help their brand in a positive light, and they are all about people who are loyal, good storytellers.”
He points to the NFL’s relationship with USA Network as an example. Two years ago, Ebersol and USA wanted to work with the NFL on a series called “NFL Characters Unite.” Ebersol counseled the network not to view a deal with the league as a one-off. Rather, he suggested looking at it as a long-term partnership. The NFL was happy with the series, which pairs players with kids having a tough time getting through adolescence. Last year, for example, Pittsburgh Steelers wide receiver Hines Ward helped a student who was being bullied.
With the network’s foot in the door thanks to “NFL Characters Unite,” Ebersol met with Katz and the league’s vice president of entertainment marketing and promotions, Tracy Perlman, to discuss using NFL footage in “The Moment.” The conversations were easier because both sides trusted each other after their experience with “NFL Characters Unite,” Ebersol said.
Ebersol tells a similar story about NASCAR, which agreed to be the subject of an episode for “The Moment.”
“I was raised around NASCAR, especially with Richard Childress,” Ebersol said.
Childress, president and CEO of Richard Childress Racing and a longtime friend of Dick Ebersol, recalls bumping into a young Charlie Ebersol at races years ago. More recently, when Ebersol approached with an idea to have former driver Kyle Shields try out for Childress’ team, the NASCAR executive jumped at the chance. “When I knew that Charlie was going to be doing it, I thought it was a great opportunity for me to get to work with him,” Childress said. “I thought it would be great exposure with a great network and a great producer.”
Another sports entity that goes to great lengths to protect its brand is Notre Dame. As an alum, Ebersol has deep roots throughout South Bend, and he convinced the administration to take part in an episode where it interviewed former football player Vincent Moiso for a coaching position.
Ebersol first approached Notre Dame Athletic Director Jack Swarbrick. Many Notre Dame officials were skeptical about taking part in a reality show. But after a flurry of conference calls, Ebersol convinced the school’s brass to take part.
“We’re not looking to get on a reality show,” said Dan Skendzel, Notre Dame’s digital media program director. “There was a very healthy dose of skepticism of this show when it was first pitched. But the more we dug into it, the more we talked to Charlie about it, it was clear it was a little bit different. It wasn’t just a publicity stunt.”
Skendzel cited Notre Dame’s history with the Ebersol family, and Charlie, in particular, as the main reason they decided to move forward. “Charlie as executive producer — him being in that role — was no small part of our decision because we knew Charlie and he is part of the Notre Dame family,” Skendzel said.
Though Ebersol followed his father into the TV business, he says he’s not interested in producing live sports.
“I watched my father perfect the art and become one of, if not the greatest, to do it,” he said. “It would be a little bit like Michael Jordan’s son going into basketball.”
If he has followed in his father’s footsteps at all, it’s as a storyteller. Ebersol says he wants to make the stories behind sports accessible to viewers who may not have an interest in sports otherwise. As he says, “If your father is a mechanic, you learn cars. If your father is a conductor, you learn music. With me, I would go to the Olympics and I would work in TV from a very young age.”
Call it the latest shot heard ’round the world.
When word emerged in late January that the Los Angeles Dodgers had reached a new $8 billion TV contract with Time Warner Cable to create a Dodgers-focused regional sports network, it sent shock waves through the sports and television industries.
“It was the perfect storm of alignment that the rights became available at the point in time where we had a very large system and with rights that we perceive were important to our customers and ones we would have bought in any event,” said Melinda Witmer, Time Warner Cable executive vice president and chief video and content officer.
The ripple effects of the Dodgers deal are quickly beginning to manifest themselves. In the wake of the pact and prior mega-deals for Fox Sports Net with the Angels, Rangers and San Diego Padres, several teams with soon-to-expire TV deals are eagerly anticipating their turn to cash in. Among the clubs with soon-expiring rights deals are the Chicago Cubs, Seattle Mariners, Philadelphia Phillies and Arizona Diamondbacks.
“We’re feeling very bullish about our future opportunities. And why not?” said Derrick Hall, Diamondbacks president and chief executive. The club’s existing deal with Fox Sports Arizona expires in 2015. “It’s obvious the market is very robust, and we’re now doing a lot of due diligence to see exactly where the Diamondbacks fit into that landscape. Among our questions is certainly whether we continue with FS Arizona, who’s been a great partner, or create some type of Diamondbacks vehicle of our own.”
