• Faces in the Crowd: Networking at #sbjsmt

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    Here are some of the people we spotted networking at the 2013 Covington & Burling Sports Media and Technology Conference. Click any image to start the slide show.

    Tags: CES, ING, Media, GE
  • SBJ/SBD Podcast: Recapping SMT Day One

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    SBJ Podcast

    Executive Editor Abraham Madkour and media reporter John Ourand recap Day One of the 2013 Covington & Burling Sports Media & Technology conference being held yesterday and today at The Crowne Plaza Times Square. Highlighting the discussion are their thoughts on DirecTV CEO Michael White's featured interview — "It was a real sobering message. … He essentially compared the market today to the real estate bubble of 2006, 2007." — as well as their thoughts on Ted Leonsis' address.

    Tags: Ping, ING, Media, DirecTV, CTV, GE, Ally, SBJSBD Podcast
  • SMT Panel: Investing in Sports Media

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    Investing in Sports Business

    Don Cornwell, Morgan Stanley
    Peter Englehart, Falconhead Capital
    Peter Kern, InterMedia Partners

    On the heels of such deals as Guggenheim Partners’ purchase of the Dodgers and Providence Equity’s tie-up with the NFL for investing in startup ventures, investment in sports media was the topic of an afternoon panel on the first day of the 2013 Covington & Burling Sports Media & Technology conference. Falconhead Capital operating partner Peter Englehart, whose firm just exited ownership of Competitor Group in a $250 million sale, said “in the consumer space in sports, there are still lots of opportunities that have tangential media connections. But as long as consumerism remains 70 percent of our GDP, that’s an enormous playground in which you can look for opportunities.” Don Cornwell, managing director of mergers and acquisitions at Morgan Stanley, who recently advised the Ontario Teachers Pension Plan on the sale of its stake in MLSE to Bell Canada and Rogers Communications, said that “there is still lots of opportunity” in soccer abroad. Cornwell: “That’s a business where people can come in and actually buy the content themselves, buy the team. And they’re generally not well-run businesses.”

    MORE DEALS LIKE GUGGENHEIM?: Englehart believes more deals like Guggenheim’s purchase of the Dodgers are coming, but “what this type of deal is emblematic of is that the acquiring entity — the investing entity — looks at these types of opportunities with professional sports franchises, and really the sector you can apply the most creativity to is the monetizing of the media rights. You can only be so much better than the pre-existing incumbent seller in operations, marketing, ticket sales. But if you have a special angle and know how to monetize or launch a network or do something with media rights, that’s where all the activity and creativity lies.”

    CAN SMALL PROPERTIES GET INVESTMENT?: InterMedia Partners managing partner Peter Kern said money for smaller properties is a question of the “haves versus the have-nots.” Certain sports “have to buy their way onto TV.” But Kern added that “if someone were to persuade us that five-man touch football was going to be the next big thing, we’d put money in it.”

    THOUGHTS ON THE NFL-PROVIDENCE EQUITY DEAL: Englehart said that “from the NFL’s perspective, it’s very good, because they get to preserve their own capital and let someone else take the risk. Providence is a very talented, deep-pocketed organization. … They have a game plan. This isn’t a blank slate.” Englehart: “Logic dictates to me that the investment horizon on this is a little longer because you’re really starting something that is pretty infantile and they’re going to try to grow this.” This “could set up a new model.” Leagues are probably “taking more meetings with private investment groups to explore this kind of stuff, because why use their owners’ capital?” Cornwell said this type of deal makes sense because “you’ve got 30 to 32 billionaires who are getting investment ideas all the time. To have a central place where they can evaluate and actually have some outside capital makes all the sense in the world.”

    Tags: ING, Media, Morgan Stanley, GE, NFL, MLS, Soccer, Franchises, SEC
  • SMT Panel: What's Next for Digital Entrepreneurs

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    After the Sale

    Christopher Russo, CR Media Ventures
    Shannon Terry, 247Sports
    Peter Vlastelica, Fox Sports

    Founders of digital businesses can’t predict when their companies will be bought or what will happen to them after they’ve sold their business, but there are several things they can do to prepare for that process and make it smooth.

    Speaking at a panel titled “After the Sale: What’s Next for Digital Entrepreneurs,” former Fantasy Sports Ventures executive Christopher Russo said, “The sale is the end of the process. You can talk about what you did or didn’t do right in the last month or two months, but the reality is that a lot of the decisions you make years before affect that outcome.”

