SBJ/May 20-26, 2013/Media

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  • ACC network may stall over rights issues

    Don’t expect an ACC-branded TV channel to be launched any time soon.

    The biggest problem so far is a rights issue. ESPN needs to control the conference’s syndicated rights to launch a channel. But those rights are tied up until 2027 through deals with Raycom and Fox Sports Net.

    “There’s no way an ACC network co-exists with a syndicated model,” said Chris Bevilacqua, a media consultant who worked with the Pac-12 to form a league network. “They’re going to have to get those rights back.”

    Just a couple of weeks after the ACC renegotiated its ESPN deal and all 15 schools agreed to grant their media rights to the conference, giving the league the kind of long-term security that will theoretically keep it together, a conference network became a hot topic.

    But last week’s annual spring meetings at Amelia Island, Fla., served as a reminder that it’s going to be a long and winding path to get to a channel. There was much more discussion about the prospects for a channel outside the meeting rooms than there was inside, say sources who attended the meetings.

    Raycom holds the rights to live ACC football and basketball games, and sublicensed the rights of some to Fox.
    Photo by: GETTY IMAGES
    With subjects like the future of the men’s basketball tournament dominating conversation, the channel hardly came up, even though ESPN executives Burke Magnus and Dan Margulis attended the meetings, as they typically do.

    The week before, ESPN and Raycom engaged in meetings at the Charlotte offices of ESPN Regional Television, but those talks centered on how to program new member Notre Dame, not how to work together on a channel.

    Such a league-branded channel is considered vital to the conference’s financial future. The Big Ten, Pac-12 and SEC, beginning next year, all have channels dedicated to their leagues.

    But the only commitment ESPN has given the ACC is that it will discuss the benefits of launching a channel. Industry insiders say there is not a rush to put together an ACC channel, and that it likely would be 2016 or 2017 before one would launch, if then.

    If, in three to four years, ESPN decides an ACC channel is not financially viable, sources say there will still be financial benefits to the ACC.

    The league’s current media rights contract is valued at $260 million a year through 2027, or about $18 million per school on an average annual basis across 14 schools. Notre Dame’s cut is much smaller because the Irish have their own football deal with NBC.

    ESPN, if it says no to a channel, would increase its compensation to the ACC, pushing the per-school average to close to $20 million.

    The main roadblock is rights. When it signed its ACC deal in 2010, ESPN and Charlotte-based Raycom Sports cut a deal that grants Raycom the ACC’s digital and corporate sponsorship rights, plus a heavy dose of live football and basketball games. Through a sublicensing agreement, Raycom owns the rights to 31 live football games and 60 live men’s basketball games.

    Even if the conference is able to buy back those rights from Raycom, a second roadblock remains. Raycom sublicensed 17 of those football games and 25 of those basketball games to Fox, which carries the games on its regional sports networks throughout the ACC footprint. Live local sports programming is important to Fox’s RSNs, and they are not likely to give up those games cheaply.

    The games that stay with Raycom make up the ACC’s long-running syndicated package that is distributed to more than 50 million households on over-the-air networks, and reaches 25 of the top 50 U.S. TV markets.

    Those deals extend through 2027.

    It’s unlikely that ESPN will try to launch a channel without those rights. ESPN brought all of those rights — TV, digital, sponsorship — together as it formed the SEC Network, which launches in August 2014.

    “I just wonder if the ACC is a little late to the party,” Bevilacqua said. “They had the opportunity to look at this several years ago and decided not to pursue it, when in fact, that was the more appropriate window. A lot has happened since then, and a lot of other programming services have popped up. There’s even more headwind out there now that makes launching a network not impossible, but certainly harder to do.”

    The ACC has made the case that its league is perfectly suited for a channel. It cites figures that show the ACC has more TV households in its footprint, 43 million, than any other conference.

    Duke Athletic Director Kevin White, North Carolina AD Bubba Cunningham and Clemson AD Dan Radakovich form the ACC’s TV subcommittee.

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  • Doing it ‘Wimbledon-style’: ESPN, USTA reach 11-year, $825M deal for U.S. Open

    Surrounded by reporters after ESPN’s upfront advertising event in New York last week, ESPN President John Skipper was asked to comment on the SportsBusiness Daily report that he was close to doing a deal to bring the entire U.S. Open tennis tournament to cable.

    Skipper smiled and said, “We are not fans of long negotiations.”

    Just two days later, 16 days after starting negotiations, ESPN and the U.S. Tennis Association announced a landmark deal that will end the U.S. Open’s nearly five-decade association with CBS. The surprising and swift media rights deal runs 11 years and is worth more than $825 million, starting in 2015. The deal ends an era that has seen CBS broadcast the event every year since 1968.

