SBJ/Jan. 11-17, 2016/In Depth

The eyes have it

Media companies and leagues shift more sports programming to the powerful pull of broadcast television

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For much of the past decade, most sports rights holders in the United States believed that their financial health was tied to cable television’s dual revenue stream of affiliate fees and advertising revenue.

But as we begin 2016, a new trend has been identified: Media companies and leagues are putting more sports programming on broadcast TV.

The reason comes down to simple math. While the number of homes that subscribe to pay TV gets smaller, the reach of broadcast networks essentially remains the same. That has caused leagues and media companies to embrace broadcast time slots like they used to a decade ago. If the rights fees are competitive, many sports properties have decided to opt for the reach that broadcast networks provide.

CBS produces almost all of its major sports programming exclusively for its broadcast network.
Photo by: Getty Images
The NFL has remained committed to broadcast television, even as it collects more money from ESPN and DirecTV than other media outlets. For example, the NFL’s games on ESPN and NFL Network have to be carried on local over-the-air channels in the markets of the teams involved. And ESPN’s coverage of last weekend’s wild-card playoff game was simulcast on ABC.

Not surprisingly, the league has focused its “Thursday Night Football” television negotiations on the broadcast networks, leaving ESPN and Turner Sports as long shots to claim the package, according to several sources.

Other leagues are warming back up to broadcast TV, too. ESPN and the NBA made a joint decision to have ABC start carrying a Saturday night schedule of eight NBA games on Jan. 23, as a complement to the Saturday night college football games it carries in the fall. Last summer, ESPN moved its midsummer ESPY awards to ABC for the first time and saw such a dramatic viewership jump (250 percent) that the ESPY franchise should remain on ABC for the foreseeable future.

It’s not only ESPN and ABC. A few years after leaving broadcast TV for cable, the British Open Championship made a move that it believes will result in bigger TV ratings by returning to broadcast television this summer on NBC. NASCAR came back to NBC last summer, persuaded by the promise of more broadcast coverage. And the Comcast-owned network introduced professional boxing to broadcast audiences last year for the first time in years, albeit as part of a time-buy arrangement.

Similarly, Fox’s schedule is littered with sports programming, from Big East basketball games to international soccer games and UFC fights to prime-time MLB games. CBS produces almost all of its major sports programming exclusively for its broadcast network.

Coming full circle

The current embrace of broadcast TV stands in contrast to 2008, when ESPN outbid Fox to bring the BCS exclusively to cable television. At the time, it seemed that the sports media business was at the beginning of a tipping point of sports migrating to cable.

The NHL placed two of its Stanley Cup Final games on a relative small cable channel called Versus (now NBC Sports Network); NASCAR moved its end-of-season Chase for the Sprint Cup exclusively to ESPN; and MLB moved one of its league championship series to a cable channel — though its executives said at the time that the World Series never would move off broadcast television. All sports, other than the NFL, contested some of their biggest games on cable TV, from the NBA and MLB semifinals to the NCAA basketball tournament.

Sports leagues increasingly decided to forgo broadcast’s bigger audiences for more money from the cable networks
ESPN moved its ESPY awards broadcast to ABC last year and saw a 250 percent spike in viewership.
Photo by: ESPN Images
that could write bigger checks, thanks to their dual revenue streams.

Now the latest moves in sports media fly in the face of those trends from a decade ago. And each move back from cable to broadcast is a boon for broadcast network executives and their PR spin doctors, who warned for years that sports properties were not seeing the big picture when they gave up broadcast distribution for the allure of cable dollars.

“The PGA Tour and PGA Championship are good examples for us,” said CBS Sports Chairman Sean McManus. “Part of the foundation of those two properties are corporate sponsorship sales. The best way for a corporate sponsor to reach the largest possible audience is on broadcast television. There is certainly a place on cable television for golf properties. But the majority of the big-time golf properties seem to have a better home on broadcast television than they do on cable.”

Today, sports rights holders that migrated to cable increasingly are agitating to get media companies to move their games back to broadcast television. Unlike 2008, broadcast networks now have a dual revenue stream as well, allowing them to better compete with cable networks for media rights.

“Now, given retransmission consent — where broadcasters have two revenue streams and are looking for live event programming — sports programming is the most natural fit [for broadcast networks],” said Mark Lazarus, chairman of NBC Sports Group. “Broadcast companies are willing to utilize their time slots for live-event sports in a way that maybe, half a decade or a decade ago, maybe they weren’t.”