    Russo said investors a company takes on can affect when a sale is made, and partnerships a company strikes can affect whether a sale happens. Fantasy Sports Ventures did an early partnership with Gannett, which acquired the company years later for $30 million.
    Shannon Terry, who sold his company, Rivals.com, to Yahoo, said that it’s important to think in advance about what role you want in your company after it has been acquired. He said that he didn’t consider that during the sale and became a “father” figure afterward without an active voice in how Rivals was run.

    “From a leadership perspective, be true to yourself as to what your role is,” Terry said. “If you’re going in to integrate the asset, do that and understand that. As you enter the term sheet negotiations, have a plan and be true to it for yourself and your leadership group, so that you don’t build unneeded angst as you move onto the next thing.”
    “But be flexible with it,” said Peter Vlastelica, senior vice president of digital at Fox Sports, which acquired his company, Yardbarker. “I thought a year or two into the deal I’d be intellectually absorbed with something else. That had nothing to do with Fox. It had to do with this bias against big companies in general. But … you could argue Fox Sports is the most successful startup of the past years. There’s a culture there I didn’t expect. … It doesn’t feel like I’ve sold out and gone to work for the man.”
    Russo said that acquisitions are done in unique moments when other companies are looking to buy an asset. He added,  “Your chance to get to the finish line are a lot greater if you don’t give yourself two months to make it happen (because you need funding).”
    On trends and opportunities they see:
    Vlastelica: “I’m interested in enabling technology. Personalization is something we still all collectively have a long way to go in. Team Stream (an app from Bleacher Report) is a great personalized product … but when you start to layer on other types of personalization … There are different types of Lakers fans. There are Lakers fans who grow up in L.A. There are Lakers fans that didn’t. There are Lakers fans who remember Magic. There are Lakers fans who don’t.”
    Terry: “At the rate that mobile is ascending, there’s some help you can get from tablet and how it’s viewed, but I see mobile being two-thirds of usage very soon. We have to navigate that or slow it down.”
    Russo: “More tablets were sold in the last year than laptops or desktops. We’re just beginning that trend.”

    Tags: Media, Fox, Yahoo
  • Ted’s Take: Leonsis on content, distribution and opportunities in a multi-platform world

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    Leonsis: “We’ve gone from being a ‘new’ media to being ‘the’ media. Everything centers around digital.”
    Photo by Marc Bryan-Brown

    Digital media has made huge strides since Ted Leonsis spoke at the first Sports Media & Technology conference more than a decade ago, but he said digital advertising has been slow to catch up.

    Leonsis, the founder and CEO of Monumental Sports & Entertainment and the subject of a one-on-one interview this afternoon at the 2013 edition of the conference, estimated that when he made that first appearance, people spent three hours a day online, and that amounted to 17 percent of their media consumption. But at the time only 5 percent of advertising was devoted to digital media. His goal was for that ratio to become 1:1.

    The ratio has improved today, but as more people are spending more time online, advertising spending is still behind the pace. He expects that to change. “Young consumers, first and second generation, are spending the majority of their time on the net … but still the advertising and promotional dollars haven’t followed in lockstep,” Leonsis said. “But as these young people move into positions of management at agencies and companies, that will sort itself out and the floodgates will open.”

    Returning to the conference to speak this year helped Leonsis appreciate just how far digital has come from his days at AOL and his early days of sports ownership when he bought the Washington Capitals 14 years ago. “We’ve gone from being a ‘new’ media to being ‘the’ media,” Leonsis said. “Everything centers around digital.”

    ENTREPRENEURSHIP TODAY: Leonsis said digital and online efficiencies today have made it a great time to be an entrepreneur because people can take traditional businesses and make them more efficient. His investment group, Revolution Growth, has invested in several online companies that are digital iterations of other businesses. Groupon is a company that digitized the coupon. Zip Car digitized the car rental business. And CustomInk, which just received a $40 million investment from Revolution Growth, is digitizing the apparel business. “It’s never been a better time to be an entrepreneur,” Leonsis said. “It’s never been a better time to start a company. The consumers are there. The devices are there. The tech is there. The capital is there. It’s just waiting for someone to launch these businesses.”

