SBJ/Jan. 13-19, 2014/Media

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  • SEC Network’s cost will top that of other college nets

    Distributors in SEC country can expect to pay a rate of $1.30 to carry the soon-to-be-launched SEC Network, according to several sources with knowledge of the rate card.

    That fee, paid on a monthly per-subscriber basis, is what cable and satellite companies within the SEC’s 11-state footprint would pay to ESPN, the owner of the SEC Network. Outside of SEC territory, the channel’s license fee drops to 25 cents.

    SBJ Podcast:
    Media reporter John Ourand and college writer Michael Smith detail ESPN's plans for the SEC Network.

    Cable operators are certain to blanche at the network’s price tag, which is more expensive than other college conference channels like Big Ten Network and Pac-12 Networks.

    But ESPN could have leverage as it negotiates with cable operators, as it appears to be on the cusp of landing a deal with one of the industry’s biggest distributors. Sources said that the country’s third-largest distributor, Dish Network, has agreed to carry the channel from its August launch. The deal has not been completed and is part of a bigger overall deal that it is negotiating with ESPN. Dish’s ESPN deal expired at the end of September, but the two worked out an extension, and they are still negotiating terms. Sources say SEC Network carriage is not a sticking point in these talks.

    Dish Network’s national reach and roughly 14 million subscribers would be a significant deal for the new network. AT&T U-verse, with 4.5 million subscribers, previously said that it would carry the channel. It’s unusual for channels to have distribution deals so far in front of a channel’s launch. Typically, distributors and networks wait until just before or after a launch to agree on carriage terms.

    Comcast and Time Warner Cable are the biggest cable operators in the SEC’s footprint, and ESPN is using its schedule to apply pressure against them. The SEC Network’s first football game Aug. 28 will be between two schools based in Time Warner Cable markets: South Carolina and Texas A&M. The second game of its Aug. 28 doubleheader will feature Vanderbilt, which is in a Comcast market, against Temple, in Comcast’s hometown of Philadelphia.

    ESPN President John Skipper has said in the past that the network expects the SEC channel to reach distribution on par with ESPNU, which is in nearly 75 million homes.

    An in-market rate of $1.30 makes the SEC Network significantly more expensive than the Big Ten Network. BTN launched in 2007 and currently charges up to $1 in its 11-state footprint from New Jersey to Nebraska. Sub fees on average from both inside and outside the footprint average 37 cents, according to researcher SNL Kagan.

    ESPN executives have expressed confidence that the SEC Network will get carriage, especially in SEC states, because of the conference’s rabid fan base across sports. It was ESPN’s top-rated football conference in 2012. SEC games account for nine of the 10 most-viewed regular-season college baseball games in ESPNU history, and it holds nine of 10 of the most-viewed college softball games on ESPNU.

    David Preschlack, executive vice president of affiliate sales and marketing for Disney and ESPN Networks Group, is leading the talks for ESPN. Justin Connolly, ESPN senior vice president for programming, is leading the creation of the network.

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  • NBC halts Sochi ad sales for now

    Weeks before the Sochi Games are scheduled to start, NBC has stopped taking ad sales orders for the Winter Olympics.

    The network is reserving an undetermined number of ad units for advertisers in case it does not hit ratings guarantees during the Sochi Games. If ratings fall short of those guarantees, NBC would need to have a certain number of spots available as make-goods. Olympic networks typically hold ad spots back in this manner, but in recent years NBC has not had to halt ad sales so far before the Games start.

    At NBC Sports’ press event (from left): Bob Costas, Steve Burke, Mark Lazarus, Gary Zenkel.
    Photo by: HEIDI GUTMAN / NBC
    “We have put sales in abeyance until such time that we get to the Games and we’re satisfied with the ratings we’re delivering, at which time we’ll go back into sale once we’re comfortable that the Games are going to proceed as we expect them to,” said Seth Winter, executive vice president of sales and marketing for NBC Sports Group and NBCUniversal News Group. Winter said NBC is in its best ad sales position before a Winter Olympics in memory.

    SBJ Podcast:
    Olympics reporter Tripp Mickle and media writer John Ourand discuss NBC's decision to halt Olympic ad sales and its prospects for the Sochi Games.

    At a press event in New York last week, NBC Sports Group chairman Mark Lazarus said that the network has brought in more than $800 million in ad sales revenue around the Olympics, “and we’re going north.” NBC expects to make a profit from the Sochi Games, for which it spent $775 million in rights fees.

