NBC steps up, lands NASCAR

During the week of July 7, NASCAR officials started to realize that the sport’s long-standing, multi-decade relationships with ESPN and Turner were coming to an end.

Soon after the July 4 holiday, Turner’s David Levy called NASCAR’s Steve Herbst to say that Turner wasn’t going to make a formal bid for the NASCAR media rights that were available, sources said. The network had looked into expanding its six-race package for months, but it was in the middle of its lowest-rated season in 29 years of carrying the sport and ultimately decided that more NASCAR races weren’t worth the investment.

The rejection narrowed NASCAR’s focus to ESPN, which, like Turner, still had an exclusive negotiating window until July 14. NASCAR was hoping ESPN would pay a significant increase, believed to be a minimum of 30 percent bump from the $270 million a year the network currently paid. But ESPN had soured on the sport because of declining TV ratings, an aging fan base and a tough ad sales market.

Just like Turner earlier in the week, ESPN’s John Skipper called NASCAR executives and told them not to expect a bid.

NBC’s Mark Lazarus brought a level of familiarity to NASCAR executives. Photo by: GETTY IMAGES

Executives in NASCAR’s Daytona Beach, Fla., headquarters who weren’t involved in talks sensed negotiations weren’t going well and became concerned. But Herbst, NASCAR Chairman Brian France and the sport’s main media adviser, Doug Perlman, weren’t dismayed at all.

They knew they had an eager suitor waiting in NBC and its sports chairman, Mark Lazarus, who viewed NASCAR as an integral part to growing his division.

NASCAR officials just needed to wait until ESPN and Turner’s exclusive negotiating window ended before starting formal talks with them.

On July 15, as the window ended, NASCAR officials called Lazarus. They set up a meeting in New York the next day. By the end of the day, the two sides had reached a broad agreement on a deal.

It took eight more days to finalize that deal. But that New York meeting marked the point when NASCAR realized it would see a healthy increase in its media rights fees, even if NBC executives remained somewhat wary.

“I am never confident until the deal actually gets done,” Lazarus said. “I certainly felt more confident that we were on a path to strike a deal.”

Ultimately, NBC Sports Group agreed to pay $4.4 billion over 10 years for rights to the second half of the Sprint Cup and Nationwide Series. NBC also picked up rights to NASCAR practice and qualifying sessions, the K&N Series, Whelen Modified Tour, Toyota (Mexico) Series, the Hall of Fame induction ceremony and season-ending banquets. As part of the deal, NBC also picked up Spanish-language, video-on-demand and TV Everywhere rights. Many of the properties, such as the K&N Series and Whelen Modified Tour, had been televised by Speed.

For Lazarus, the deal was a no-brainer. He already had convinced his boss, NBC’s Steve Burke, that the move made sense, even amid the declining ratings and tough ad market that ESPN and Turner faced.

“We think this is a major feather in our cap for our total business,” he said. “The importance to distributors and affiliates is a very strong business factor for us. … NASCAR is a major passion point for fans, and we’re there to serve all markets. I had to sell the value of NASCAR to my bosses. The NASCAR footprint made the sale easy. NASCAR’s audience is truly all over the country.”

Lazarus believes that kind of fan passion will help NBC Sports Network grow its affiliate fee from 33 cents per subscriber per month, according to SNL Kagan, and its distribution, which stands at 77.8 million homes, according to Nielsen’s most recent numbers.

But it’s not just about distribution for NBC Sports Network. The deal also gives the cable channel a ton of new programming — more than 90 hours of live races per year and requisite shoulder programming. And it gives NBC’s broadcast network a Sunday programming schedule that’s particularly strong, with Sprint Cup races leading into “Sunday Night Football” for up to seven weeks.

“NASCAR is one element of a sports strategy that we have developed and executed,” Lazarus said. “We have a five-year plan. We’re only 1 1/2 years in.”

As much as price, it was Lazarus’ commitment and confidence that won over NASCAR officials. Lazarus has been a big NASCAR supporter since the early 1990s, when he started working at Turner. In 1998, Lazarus was head of Turner Sports and cut the deal to share a national TV package with NBC.

Not only did NASCAR executives trust Lazarus. They also were enamored with producer Sam Flood, who produced the races under the TNT/NBC partnership.

“That comfort zone meant that we didn’t have to do a sales pitch of who we are,” Lazarus said.

NASCAR’s highest ratings ever were when Fox and NBC shared its rights. Photo by: FOX SPORTS

But NBC still made its pitch. It promised NASCAR more promotion, more storytelling, more broadcast TV and, perhaps most importantly, a return to the Fox-NBC days when the sport posted its highest ratings in history.

Those promises resonated with France and senior NASCAR officials.

In the weeks before talks with NBC, some NASCAR staff had expressed reservations about leaving ESPN. They feared that viewership would fall when NASCAR races moved from the 98 million homes that ESPN provides.
 
More than that, they worried it would mean the end of appearances by NASCAR drivers such as Dale Earnhardt Jr. and Brad Keselowski on ESPN programs like “PTI” and “Mike & Mike in the Morning.”

But where others saw danger, France saw opportunity. He trusted Lazarus and believed the upside in promotion and broadcast exposure for NASCAR outweighed the downside of leaving ESPN.

“The integration of the assets that they are marshalling together, because this is such an important franchise for them, made it so compelling that it was just the right choice,” France said.

More importantly than promotion, the deal gives NASCAR long-term rights stability and silenced skeptics in the industry that questioned whether NASCAR could secure an increase in TV rights after several years of declining ratings.

The annual value of the NBC deal, $440 million, represents a 54 percent increase over the $285 million ESPN and Turner currently pay for the same races. NASCAR still has 14 Nationwide Series and three Sprint Cup races to sell, and that, combined with the $300 million that Fox agreed to pay annually, will push its annual TV rights revenue above $740 million beginning in 2015. It’s a sum that will benefit everyone from teams to tracks to drivers.

“We wouldn’t have made the change if it weren’t a favorable arrangement for the industry financially,” France said. “And it is, and everybody will benefit from that, as every league does.”

It will be another year and a half before the NASCAR industry sees the benefits of that new TV money. Until then, teams, tracks and sport officials will continue to work with Turner and ESPN. They will watch Fox Sports 1 launch and track NBC Sports Network’s effort to increase distribution.

And they will hope that NBC will be able to fulfill its promise that a return to the broadcast pairing of Fox and NBC will bring a return of the ratings growth the sport last saw a decade ago.