    MONUMENTAL SPORTS & ENTERTAINMENT NETWORK: Leonsis said his long-term goal is to turn the broadband network behind the Capitals, Wizards and Mystics into a production house with “the ability to show something in our arena, in real time, in all the televisions in the arena and outside on the signs and in those virtual screens on everyone’s site and everyone’s phone.” Leonsis would like to see it broadcasting concerts, and professional, college and high school sports games that take place at the Verizon Center. “We can look at all of that as ancillary opportunity for us,” Leonsis said. The Wizards and Capitals both have long-term rights deals with Comcast Sports Net. The Wizards have seven years left on their deal. The Capitals have three. Leonsis said that he envisions doing one of three things with those rights when they become available. “One would be that we would partner in a big way with Comcast,” Leonsis said. “I certainly believe we should have ownership in that network and a large voice in the programming of that network because we know our fans and our community extremely well. Or we would launch our own network, the Monumental Sports & Entertainment Network, or we’ll partner with some other sports network.”

    Ted’s Takes:

    Biggest inspiration: A 75-year-old Jesuit priest at Georgetown University who helped Leonsis, an English major, use a computer to determine that Ernest Hemingway wrote Old Man and the Sea in the 1930s, not 1950s. Leonsis said, “I went from being a liberal arts major, an English major, to someone who understood algorithms.”

    On sports ownership: “No other business gives you the psychic uplift like owning a sports team. But the down beat, you lose a game seven in the playoffs, it’s like death.”

    His favorite part of ownership: “It’s the fan interaction. I’ve probably exchanged half a million emails. …I’m an extrovert by nature, and I get a lot of energy from that. It’s absolutely amazing. … People will come up to me in a mall or a restaurant and say, ‘Do you remember me? I sent you an email in 1999.’ The passion and enthusiasm fans entrust in you is like no other business.”

    Then downside of ownership: “In sports, there’s one winner and 29 losers. The assets, from a business standpoint (of the teams I own), have dramatically increased in value … but we haven’t won a Stanley Cup or NBA championship, so I’m a failure. That’s what this business is about. One winner and 29 losers.”

    In his downtime: “I read an awful lot. I try to read in totally different areas. Getting outside your comfort zone is important. I’m trying to reinvent my way of thinking to be more data driven. I am an English major, so studying a lot of math and reading about a lot of math thinkers … exercises important parts of the brain.”

    Why he blogs: “It’s left-brain right-brain. I’m outgoing. I’m creative. I grew up living my life on the Net. … It’s a natural way to communicate. In the second, other part of your brain, it’s a good business move to control your message. I’m a media company.”

    By the numbers:

    $28,000: His family’s maximum income growing up in Brooklyn where his father was a waiter and his mother worked at a chewing gum factory.

    200: Number of consecutive sellouts for the Capitals.

    $40 million: Invested in CustomInk, a custom apparel company, by Leonsis’ investment group Revolution Growth.

    Tags: Media, Washington Capitals
  • SMT Panel: The State of Sports Radio

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    Standing the Test of Time

    Steve Cohen, SiriusXM Satellite Radio
    Chris Corcoran, WestWoodOne Sports
    Traug Keller, ESPN
    Chris Oliviero, CBS Radio

    While mediums such as newspapers and magazines are still trying to adapt to a digital landscape, sports talk radio executives said they have seamlessly transitioned to the current media environment. Speaking this morning at the 2013 Covington & Burling Sports Media & Technology conference, executives from each of the major sports radio operations said their audience has increased through the advent of technologies such as digital audio streaming and podcasting. Additionally, despite fears of cannibalization through the TV simulcasting of many popular sports talk radio programs, in most cases the practice has instead led to improved audiences on radio. “Audio listening is actually way up when you combine all the platforms, especially mobile,” said Traug Keller, ESPN senior vice president. “Our audio audience is 65 percent higher than what’s in [radio measurement outfit] Arbitron figures when you add in these other things. In terms of reach, it’s second only to TV.”

    Despite that increasing audience, the panelists acknowledged that they have not done enough to communicate the power and influence of sports talk radio and need to do a better job conveying their successes to both advertisers and audiences. “We’ve always been second-class citizens to TV,” said Steve Cohen, SiriusXM Satellite Radio senior vice president of sports programming. “It’s always been more difficult for us to do our job. But unlike TV, we’re an interactive medium. We can bring people closer to the teams they love.”

    Similarly, the panelists said the demands of being a sports talk radio host are often misunderstood. “A lot of people have really underestimated what it takes to host a daily sports talk radio show,” said Chris Oliviero, CBS Radio executive vice president of programming. “Mike Francesca goes on for five hours every day with no teleprompter and no script. It’s basically him and a phone and a microphone. So you have to have an incredible work ethic and really strong entertainment value.”

    Quick hits:

    On being a successful sports talk radio host: “If you’re not getting in trouble once in a while, you’re probably not pushing things hard enough,” Keller said.

    On the best day part on sports talk radio: “If you look at the finances, morning drive is our prime time,” Keller said. “That's when the boxcar numbers occur.”