    “We’re doing quite well,” Lazarus said. “Marketers and sponsors are buying one of the very few events that gather large numbers across all demographics in front of their televisions.”

    It’s not known how much inventory NBC is holding back. NBC’s ratings guarantee has not been made public. Sources say the guaranteed number generally is around 10 percent below what they had been getting in past Olympics. For the last Winter Olympics in Vancouver, NBC’s ratings guarantee for prime-time telecasts was a 14.0. During those Games, NBC pulled a 17.3 rating for the Opening Ceremony and a 13.8 average rating for its prime-time broadcasts.

    This situation is unique to an event like the Olympics, which for Sochi spans 18 days, from Feb. 6-23. If, for example, the Opening Ceremony on Feb. 7 under-performs ratings-wise, NBC would still have 16 days left during the Games to offer make-goods to advertisers.

    “It was a long conversation with NBC,” said Jeremy Carey, U.S. director for Optimum Sports, which counts Olympic advertisers McDonald’s, Visa and Chobani as clients. “It took some time, but we feel really good about where we netted out.”

    One potential hiccup occurred last week when U.S. skier Lindsey Vonn pulled out of the Games because of a knee injury. Carey said he was concerned that the loss of a big star would negatively affect the ratings.

    “She’s probably the most well-known star of the Games,” he said. “We’re confident another athlete will step up and fill that void.”

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  • Tier, placement changes to boost NBCSN numbers

    NBC Sports Network will add around 7 million homes to its distribution footprint in the next few weeks, moves that potentially could add close to $30 million per year in revenue for the channel.

    The channel’s biggest distribution gain will come from Dish Network, sources said, which will move the channel from its America’s Top 250 tier to its more popular America’s Top 200 tier. Dish Network will make the move by Feb. 1.

    NBC Sports Network also will see distribution gains from better placement on Cablevision and Suddenlink systems, among other distributors.

    NBC Sports Network will be in 85 million homes by Feb. 1, NBC executives said last week. The most recent Nielsen estimate had the channel in 77.5 million homes as of the beginning of January.

    Distributors pay around 35 cents per subscriber per month for the channel, according to figures from SNL Kagan.

    SBJ Podcast:
    Olympics reporter Tripp Mickle and media writer John Ourand discuss NBC's decision to halt Olympic ad sales and its prospects for the Sochi Games.

    The timing of the moves comes just before NBC’s coverage of the Sochi Olympics starts. NBC Sports Network will have more than 230 hours of coverage during the Games, most of any NBC network. Inside NBC’s “30 Rock” offices, NBC executives refer to the channel as the “Home of Team USA,” with plans to schedule live figure skating and hockey on it.

    Historically, NBC has used its Olympics association to grow distribution and license fees for its cable channels. In the 1990s, USA Network, in particular, achieved full distribution thanks to deals made around the Olympics. USA is in 98 million homes and is scheduled to carry 43 hours of programming from Sochi.

    NBC executives credit the Olympics for the current distribution push, adding that NBC Sports Network’s other sports properties also helped.

    “It’s the power of the Olympics, along with what we’ve been doing with the NHL, along with NASCAR coming, along with EPL,” said Mark Lazarus, chairman of NBC Sports Group. “We’re finding our way. This has always been a multiyear game of patience with us for NBC Sports Network. We’re never where we want to be, but we’re making good progress.”

    NBC Sports Network’s push to 85 million homes puts it closer to one of its competitors, Fox Sports 1, which is in 87.7 million homes. Both ESPN and ESPN2 are in close to 97 million homes.

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  • Execs unfazed by threat of blackouts for NFL wild-card games

    John Ourand
    Top industry executives say they are not concerned that the threatened TV blackouts for three of the NFL’s four wild-card playoff games mark the start of a trend.

    Rather, these executives point to a series of extenuating circumstances that caused the league to grant an extension to allow a football-crazy market like Green Bay, for example, to sell the last of its tickets to corporate sponsors just two days before kickoff. Green Bay, Indianapolis and Cincinnati were the challenged markets. All three eventually sold enough tickets to avoid a blackout; however, their struggles became a news story across mainstream media, even hitting the morning news shows.

    “I don’t think sellouts are a long-term problem, certainly not for the NFL playoffs,” Mark Lazarus, chairman of NBC Sports Group, told me last week. “This was an isolated experience based on a few strange factors.”

    In Green Bay, sub-zero temperatures and a change in ticket policy were just some of the factors in play.
    Photo by: GETTY IMAGES
    Lazarus was one of several executives who talked about this issue last week, though he was the only one to go on record. All the executives, who had business ties to the NFL, described the reaction to the potential blackouts as overblown, especially considering that the NFL’s regular-season attendance increased this year and it had only two local TV blackouts all season.