Several media companies have identified Seattle as the next big sports rights battleground. The Mariners have an opt-out clause from their Root Sports contract after the 2015 season and the NBA’s Kings could be moving to the market from Sacramento, which would add a second property to a Seattle-based RSN and complement the Mariners’ summer programming with the Kings winter programming. Plus, Comcast is the dominant cable operator in the area and already operates a regional sports network out of Portland. The presence of at least two bidders — Comcast and Root Sports — could send rights fees in Seattle soaring.
But the Mariners are far from alone. The Cubs, playing in the nation’s third-largest media market, are busily evaluating what to do with their WGN-TV contract that expires after the 2014 season and have even begun to study options for when their Comcast cable deal expires five years later. The WGN-Cubs deal, worth an estimated $20 million annually for about 70 games a year, is unusually large for a team broadcast deal because of WGN’s superstation status and the simulcast of those games on WGN America. As a result, the status of the WGN deal will have a direct influence on what the Cubs later do with their cable rights.
Earlier this year, battle lines began to form when the Cubs said publicly that WGN parent the Tribune Co. could retain its broadcast rights if it paid “fair market value,” a clear reference to the Dodgers.
The Phillies, similarly, hold a bevy of options when their deal expires in two years playing in Comcast’s home market and boasting some of the largest audiences of any MLB team on regional cable.
The run of big-dollar baseball rights deals, however, holds some potentially dark sides. Pacts such as what the Dodgers are seeking threaten to re-expose economic polarities between high-revenue and low-revenue clubs. MLB spent much of the 1990s and 2000s at war with both itself and the MLB Players Association over how to create a more level playing field among clubs in markets of vastly different sizes.
Since then, revenue sharing has increased substantially, and vehicles owned equally by the clubs such as MLB Advanced Media and the MLB Network spin off more cash to improve competitive balance. On the field, nine teams have won the last 12 World Series, showing the fruits of those labors.
But many of those hard-won gains again stand vulnerable.
“I’ve watched this issue very closely,” Selig said. “We’ll need to make adjustments, and I’m confident we’ll do that. We will make the necessary adjustments because competitive balance is very important to me.”
And even when a team has forged a lucrative new future for its cable TV rights, problems can still surface. In Houston, the Astros launched a new regional sports network with Comcast and the NBA’s Rockets, but are preparing to begin the 2013 baseball season without carriage on most major distributors in the market. Similarly, Fox Sports launched a new RSN around the Padres but has had no luck persuading Time Warner Cable to carry it, with the saga beginning to involve local politicians.
The concept of “fair market value” has also been the subject of a largely private but highly intense battle for more than a year in the nation’s capital between two MLB teams. The Washington Nationals, the consensus media pick to win the World Series, want to more than triple the $29 million they received from the Mid-Atlantic Sports Network in rights fees last year, using the Angels and Rangers as comparables as part of their argument. But the Baltimore Orioles, majority owners of MASN, said the club remains bound to terms laid out in a 2005 relocation settlement agreement between the Orioles and MLB that followed the Montreal Expos’ move to Washington.
Tidal wave of rights fees
The reason behind this escalation in baseball rights fees is the same as it is for other major sports: Live sports pulls ratings and attracts advertisers better than other TV programming genres.
Baseball is in a particularly strong position, since it offers unparalleled volume given its schedule of 162 games per team and summertime placement, when scripted entertainment is typically on hiatus and competition from indoor sports does not exist.
“What we’re seeing also shows how good the game is, that people are willing to pay that kind of money for our content,” Selig said.
Regional sports networks are already buttressed by a dual-revenue stream of subscriber fees and advertising. But for diversified communications companies such as Comcast and Time Warner Cable, overall investments in sports benefit the entire operation, rippling into video, high-speed data and telephony divisions.
Increasingly, distributors find those halo effects from sports more powerful than for many forms of programming.
The Dodgers celebrated a record RSN deal, though it awaits MLB approval.
The dollars involved in the latest baseball rights deals inevitably make headlines. But Witmer says the focus on an overall number is misguided. The money, yes, is big. But beyond the tonnage of programming, what the contracts also represent is long-term security. The Dodgers deal grew as big as it did, in part, because it lasts for a quarter-century, well beyond the 10- to 20-year terms often seen for other teams. As future deals continue to grow in size, Time Warner now has a locked-in number with one of the major brands in all of sports.