    The move fits ESPN’s strategy of bringing championship events to cable. In recent years, ESPN has picked up rights to the BCS Championship, British Open and Wimbledon. ESPN also produces the NBA Finals and Indianapolis 500, events which are broadcast on ABC.

    The deal also represents a significant rights increase for the USTA, as the U.S. Open is in the middle of a three-year deal where CBS and ESPN pay around $20 million each for their respective packages. ESPN sublicenses a smaller package to Tennis Channel. In its new deal, ESPN will pay an annual average of more than $75 million for all of the rights, which include TV Everywhere streaming rights. Matches will air on ESPN, ESPN2 and broadband service ESPN3, with ESPN3 carrying all of the matches from the outer courts that had not been covered. It is unclear whether ESPN would continue to sublicense matches to Tennis Channel.

    ESPN has college football commitments in the fall but has committed to carry the men’s and women’s semifinals and finals on ESPN. “Whatever happens with rain, 15-hour matches, delays or whatever, we will on our significant platforms have all the matches,” Skipper said.

    It took ESPN and the USTA a little more than two weeks to fashion a “Wimbledon-style” deal that will bring the entire event to cable.

    The USTA initiated renewal talks with CBS in March, but CBS’s 45-day exclusive negotiating window ended at the end of April. CBS had a chance to keep its broadcast part of the package for more than $30 million per year, sources said. But given the tournament’s poor ratings recently, CBS passed on the opportunity. The loss of tennis allows CBS to move some SEC football games to those September weekends. It also allows CBS to carry an NFL doubleheader, both of which rate much higher than the U.S. Open.

    The tournament has struggled with TV ratings on CBS recently, and weather has played havoc with the event. The men’s final has been pushed to Monday by rain five straight years. If pushed to Monday with ESPN, the U.S. Open will run up against “Monday Night Football.” ESPN and USTA executives did not say where the men’s final would be carried if held on Monday, but it appears possible that it could be moved to ESPN2. “We will not have any issue,” Skipper said. “We will be fine if it goes to Monday night.”

    Covington & Burling and Sports Media Advisors represented the USTA on the deal.

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  • Three trends worth considering from the upfront season

    John Ourand
    It wasn’t long ago that the upfront selling season was dominated by advertisers looking to buy schedules of 30-second spots in network entertainment shows. While that’s still a big part of the upfronts, cocktail chatter around this year’s events illustrated the dizzying changes that have affected the media business — changes that have caused networks and advertisers to adapt their strategies. This year, I heard more ad executives talk about second and third screens than ever before. Social media has been a big topic for a few years. Now, companies have plans to operate in that space.

    Network and advertising executives say they’ve seen more robust years. They described the marketplace that greeted networks during the upfront selling season this year as steady. But the pace of change affecting this business created a vibrancy in the market.

    Here are three trends that I’ve picked up from this year’s upfront.

    > The value of sports rights will remain high.

    Live sports have become the safest bet for advertisers, by far. It’s much riskier to invest in entertainment and news programming. In an environment where NBC canceled most of the entertainment and news shows it brought to last year’s upfront, advertisers increasingly are making their bets with the biggest sports leagues, knowing that they will draw the biggest TV audiences well into the next decade. SEC football and basketball games will be on national TV through 2034. There’s no guarantee that NBC’s new “The Michael J. Fox Show” will come back next year, even though it created a good bit of buzz last week.

    John Skipper told ESPN’s upfront crowd that live sports hold superior value.
    Photo by: RICH ARDEN / ESPN
    Historically, networks have used upfronts to introduce new shows. ESPN turned that strategy on its ear this year by hosting an upfront presentation virtually devoid of new shows, other than a soccer show that will be on ESPN2 and a retooled NFL show that will be on ESPN. Rather, ESPN focused on its live sports rights, from the NFL to the X Games.

    “Live sports rights represent the most valuable opportunity in media,” ESPN President John Skipper told the upfront crowd.

    Fox took a similar approach in March when it publicly unveiled plans for Fox Sports 1 to an upfront-style audience of advertisers. Fox’s message was that it had enough live sports rights to become a formidable channel at launch. Throw in NBC Sports Network, CBS Sports Network, league-owned channels and college conference networks, and advertisers have more choices than ever if they want to invest in sports.

    > The industry is figuring out how to profit from social media.

    It’s never a surprise to hear advertisers say that they don’t want to limit their media buy to 30-second spots during games. For years, they have been looking to supplement in-game spots with a digital presence.