    Let’s use Green Bay as an example. The Packers were mediocre most of the season, sneaking into the playoffs with an 8-7-1 record. The team beat Chicago in a win-or-go-home game the previous Sunday afternoon, meaning its fans did not know that the Packers would host a playoff game until just a few days before it needed to sell out. Weather forecasts for the game called for sub-zero temperatures at game time.

    Media reports suggested the team also offended some of its season-ticket holders with a change in its ticket policy that did not guarantee a refund on tickets sold earlier in the season. If the Packers had not hosted a playoff game, the money would be credited to future season tickets rather than refunded.

    “I think some of it is when and how they go about selling their tickets to season-ticket holders and regular fans,” Lazarus said, speaking of the league in general, rather than the Packers’ specific situation. “That’s one the teams have to wrestle with as times go by.”

    I believe another factor deals with the hassles associated with attending games, something that has the potential to hurt attendance. What bigger indictment of the at-game experience than Titletown having trouble selling out a playoff game?

    One of the dominant sports business issues over the past two years has been trying to improve the at-game experience by replicating in arenas what the leagues’ network partners do on TV.  I felt this personally in October 2012, when the Orioles made the MLB playoffs. I was offered tickets to every game of the team’s first-round playoff series, in Baltimore and New York. I turned them all down. A longtime fan of the team, I preferred to watch from home and stay connected to my social media accounts and websites while watching the game.

    Many pundits agree. The week Cincinnati, Green Bay and Indianapolis faced playoff blackouts, many media members cited the comfort of watching at home as a prime reason. When NBC’s Al Roker talks about “the flat-screen experience,” as he did on the “Today” show Jan. 3, it’s becomes an issue that has hit the mainstream.

    League and team executives recognize this as a real issue and have been taking steps to address it, from increasing Wi-Fi capabilities to showing replays for the in-arena audience.

    Lazarus said the changes are working.

    “I’ve been in 15 stadiums this year for football games,” he said. “I think the in-arena experience for football is tremendous. You cannot replace that sense of community and spirit on TV. There’s 80,000 people a week that will gladly go watch their home football team. I have very high expectations that the in-stadium experience will never be replaced by television, even though the television experience is darn good.”

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

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  • New York Life signs on as Big East sponsor

    Two months after the Big East cut a deal to have Fox Sports sell corporate sponsorships for the conference, it has landed New York Life as a presenting sponsor through the 2014-15 academic year.

    Financials were not made public, but industry observers peg the total value of the deal between $10 million and $20 million over the two years.

    “There will be others,” said Big East Commissioner Val Ackerman, adding that she’s looking to fill the credit card and telecom categories. “We’re looking for a smaller group of partners that share our values and can be more deeply integrated in our conference.”

    New York Life had a deal with the old Big East Conference that ended around 2010.

    The deal sets New York Life as the presenting sponsor for all Big East championship events, including use of marks and logos in promotional materials, and includes ads on Fox Sports 1’s telecasts. For the conference’s marquee event, the men’s basketball tournament, New York Life will be featured on a co-branded tournament logo at center court, as well as a standalone logo on the court and co-branding on tickets and programs.

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  • European TV’s take on U.S. sports

    U.S. sports leagues still view international expansion as the holy grail of growing their business. But in Europe, at least, veteran media executives describe U.S. sports as little more than niche programming that still needs to find an audience in markets that are dominated by soccer and Formula One.

    “Top American sports brands are not so big in Europe,” said Arnaud Simon, Eurosport France managing director and Eurosport Group television content director. “It’s not just because you are a famous brand that you attract a lot of ratings and a lot of people are watching you.”

    There are some exceptions, of course. The NBA and NHL are popular in some parts of Europe because of the respective ice hockey and basketball cultures in those areas. But even an established basketball culture ­— like in Spain and Italy — doesn’t guarantee high ratings for NBA games because Europeans remain loyal to local clubs, rather than U.S.-based teams.

    BT Sport includes the UFC in its rights mix.
    Photo by: GETTY IMAGES
    “If you look at the NHL, for obvious reasons, it’s quite big in Scandinavia, Russia and some Eastern European countries because these are the countries where ice hockey is big,” Simon said. “But the NHL in Spain, France or Italy is just a brand that you have seen in American movies, to exaggerate a little bit, because they don’t watch ice hockey at all.”