“These deals all sound really expensive when they’re made,” Witmer said. “But it’s never going to be the case that someone’s going to take the Los Angeles Lakers away from us, or the Mets here in New York. We will have access to the content at economics that we know and understand for a very long time. That simply makes it more affordable and manageable for us.”
Distributors like Time Warner Cable and Comcast have pitched teams on the benefit of cutting out the middleman, like a regional sports network, and in theory makes available more money for the team. Such was the notion in the Dodgers deal.
“It’s not hard to figure out that when you take out the middleman, there is a chunk of economics that can be shared with the team,” Witmer said. “In our business, a regional sports network is one of 300 channels of programming that we carry.”
Fox Sports Net is, in essence, a middleman. But baseball was a major factor in its recent acquisitions of controlling interests in SportsTime Ohio and the YES Network, channels dominated by their coverage of the Cleveland Indians and New York Yankees, respectively. The deals added to the company’s base of rights deals with 14 teams. The company was near a deal with the Dodgers last fall during exclusive negotiating period between the two entities. But the window expired without a contract, and Time Warner swooped in with its bid.
Still, baseball is fundamental to Fox Sports Net’s operation, even at the mushrooming prices.
“The other word for middleman is aggregator,” said Jeff Krolik, Fox Sports Networks executive vice president. “Certainly, we make a margin. On the other hand, we provide scale. It costs money to run a regional sports network. If you have four regional sports networks, that’s going to be four overheads in one market. Yes, in one sense you cut out a middleman. But you’ve added a lot of overhead to the equation.”
Fox says it tries to be opportunistic with its RSN strategy. In addition to its Indians and Yankees deals, its executives talked with MASN officials briefly more than a year ago about possibly picking up one of those Mid-Atlantic RSNs. Those talks ended, and the two sides have not met in a year.
“Wherever there are teams, we’d certainly like to have a conversation about having an RSN,” Krolik said. “There certainly are some markets that are more attractive than others.”
The primary reason the Dodgers deal has yet to be formally submitted to MLB stems from a lack of consensus around how much of the deal is subject to revenue sharing. Already the topic of intensive discussion between Dodgers Chairman Mark Walter and Rob Manfred, MLB executive vice president for economics and league affairs, the deal still faces a wide gulf in terms of the Time Warner riches due to be shared with the other clubs.
A bankruptcy court settlement between MLB and the Dodgers last year established the club’s fair market TV rights to be worth $84 million a year, with 4 percent annual escalators beyond that. The annual average value of the deal of more than $300 million, leaves, in theory, a great deal of money not subject to revenue sharing.
Some of the revenue sharing discussion is also centered on how the money in the Dodgers deal is defined. Normal rights fees are subject to revenue sharing on a 34 percent basis, with that money designed to improve the entire sport and smooth out differences between large-market clubs and small-market ones.
Teams that own equity in their own networks, such as the Yankees, Boston Red Sox, Toronto Blue Jays and others, are subject to revenue sharing based on a formula derived by the Bortz Media & Sports Group, a consultant to the league, that estimates a fair-market value for the broadcast rights of those clubs.
But carriage fees generated by team-owned regional sports networks are not subject to revenue sharing, generating additional questions from the deal. Among them: How much of that deal actually represents carriage fees, or the promise of carriage fees?
It’s not a new thought for the commissioner. Nearly 13 years ago, he released the results of a special research panel he formed to look at fiscal balance in the game, the Blue Ribbon Commission on Baseball Economics. The group concluded that “the growing gap between the ‘have’ and ‘have-not’ clubs … is a serious and imminent threat to the popularity, health, stability and growth of the game.” And the report formed part of the basis of management’s negotiating platform during the 2002 labor negotiations with the MLB Players Association.
Revenue sharing reached about $400 million last year, more than twice the total from when the Blue Ribbon report was published. The question, as Selig said, is whether the current mechanisms in the collective-bargaining agreement with the players are sufficient to keep up with the fast-changing TV landscape.
“It does concern me that competitive balance may be beginning to fall out of whack a bit,” Hall said. “Our [average annual value] from TV is quite a bit behind some of our competitors, and probably still will be after the next deal. But we can’t overly worry about our competitors. We still have to be the best we can be. We’ve seen tons of mid-market teams go deep into October. If you do what you’re supposed to do, it is possible to compete.”