The different perception of broadcast television as a business could be seen at an industry conference in the fall, when CBS Chairman Leslie Moonves offered a full-throated defense of broadcast TV.

“I’ve been hearing that network television has been dead since the day I took this job over 20 years ago,” Moonves said at the Sports Media & Technology conference in New York. “Network is still pretty damn important and pretty damn successful.”

Response to cord cutters?

Rights holders also are becoming concerned with cord cutters and cord shavers who are ditching their pay-TV subscriptions. Cable, satellite and telecommunications distributors saw their distribution numbers fall below 100 million households in October, according to Nielsen estimates. That marked the first time in more than seven years (since August 2008) that the pay-TV industry failed to eclipse the 100 million home mark.

Cable’s 99.6 million home universe as of January 2016 is the smallest since September 2007, according to Nielsen.
That means the cable industry has lost 5.6 million homes in 4 1/2 years — since its high mark of 105.2 million homes in July 2011.

The poster child of the pay TV downturn is ESPN, which has lost 8.7 million homes in that 4 1/2-year time. ESPN was in 100.1 million homes in July 2011; it’s in 91.4 million today, according to Nielsen.

At the same time, broadcast TV has seen moderate growth. It reached 115.9 million homes in July 2011. Today, the broadcast TV universe consists of 116.4 million homes.

For CBS Sports’ McManus, these numbers validate CBS’s broadcast-first strategy. Like other broadcast networks, CBS owns a cable sports channel. But the company has invested much less in CBS Sports Network than Fox has in FS1 and NBC has in NBCSN — a strategy that appears to be paying off.

“There’s been some erosion in the cable universe with skinny bundles and mini-packs,” McManus said. “It’s almost impossible to imagine any kind of mini-pack or skinny bundle that doesn’t have CBS. … The reason why we think it’s important to keep some of the exclusive properties that we have in sports is just for that reason: to make ourselves a must-buy and a must-carry no matter what the offering a cable, satellite or digital company is providing.”

Pay TV’s falling subscriber numbers also are being felt in league offices, where sports rights holders are taking notice of the changes, according to TV executives.

“By and large, rights holders want to know what your programming and distribution plan will be,” Lazarus said. “In today’s environment, they encourage broad distribution. They are all looking to maximize eyeballs. Broadcast undeniably drives more eyeballs than the reach of cable.”

More exposure for sports

While ESPN officials acknowledge that moves, like creating a prime-time series around the NBA, may look like a shift in philosophy, they say the move does not represent anything new. The upcoming Saturday night NBA series, for example, essentially moves games from one broadcast time slot on Sunday afternoons to a different broadcast time slot on Saturday nights.

ESPN said it jointly came up with the plan to launch a prime-time broadcast series around some of the league’s marquee games during its recent round of rights negotiations. The NBA was looking to expose its biggest stars and best teams to the bigger audiences a prime-time time slot could deliver. ESPN was looking to build off of its successful college football series, which regularly wins Saturday nights in the fall.

“We’ve learned that there’s an audience of sports fans that can be attracted to a franchise like this,” said Burke Magnus, ESPN’s executive vice president of programming and scheduling. “We had the benefit of college football continuing to escalate in popularity and the inventory of relevant games got a little deeper and the definition of what could be a prime-time game made it more feasible.

“The thinking is similar here with the NBA,” Magnus continued. “We had a number of games that were configured primarily as Sunday doubleheaders. We wanted to take that same inventory and start a new franchise on Saturday night and tie it as much as possible to college football. We wanted to lead people from one season into the next and make them the very best games that the NBA has to offer. We’ve got our fingers crossed, but we think there is an audience there that will respond.”

Fox, which launched its own sports channel in August 2013, has taken a similar tactic with its broadcast channel.
Properties such as NASCAR, which has six Cup races on cable and 10 on broadcast, and the Big East, which will have 12 games on broadcast this season, including the championship game, increasingly are being carried on the broadcast channel. Fox executives believe broadcast coverage helps grow the sport, leading to bigger cable audiences.