    On the power of a sports talk radio host: “If you talk to teams, in their markets, it’s the sports talk radio host that is a key influencer, not necessarily the guy on the 11 p.m. TV news or the local newspaper columnist,” Oliviero said.

    Tags: SiriusXM, ESPN, CBS, Media, Arbitron
  • Faces in the Crowd: Morning Networking

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    Here are some of the people we spotted networking at #sbjsmt. Click any image to start the slide show.

    Tags: CES, ING, GE
  • SMT Panel: Sports media headlines of the day

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    Perspectives from the Top

    Bill Daly, NHL
    Lenny Daniels, Turner Sports
    Paul Fichtenbaum, Time Inc.
    Brian Rolapp, NFL Media

    The latest developments, trends and technologies that affect sports media was the main topic of during an opening panel of the ’13 Covington & Burling Sports Media & Technology conference this morning. On the heels of a conference interview with Twitter COO Ali Rowhani, NFL Media COO Brian Rolapp discussed the league’s recent deal with the microblogging platform and said the collaboration “creates an immediacy and a scale,” and that Twitter has a “monetization model that fits well with ours.” Time Inc. Sports Group Editor Paul Fichtenbaum said of possible pitfalls with Twitter, “It has taken a little bit of accountability out of sports reporting.” Turner Sports Exec VP & COO Lenny Daniels said the company has put old Lakers games on NBA TV, with Kobe Bryant live-tweeting the game, and “all of a sudden there is interest in a game that happened 10 years ago.”

    Hot topics:

    TECH COMPANIES BIDDING FOR RIGHTS? Rolapp said companies like Google or Apple are “so flush with cash they can do whatever they want. It’s really a question about developing a model that works for them. We haven't seen that yet.” Daniels said many of these tech companies work because they are “hyperfocused on what they do.” Daniels: “There would really need to be a shift at these companies to where they feel they needed to be a media company. I just don't know that it is in their DNA.”

    NEW WAYS TO CONNECT WITH FANS: NHL Deputy Commissioner Bill Daly said the league is now serving fans “in ways they never had been able to before,” including player tracking technologies on NHL.com.

    ANOTHER THURSDAY NIGHT NFL PACKAGE? Rolapp said there is “no timetable.” Rolapp: “Nothing is off the table. ... I don’t think it’s eons off, but it’s more in the near future.”

    MOBILE USAGE, MONETIZATION: Fichtenbaum said a recent surprise has been that people are “reading long form” more on mobile, with about 51% of those types of stories being consumed via mobile devices. Fichtenbaum: “The level of engagement was really off the charts for some stories that I never would have thought would have worked very well on mobile.” Daniels said mobile monetization “will take time for people to figure out.” Fichtenbaum: “It depends on the content as to whether it will be a moneymaker. A subscription model can work.”

    Rolapp said that “if you don’t have a wired stadium, if you don't have an information highway where people can get this content, it’s irrelevant. But first, it would be nice if you could just make a call or send a text. You have to start there. It requires short-term action if you’re going to get ahead.”

    Rolapp feels there was “a lot of information swirling around, some informed, some not. … The facts are not out yet and you have a lot of opinion and commentating.”

    Daniels and Fichtenbaum both said NCAA reforms. Daly said the conclusion of the NHL’s Canadian TV rights deals. Rolapp said the story to watch is more consolidation in pay TV.

    Tags: Media, NHL, Turner Sports, NBA, NFL, Twitter, NBA TV, Google, Apple
  • Twitter COO Ali Rowghani on the company's IPO, new opportunities and sports media

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    Rowghani: "We feel that the pressure of being a public company will make us better."

    When its IPO was launched, there was something noticeably different about Twitter headquarters in San Francisco. “We had basically the entire workforce — about 1,000 employees — all showing up at 6 in the morning,” said Twitter COO Ali Rowghani during Wednesday morning’s second featured interview at the 2013 Covington & Burling Sports Media & Technology conference. “Our engineers often come in after 10 a.m. That was the only thing that felt different. Otherwise, internally at Twitter, you would be surprised at how it was business as usual.”

    Rowghani said there was a reason for that. “It sort of speaks to the ideology of the company,” he said of the staff-wide reaction. “We see the IPO not as an end, but as a means to an end.” Rowghani insisted that the IPO, with the mandate of quarterly reporting, is a positive for the creative output of Twitter. “There’s no place to hide,” he said. “We feel that the pressure of being a public company will make us better. It’s a quarter-to-quarter challenge for management to keep its eye on the long term. It comes down to our discipline as a management team, how we manage for the long term and not get too caught up in a short-term vision.”