    This year, however, more advertisers seemed to be talking about wanting to be part of the social conversations around those games. That means interacting with fans during the week, either leading up to the games or just after them. Advertisers see this as an opportunity to use social media to tell stories and promote their brands.

    Advertisers identified sports programming as uniquely positioned to capitalize on social media since it’s the most popular genre on social media.

    Take ESPN, for example. Twitter was a significant part of ESPN’s upfront presentation last week. Last year, ESPN started sending out sponsored highlights in near-real time of college bowl games via Twitter. Now, ESPN is expanding that partnership to include college football’s regular season and soccer games. ESPN expects to have these replays, which can be seen in Twitter feeds, for the World Cup.

    > Advertisers are looking to make one buy for both TV and digital.

    For the past several years, TV network executives have said they don’t want to trade network dollars for digital dimes. That cliché isn’t used anymore because advertisers and networks aren’t viewing digital as a separate ad buy. Rather, they believe that taking advertising position on second screens will complement what’s being done on television.

    This push ties in with the networks’ plans to roll out more TV Everywhere services. Last week, ABC announced plans to stream its channels to authenticated customers, as did TBS and TNT.

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

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  • Feld looks to extend deal with Fox Sports for Monster Energy AMA Supercross Series races

    Feld Motor Sports executives plan to meet with Fox Sports executives in the coming month to discuss an extension of their TV rights.

    Fox’s Speed network pays $1 million a year and shows 11 Monster Energy AMA Supercross Series races live. Despite replacing Speed, a motorsports channel, with Fox Sports 1, an all-sports channel, this August, Fox plans to show the 2014 supercross season on Fox Sports 1, and its top executives have said they like the property because of its appeal among 18- to 34-year-old men.

    The series averaged a 0.24 rating and 329,000 viewers over 12 races shown on Speed in the 2013 season.
    Photo by: GETTY IMAGES
    That’s good news for supercross executives. Their rights agreement with Fox ends after 2014, and striking a new TV deal is the sport’s top priority this offseason.

    “Our goals are simple: We want a network to embrace, feature, promote and take the sport to the next level, and money,” said Ken Hudgens, Feld Motor Sports’ chief operating officer. “This is a sleeping giant in this world. You have a property that has everything that media companies are looking for: sellout attendance; young, marketable athletes; young fans.”

    Hudgens will be joined in the TV negotiations by supercross’ media adviser, Hillary Mandel of IMG. Fox will be represented by Executive Vice President David Nathanson.

    The 2013 supercross season on Speed averaged a 0.24 Nielsen rating and 329,000 viewers over 12 races, down 20 percent from the 0.3 rating and 12 percent from the 374,000 viewers that the sport delivered last year. The most viewed race was held in Atlanta in late February and averaged 507,000 viewers.

    Feld Motor Sports complemented the live races on Speed with nine hours of tape-delayed coverage on CBS. Those races, which air as part of a time buy, averaged a 0.6 Nielsen rating and 938,000 viewers. That was down from a 0.7 Nielsen rating and 966,000 viewers in 2012.

    Despite seeing a dip in TV ratings and viewership, the supercross series extended its success at the gate. The series increased attendance 2 percent from 2012 to 848,485 spectators over 17 races. Average attendance was 49,911, a record for the sport.

    The sport posted strong attendance numbers despite making a last-minute venue change during the season. Six weeks before its race at Dodgers Stadium in January, it had to cancel the event because of facility improvements being undertaken at the ballpark. It wound up moving the race to Anaheim and drew 37,789 spectators.

    “That impacted attendance at that event, but overall we had an all-time record and we’re playing to a very high percentage of capacity,” Hudgens said. “There’s not a lot of room to grow the live event numbers because we’re maxed out in a lot of places, so any growth is good. At least one of these additions to our schedules in 2014 will bump it up.”

    For the first time since 1991, supercross will return to New York next year. The series scheduled a race in April at MetLife Stadium. Hudgens said the sport will try to make the most of its return to the New York market, scheduling driver appearances on late-night and daytime TV shows, bringing marketers out to the race and hosting demos or events in Times Square or Grand Central Station.

    “This is a gigantic upgrade to the schedule,” Hudgens said. “It’s something we wanted to do for quite a while and something our sponsors and teams have wanted for a while. To be able to put supercross in MetLife is a boon to the series.”

    Hudgens said the series has 80 percent of its sponsorship revenue secured for next season and no major renewals to work on in 2014. He said the series continues to look for sponsors in the telecommunications and insurance categories and hopes it can complete agreements in those areas later this year.

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