Investment Decisions Should Still Be Determined By Basic Consumer Demand
Amid a volatile culture and extraordinary changes to the way people view sports, the fundamentals of consumer demand still ought to drive investment decisions, said Providence Equity Partners Managing Dir Josh Empson. When asked about the prospects of former Providence property YES Network, Empson said he believes in its future despite the challenges facing RSNs, because of the Yankees’ strong fan base. “If you’ve got that, does it matter if you’re an RSN or OTT?” he said. “You’ve got an audience that’s going to show up. And, unfortunately, that level of passion is not the same for all properties. The value of the DMA you’re operating in is not the same. ... There are RSNs who are having problems, and I’d imagine those same properties would have difficulty with an OTT platform.” He made a similar point about the NFL’s struggles with fans who are upset over the anti-police brutality protests during the national anthem. “As much as people make a big deal out of it, and it’s painful to me, that just emphasizes how important the NFL is to the national conversation,” Empson said. “Whether people stand or kneel captivates the nation, what else can do that? As long as they’re central to the national conversation, I can’t see anything eroding that position.”
* Empson rated the NFL as a short-term “hold,” but a long-term “buy.” He explained the short-term “hold” by saying the NFL won’t get the big revenue gains it’s hoping for until the rest of the ecosystem catches up to its success, perhaps when some major new player like Apple or Facebook pays top dollar for exclusive rights. “Which they may, but they seem to be focused on other sports for exclusivity,” he said.
* On esports: “Numbers are huge, but the future is far from clear."
* On investment in European teams versus U.S. teams: “The strong federation systems and governing bodies in the U.S. that are very, very commercial, like the NFL and the NBA, offer enormous value to their team owners. But it also somewhat constrains what the teams can do independently. In Europe, there’s a lot less of that, so there’s a lot more opportunity for them to align with a partner and pursue differentiated strategies."