    Quick hits:
    On what Twitter can do better: “I think that we can make Twitter easier. It’s amazing to me that the hashtag is essentially a mainstream notion. The hashtag was invented by a Twitter user to help make sense of it all. Now you can't watch 'SportsCenter' without the anchor saying the word 'hashtag' multiple times. It's like 'www' 20 years ago. Having said that, there's a jargon and syntax that makes Twitter difficult and too inaccessible for a mainstream audience. We want to make that easier.”

    On one of Twitter’s new developments: “We announced a set of rules to allow any publisher to pick the best tweets of any given subject, from the best cat jokes on Twitter to the best content about the typhoon in the Philippines — from something mundane and trivial to something very important. You can put the best content in a custom timeline and put that timeline anywhere you want — on a website, on a mobile app, wherever. One of the challenges of Twitter is that it’s just a torrent of content. This is a more curated, more organized experience. Twitter doesn’t want to be in the business of curating content. Our role is not an editorial one. We want to create tools that help people curate their content.”

    Why Twitter stands out in social media: “The space has gotten very competitive, and I’m sure it will continue to. We are the only platform that’s the combination of being live, public, conversational and publicly distributed. No one else has those four things. You have to make that differentiation valuable to your consumers.”

    Tags: Twitter, Media, ING, Ally, SEC, GE, ACC, CES, Audi
  • DirecTV CEO Michael White talks Sunday Ticket, SEC Network and the sports media landscape

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    White, on making a new deal for Sunday Ticket: “We’re talking lots of money here, so these things take time.”

    Michael White is well aware of the image that comes to fans’ minds when they think of DirecTV in 2013: Peyton and Eli Manning in wigs, rapping to a hip-hop beat, touting “Football on your phone.”

    Before the featured interview that kicked off the ’13 Covington & Burling Sports Media & Technology conference, the chairman, president and CEO of DirecTV took the stage while the beloved spot featuring the Manning brothers played on two big screens. “They’re both incredible athletes, but they’re great to work with,” White said of the Mannings. “They really got into it. They picked out the clothes and the wigs. It re-enforced our new message — about our mobile.”

    Of course, what everyone wanted was an update on negotiations between DirecTV and the NFL for future seasons of Sunday Ticket. “We’re talking lots of money here, so these things take time,” said White. “I’m optimistic that we'll get an exclusive deal done. There are always complications with a deal of this size, like with digital rights. We’re a good partner. We want to continue to build the franchise.”

    White explained why the NFL-DirecTV relationship is a mutually-beneficial partnership. “We’ve got two million subscribers that pay for Sunday Ticket, so that’s good for the NFL,” said White. “The highest-rated content of any kind these days is sports. Being linked with the NFL differentiates us from the rest of the competition.”

    Quick hits:
    On DirecTV’s surcharge for certain, large regional sports networks charging more than $7 a month: “We only put it on 15 percent of the country. This is one of those things where our industry is screwed up. You look at some of these mega-markets and it’s a big number on the bill. We had to pass it through to pay for the rising cost of sports in those geographies, so we charged something like $2. The money has to come from somewhere. Ultimately, it comes from the customer.”

    On where DirecTV is seeing an increase in customers: “We’re growing aggressively in Latin America. We’re growing internationally.”

    On negotiations with SEC: “We haven’t started to look at it yet.” Referring to fans in other parts of the U. S. who are not the slightest bit interested in the conference, White said, “One of the issues will be, who am I taxing?”

    On cord-cutting by consumers: “It’s a changing world out there, but so far, I don't see a significant trend in cord-cutting.” Still, pointing to the continued struggling economy, White added, “There are some significant consequences down the road that we better think about.”

    On how DirecTV’s negotiations have changed with sports leagues: “We’re looking at ratings and we're assessing their value. It’s a much more data-based negotiation than it has been. You have to try to understand, What can the consumer bear? Every now and then, you have to take a tough stand.”

    On the rising cost of sports rights and, ultimately, the cost for consumers: “I have to speak on behalf of our 20 million households that aren’t happy with their bills right now. Our average bill is $100 a month, and there are a lot of people who cannot afford that bill. There is no easy answer. Ratings in sports have never been higher. But the cost of sports is up. The challenge for us as a distributor is that we have to pass that through. I can’t cover that. That’s the real challenge for us in the industry.”

    “Sports is best when it appeals to everyone.”

    Tags: DirecTV, Media, NFL
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