    Even as niche players, U.S. sports leagues are finding many suitors for their rights, as European sports networks look for live programming to fill their schedules.

    In Germany, for example, network Sport1 benefited from the shuttering of ESPN America, which went dark in July about a year after parent company ESPN failed to retain rights to the English Premier League. Sport1 acquired several sports rights from ESPN America, including NCAA football and basketball for three seasons through 2016, IndyCar through 2015, and Major League Soccer starting with the 2014 season. It also gained additional NFL and NBA programming. Like other European networks, Sport1 would not disclose financial terms of its rights deals.

    With these new rights, Sport1 US launched in August as a dedicated U.S. sports channel, complete with live rights and shoulder programming such as NBA TV’s “NBA Action,” the NFL Network’s “NFL Game Day” and HBO’s “Hard Knocks,” among others. While viewership numbers and the fan base of U.S. sports in Germany are small compared with soccer or F1, Sport1 anticipates that viewership will grow.

    “The acquisition of the ESPN rights was a very important step to establish Sport1 US,” said Olaf Schröder, chief editor and program director at Sport1. “Our goal was to further stock up these packages to ensure an attractive program lineup for an independent U.S. sports channel.”

    Pan-European sports network Eurosport is using a different strategy with U.S. sports. Rather than setting up a separate channel, it weaves U.S. sports into its programming mix. Still, the channel’s executives acknowledge the obstacles U.S. sports leagues encounter in Europe.

    European media executives believe that the success of U.S. sports in Europe depends on the networks’ ability to attract casual fans. Time zones present a significant hurdle for U.S. leagues looking to international markets. Live game coverage for most U.S. leagues often starts after midnight, which makes it difficult to attract viewers and advertisers.

    Europe’s soccer-dominated culture also is proving to be a tough nut to crack. European sports fans are conditioned to watching matches that have a continuous flow without commercial interruptions. That’s a sharp contrast to the television coverage of U.S. sports leagues, flush with stoppages for timeouts and replay reviews.

    “The hard-core sports fan, I absolutely can’t ignore them, but they will always be there for their sport,” said Simon Green, head of BT Sport. “If you want to grow a business, you have to appeal to that marginal sports fan.”

    Still, U.S. sports are filling a worthwhile niche for European sports networks.

    For BT Sport, which launched Aug. 1, the acquisition of U.S. sports rights has helped it establish credibility. But BT Sport focuses much of its resources on its Premier League broadcasts.

    Green doesn’t rule out the possibility of BT Sport one day producing its own U.S. sports-related studio shows. For the time being, the company airs purely American game broadcasts and shoulder programming such as ESPN’s “Baseball Tonight.”



    “Of course it’s a niche audience against the mass popularity of a sport like football,” Green said. “There is a market out there for us to get these rights, and in the case of MLB, it rates relatively favorably against some of the other European soccer leagues, for example.”

    Eurosport has opted against airing shoulder programming around U.S. sports, believing those shows aren’t popular enough to attract viewers. Eurosport holds rights to Big Ten college football, the Arena Football League and NFL “Monday Night Football” on British Eurosport. The channel reaches 130 million houses in 54 countries, and prides itself as being a “live” sports channel.

    In Germany, Sport1’s Schröder believes that the increase of international players in U.S. leagues will help grow the fan base in Europe.

    “Although it’s still a niche compared to the soccer or Formula One fan base, the U.S. sports fans in Germany, Austria and Switzerland form a big and very loyal community,” he said. “We anticipate the general U.S. sports community to get even bigger — especially due to the growing number of German athletes now competing in the major professional sports leagues in the U.S.”

    HJ Mai is senior writer for sister publication SportsBusiness Daily Global.

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  • MLBAM’s new deal with The Whistle includes tech component

    Youth sports digital programmer The Whistle has signed a multiyear content and technology deal with MLB Advanced Media, which will also support the company’s video streaming efforts.

    The pact with MLBAM, baseball’s digital arm, extends an accelerating run of league-level partnerships for The Whistle that also has included the NFL, NASCAR, the PGA Tour and Major League Lacrosse, among others. But the baseball deal expands significantly beyond many of the others, given that MLBAM also will serve as a technology partner to The Whistle, aiding on the company’s video initiatives as well as helping design user experiences for online and mobile platforms.

    A baseball partnership has been a key priority for The Whistle.
    Financial terms were not disclosed, but similar to other league partnerships The Whistle has signed, MLBAM will acquire a minority equity stake in the company. MLBAM provides video support for a growing number of non-baseball clients, including Southwest Airlines and Glenn Beck, and it will be involved in Sony’s forthcoming cloud-based, multichannel TV service announced last week at the International Consumer Electronics Show in Las Vegas.