“Strategically, while we’re always trying to grow the cable channel, we also realize that it’s good for the viewers, advertisers to be on broadcast,” said Bill Wanger, Fox Sports’ executive vice president of programming, research and content strategy. “For sports that aren’t as popular and still growing, we use the broadcast network to lift that exposure.”

NBC, which operates NBCSN and Golf Channel in addition to a broadcast network, carries almost all of its sports across both broadcast and cable. Lazarus said sports rights holders benefit both from the broadcast network’s reach and ratings, as well as the cable channels’ quantity of coverage. In particular, NBC has found success with English Premier League programming in the noon time slot on weekends — a time period the network had been devoting to time buys.

“We found that we could improve our programming by bringing live sports to that daypart on the broadcast network,” Lazarus said. “We could give the sport broader exposure and market back to the cable asset in this virtuous circle between broadcast, cable and digital.”

NBC also found that it needed a consistent broadcast schedule for its strategy to work.

“You can’t just do it as a special — two or three times a year,” Lazarus said. “That doesn’t build habit; it doesn’t help your broadcast affiliate sell it; and it doesn’t help viewers get to be confident that it’s going to be there when they go to look for it.”

In the face of competition from pay-TV and digital media companies, some sports TV executives believe that not only will many of the biggest sports remain on broadcast TV for the foreseeable future, but other events and leagues will follow.

“We still believe very strongly in the power of broadcast television and still believe that there are certain events that we would like to see remain available on every television set in America, whether it’s the Masters, or Super Bowl or SEC football Saturday afternoons,” McManus said. “The best showcase and the best way to serve the viewer and the advertiser is on broadcast television.”



What they're saying

“Four years ago, in January 2012 when NBC Sports Group came together and I came into this role, we knew we had a collection of assets: a broadcast network, national cable outlets, regional networks and digital. They should all be working together. We work at our best when we take product and have it on all those platforms. We think there is a combination of the reach and ratings of broadcast and the in-depth and quantity of coverage that you can do on cable, where you are not restricted by affiliates and news programming. Working together brings the most value for us as a business and our rights holder partners. We’ve always had a lot of sports on broadcast. NBC was only broadcast up until five years ago in terms of sports. Adding NBC Sports Network and Golf Channel allows us the flexibility to balance between that broad reach and high ratings and the in-depth and quantity of coverage that we can do on the national cable outlets.”
Mark Lazarus
Chairman, NBC Sports Group

“The NBA Saturday night series is an idea that came up during the negotiation as we did the deal. We talked in really broad, general terms. … When we were done, we started digging into the details. The thinking here is that it will dovetail nicely with Saturday night college football. The NBA has come through in terms of the schedule magnificently. We have the best of the best, week-in and week-out, starting with Chicago at Cleveland. We’ve got great representation by the Warriors, Bulls, Thunder, Spurs and, of course, LeBron and the Cavs. The NBA did its part to deliver what, on paper, looks like a magnificent schedule and a great way to get people to think of the NBA on ABC as a Saturday night game and a Sunday afternoon game.”
Burke Magnus
Executive vice president, programming and scheduling, ESPN

“We worked with the NFL to establish Thursday night as a destination for prime-time football. We did a good job, both in the presentation and the broadcasting of the games during the first half of the season. … If we didn’t have the power of the broadcast network, we never would have been able to reach as many people and we never would have been able to promote and market the product to as many people. Look at the ratings — not just on the CBS and NFL Network portion on the beginning of the season but also on the back half of the season, where the games were exclusively on the NFL Network. All ratings have grown. The strategy worked. The promotion worked. The building of the foundation of ‘Thursday Night Football’ is a lot stronger now than it was two years ago thanks to the power and the reach of the CBS broadcast network.”
Sean McManus
Chairman, CBS Sports

“The Big East is a great example of how we use our broadcast network. After our first season with the Big East, we started to put the conference’s games on the Fox broadcast channel. While there’s still room to grow, our Big East ratings have increased every year. College football is another example where we’ve put games on our broadcast channel on Saturday nights in prime time, and our college football ratings continue to grow. We’ve made a big commitment to put various soccer leagues across the world on broadcast — the biggest being the World Cup. You’ve seen over the last five years the growth of all types of soccer, whether it’s MLS or European soccer, UEFA. Soccer is probably the biggest example of exposure on broadcast resulting in increased popularity.”
Bill Wanger
Executive vice president, programming, research and content strategy, Fox Sports

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