Other clubs are maintaining a wait-and-see attitude with regard to competitive balance. There are potentially troubling signs perhaps ahead as even before the Time Warner deal closes, the Dodgers’ 2013 payroll of about $230 million is a league record and nearly 10 times the $25 million that the rebuilding Houston Astros are expected to spend. But with competitive balance at a historical high point, signified in part by a crop of new teams such as the Orioles and Nationals in last year’s postseason, owners are showing faith in the league’s ability to correct course.
“We’re not afraid of what’s out there,” said Lew Wolff, Oakland A’s owner. The club won the AL West crown last year with the league’s second-smallest Opening Day payroll of $55 million. “Competitive balance is working right now. If that changes, I think we’ll be quick to get on it.”
MLB teams’ RSN deals
Team RSN Avg. annual rights fee (million) Team’s equity in the network Total deal (million) Years Arizona Diamondbacks FS Arizona $31.0 — $250 2008-15 Atlanta Braves FS Sports South/SportSouth $20-$30 — $400-$600 2007-26 Baltimore Orioles MASN/MASN2 $29.0 86% NA 2006*-NA** Boston Red Sox NESN $60.0 80% NA 1984*-NA** Chicago Cubs CSN Chicago $40.0 20% NA 2004*-19 Chicago White Sox CSN Chicago $45.5 40% NA 2004*-NA* Cincinnati Reds FS Ohio $30.0 — $300 2007-16 Cleveland Indians FS Ohio $40.0 — $400 2013-22 Colorado Rockies Root Rocky Mountain $20.0 — $200 2005-14 Detroit Tigers FS Detroit $40.0 — $400 2008-17 Houston Astros CSN Houston $80.0 45% $3,200 2013-32 Kansas City Royals FS Kansas City $20.0 — $200 2008-19 Los Angeles Angels FS West $150.0 25% $3,000 2013-32 Los Angeles Dodgers SportsNet LA $320.0 — $8,000 2014-38*** Miami Marlins FS Florida $18.0 — NA NA Milwaukee Brewers FS Wisconsin $20.0 — NA 2010-19 Minnesota Twins FS North $29.0 — NA 2011-NA New York Mets SportsNet New York $52.0 65% $1,300 2006-30 New York Yankees YES $90.0 25% NA 2002*-42 Oakland A’s CSN California $43-$48 — $900-$1,000 2009-2029 (with opt-out after 2023 season) Philadelphia Phillies CSN Philadelphia $35.0 — NA NA-2015 Pittsburgh Pirates Root Pittsburgh $18.0 — $180 2010-19 San Diego Padres FS San Diego $60.0 20% $1,200 2012-31 San Francisco Giants CSN Bay Area $30.0 35% $750 2008-32 Seattle Mariners Root Northwest $45.0 — $450 2011-20 (with opt-out after 2015 season) St. Louis Cardinals FS Midwest $25-$28 — $250-$280 2008-17 Tampa Bay Rays Sun Sports $20.0 — NA NA-2016 Texas Rangers FS Southwest $150.0 10% $3,000 2015-34 Toronto Blue Jays Rogers Sportsnet $36.0 10% NA 2001*-NA** Washington Nationals MASN/MASN2 $29.0 13% NA 2006*-NA**
NBC Sports and radio partner Dial Global this week will relaunch the online home for NBC Sports Radio and release new mobile applications, highlighting the network’s increased emphasis on its radio programming and products.
The enhanced Web page, at NBCSportsRadio.com, will include live streaming audio, social media integration, programming schedules and other tools. The mobile applications for the Apple iOS and Google Android platforms will feature many of the same attributes, as well as the ability to stream audio on background while other mobile applications are open.
Both platforms later this spring will also gain podcasts and video simulcasts of radio shows.
The digital refreshes represent a follow-up step to a larger move last fall by NBC Sports and Dial Global to launch NBC Sports Radio, and coincide with the scheduled launch today of full 24-hours-a-day programming by the network. Each of NBC Sports’ key competitors, notably ESPN and Fox Sports, have robust radio divisions. And while network sports radio does not necessarily receive the attention or acclaim of its TV counterparts, it still represents a critical element of the overall operation.