    Since The Whistle’s formation in 2011, a baseball partnership was a key priority for the company given its target demographic of youths 8-14, and former MLB President Bob DuPuy is a company adviser and investor. But creating a significant deal that included both content development and technology elements required extensive discussion.

    “It was sort of a situation where we both needed to be ready and time had to be right,” said Jeff Urban, The Whistle co-founder and chief marketing officer. “But we look forward to leaning on their expertise and continuing to build out our content.”
    MLBAM executives declined to comment.

    The MLBAM deal arrives at a key point in growth of The Whistle, which recently launched The Whistle Network, a multichannel, YouTube-based network combining content from both its league partners and independent entities such as basketball trick shot outlet Dude Perfect. The Whistle also intends to bring video from individual athletes and brands into its network.

    The creation of The Whistle Network represents a further commitment to a digitally focused content distribution strategy. The company originally planned to create a linear TV network but roughly two years ago began to pivot away from that. Helping support that strategy was a research study conducted by Chicago-based Navigate Research. Its findings show that aggregate viewership in live games of the NFL, MLB, NBA, NHL and MLS among youths 6-17 has fallen by 16 percent since 2009.

    “We were certainly prepared to go and create a linear network and head down that road, but more and more, these other platforms, particularly YouTube, are where kids are spending their time. And it’s global,” said John West, The Whistle co-founder and chairman.

    The Whistle is also readying a broad launch on the Xbox Live platform later this year.

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  • Sony, WWE extend MLBAM’s non-baseball business

    MLB Advanced Media’s acquisition of streaming video deals with Sony and World Wrestling Entertainment, each announced last week at the International Consumer Electronics Show, represents the biggest boost to its non-baseball business since it began streaming ESPN3 nearly four years ago.

    Baseball’s digital arm in the interim steadily picked up other third-party streaming video and technology deals, including with Southwest Airlines, political pundit Glenn Beck, and youth sports programmer The Whistle (see related story). But the scope of last week’s two pacts means they represent seismic industry developments in their own right, as well as substantial boosts to MLBAM itself.

    Sony’s as-yet-unnamed cloud TV service will attempt later this year to provide consumers a multichannel digital video subscription service combining live and on-demand content, but without a cable or satellite provider. WWE, meanwhile, on Feb. 24 will launch the WWE Network, a full-time, over-the-top digital network including all of the pro wrestling property’s popular pay-per-view specials at just $9.99 a month. MLBAM will provide the back-end video infrastructure for both efforts, each many months in development.

    “Great content needs great distribution,” Bowman said at last week’s WWE event in Las Vegas announcing the network. “[WWE Chairman and CEO] Vince McMahon and WWE over the years have been at the forefront of content distribution, from pay-per-view to cable to their website to mobile and social media. But today, in 2014, distribution is very different than even two years ago.”

    Bowman has held a long history with McMahon and WWE, and served on the property’s board of directors from 2003 to ’08.

    Financial terms were not disclosed for either deal. But the agreements no doubt represent a boon for an MLBAM operation that last year surpassed $630 million in annual revenue; will see further, significant revenue growth in 2014 with the implementation of new national media deals with Fox, ESPN and Turner; and represents a major driver in rising baseball franchise values since each team owner holds a 1/30th share in the outfit.

    About six years ago, MLBAM began to move away from handling consumer-facing digital operations for non-baseball properties such as Major League Soccer and AVP Beach Volleyball. Instead, it shifted its non-baseball efforts toward a business-to-business model in which it supported back-end operations and application development for other entities, buttressing its own 12 years of success streaming MLB games to computers, then to mobile and eventually hundreds of connected devices.

    After a steady buildup of clients, most notably ESPN, the company now streams video for more than 25,000 events in total annually, only a fraction of which are baseball games. That number now promises to grow substantially with the arrival of Sony and WWE.

    “These are massive undertakings, providing full 24/7 live and VOD content on a scale like this,” Bowman said. “But to be on the ground floor of interesting undertakings like this that are completely rethinking how consumers access content is very attractive to us.”

    The arrival of Sony and WWE also will accelerate efforts for MLBAM to expand its physical infrastructure to handle the encoding and delivery of the additional video content. Prior to these deals, MLBAM last year opened a new data center in Omaha. MLBAM remains based in New York, but the Omaha facility will soon become the epicenter for its video content delivery.

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