SBJ/May 20-26, 2013/Media

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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