“There’s a real pervasiveness to radio. It cuts across all dayparts and really gets into local as well,” said Chris Corcoran, Dial Global executive vice president and general manager. “We see these digital products as a key component in the overall distribution of this content.”
NBC Sports Radio’s programming lineup includes Erik Kuselias, Brian Kenny, Newy Scruggs and Dan Schwartzman, among others. The network is aligned with 249 stations; ESPN is aligned with 494 stations and Fox Sports with 389.
“We call it NBC Sports Radio, but we’re truly talking about audio content across a plethora of platforms, from online to traditional airwaves,” said Rob Simmelkjaer, NBC Sports Ventures senior vice president. “This is the way audio content is consumed now.”
Perform Group and American City Business Journals have struck a major joint venture to combine Perform’s U.S. sports assets, including its popular ePlayer sports video service, with ACBJ’s Sporting News brand.
The new company, Perform Sporting News Limited, will operate under the brand name Sporting News Media. It is expected to become one of the top five digital sports media properties in the United States by traffic, blending the ePlayer video syndication that provides highlights to more than 250 news outlets and soccer portal Goal.com with Sporting News’ portfolio of assets, which include SportingNews.com.
U.K.-based Perform will own 65 percent of the new entity and serve as majority owner. ACBJ will hold a 35 percent share.
The addition of Sporting News provides a large array of news and sports data as well as a mainstream consumer brand.
“We’ve basically gone from nowhere in 2009 with our U.S. business to now the No. 1 digital video provider in the country, but we still had a missing piece in a standout brand since the ePlayer is a white-label product,” said Oliver Slipper, Perform joint CEO. “We were on the lookout for the right destination, and Sporting News represents that standout brand. We see a big opportunity to put together what we see as a lot of very complementary assets and push that North American business forward. This combination we believe was the step we needed to get to the next level.”
Slipper said no money changed hands in the creation of the new company, but Perform will supply $1.4 million in loans and cash to the venture for working capital, and ACBJ will contribute $4.2 million. Perform and ACBJ hold options over the next four years to purchase the other side’s equity. Perform has a pre-set price of $65 million to buy out ACBJ’s stake within the next four years if it exercises the option, ultimately rising over time to $85 million. As a result, the new venture carries a value of about $200 million.
With the deal, both groups hope to achieve greater scale and compete more vigorously against outlets such as Yahoo and ESPN for a greater share of the growing digital advertising market.
For ACBJ, the deal represents another significant step in the ongoing transformation of Sporting News, which it purchased in 2006. Since that deal, the 127-year-old brand has brought in veteran media executive Jeff Price to serve as president and publisher, released several new digital products, took control of the AOL Fanhouse brand name, and last December ceased publishing the print magazine.
Juan Delgado, Perform Americas managing director, will become managing director of Sporting News Media, with Price reporting to him as president. The new company’s corporate, sales, marketing and business operations will be based in New York, with editorial operations continuing to be headquartered in Charlotte.
“The critical thing in a joint venture like this is the relationships and people you’re working with,” said Whitney Shaw, ACBJ chief executive officer. “We’ve identified a set of common goals in a very logical way, and this is a very comfortable and exciting step in the future of Sporting News. These are the right guys with which to take the next step.”
Shaw and Slipper did not disclose specifics around projected staff headcounts. However, sources said close to a dozen employees were informed that there would not be a role for them in the new setup. Staff of the various assets included in the deal will now become employees of the new Perform Sporting News Limited joint venture.
Sporting News staffing had already been in a state of change amid its transition to a digitally focused outfit. The change to the new brand will begin immediately. Sporting News Media will represent the name taken to the business and ad market, while Sporting News will be the consumer-facing brand.
The deal also marks an outgrowth of a prior relationship in which Perform was providing video content for Sporting News over the past two years, in part through its Total College Sports venture with Silver Chalice New Media. Intensive negotiations toward the joint venture began late last fall. Remaining print assets within the Sporting News umbrella, including its annual sport yearbooks and NASCAR Illustrated, are not part of the deal with Perform.
ACBJ is the parent company of SportsBusiness Journal, SportsBusiness Daily and SportsBusiness Daily Global.
Perform is a publicly listed company on the London Stock Exchange with a market capitalization of nearly 1.2 billion pounds.