Group Created with Sketch.
Volume 24 No. 179

Media

Disney today formally announced it will purchase several properties of 21st Century Fox for $52.4B, which could be a "game-changing deal in the entertainment history," according to ABC's Rebecca Jarvis. Jarvis: "The new combined company will include Fox' movie and TV studios and cable networks." Jarvis noted Fox News, Fox Business and the Fox Sports division were not part of the deal, and those assets "they will be offered to existing Fox shareholders in a new company." Disney Chair & CEO Bob Iger said the deal "gives us a much larger international footprint and it enables us to use cutting-edge technology to reach consumers in far more compelling ways and we know how important that is in today's world." He added, "We're going to launch an ESPN direct service in 2018 and a Disney branded service in 2019. This clearly will jump-start those efforts, give us more content, more producing capabilities for those services." Iger also noted he is "going to stay" until the end of '21 ("GMA," ABC, 12/14). The WALL STREET JOURNAL's Prang, Fritz & Mattioli note Disney "will also assume" about $13.7B of debt from Fox. Disney will get Fox’ stake in Hulu and its RSNs. Disney noted FS1, FS2 and Fox' stake in the Big Ten Network will remain with Fox (WSJ.com, 12/14). CNBC's David Faber notes the RSNs alone would be valued at $20B, which is the largest portion of the deal ("Squawk on the Street," CNBC, 12/14). In L.A., Meg James notes Disney would gain 22 RSNs, which could "help entice more sports fans to sign up for the proposed ESPN streaming services" (LATIMES.com, 12/14).

REGULATORS, MOUNT UP: Former DirecTV Chair & CEO Mike White said there will be "a lot of focus" on the RSNs, which is the most lucrative part of the deal. White: "I presume this goes through both the FCC and DOJ. You can never take for granted anything in that process." White added BTN was "probably" excluded from the deal for "exactly that reason" (“Squawk on the Street,” CNBC, 12/14).

GETTING EVERYONE TOGETHER: Iger said of now having ESPN and 22 RSNs, "You have to look at the regional sports networks as a complement to ESPN, not an overlap. ... There will be a sharing of product so we can infuse ESPN national with some more local content and infuse the local regional sports networks with more national content, and the result of both will be better for the consumer than it is today” (“Squawk on the Street,” CNBC, 12/14). YAHOO FINANCE's Daniel Roberts writes Iger is "doubling down on live sports television, rather than back away from it, as some analysts have suggested or predicted Disney might." Adding Fox' RSNs is a "potential boon to ESPN," as they "produce more than 5,500 live games per year." Iger clearly "sees the value and has a plan for them." Expect Disney to "swiftly rebrand the Fox RSNs as ESPN channels." ESPN can use the RSNs to "bring new life" to the "SportsCenter" franchise. Roberts: "Imagine regional versions of SportsCenter, like a SportsCenter Tennessee that airs on the ESPN Tennessee channel, covering only news about the Titans, Grizzlies, Predators, Volunteers, and Commodores. And vice-versa: Disney can pull some of the local content from RSNs into national ESPN broadcasts." The RSNs also could "feed at least some content" to the planned ESPN Plus OTT product, "although there are obvious questions about how much content and what content." Meanwhile, the deal also contains sports assets for ESPN's international brand, including the U.K.'s Sky Sports -- which Fox is expected to close on by the end of June -- and India's Star Sports (FINANCE.YAHOO.com, 12/14). 

GIVING FANS WHAT THEY WANT: In DC, Matt Bonesteel writes under the header, "Disney-Fox Deal Gives ESPN A Local Strategy To Combat Its Financial Woes." All the talk of games on the Fox RSNs "doesn't even include college football and basketball," plus MLS and the WNBA. Cable subscribers also "view RSNs as essential." A Nielsen survey in '16 of 1,500 pay-TV subscribers found that the local RSN "ranked as the fifth-most-important cable channel in their lineups, ahead of any other cable channel (including ESPN)." In some markets such as St. Louis and Detroit -- both of which are served by Fox-owned RSNs -- the local RSN "ranked higher in importance to cable customers than broadcast networks such as NBC, CBS, ABC and Fox" (WASHINGTONPOST.com, 12/14).

NOT WITHOUT RISK: VARIETY's Littleton & Steinberg note the purchase is "not without risk for seller and buyer." Littleton & Steinberg: "Can Fox make a go of things with an early-stage cable-sports operation; two cable networks that aim for a particular broad niche of people with the same political leaning; and a broadcast network that has flailed since the demise of the original 'American Idol' in 2016? And will the new properties offset some of the operating troubles Disney has had with its two best-known properties, ESPN and ABC?" ESPN remains the king of sports TV, but in recent years it has "lost subscribers while under obligations to pay out millions in lucrative rights fees to the nation’s sports leagues" (VARIETY.com, 12/14). Former TiVo Chair, President & CEO Tom Rogers said the deal makes a "very tough statement about traditional media and where it is in the world right now." Fox was "probably No. 2 worldwide in terms of advertising” after Google and “had the fastest-growing affiliate fees of anybody out there ... and yet they did not think they could make it in the future world" ("Squawk Box," CNBC, 12/14). Former YES Network Chair & CEO Leo Hindery said of whether acquiring the RSNs helps alleviate subscriber losses for ESPN, “They still have a problem. This transition from the big bundle to a world of 8-15 streaming services over-the-top is going to be a rockier road than (people) ... have talked about." Hindery: "It’s really hard to anticipate this OTT transition being as smooth as this transaction is suggesting it's going to be” (“Squawk Alley,” CNBC, 12/14).

NFL Commissioner Roger Goodell said that the league would "launch an internal investigation" of NFL Network in "reaction to the claims made earlier this week as part of a wrongful termination lawsuit that alleged rampant sexual harassment at the NFL-owned broadcast outlet," according to A.J. Perez of USA TODAY. Goodell said, "We take that very seriously. Those are issues that are important to us. We want to make sure that all of our employees, whether at the NFL Network or at the league office or at clubs, are working in a safe and comfortable environment. Any time that doesn't exist, we are going to make sure that we deal with that very quickly and very seriously." Laura Horton, the attorney for former NFL Net wardrobe stylist Jami Cantor, who filed the lawsuit, said that she "received 'no response' from the league after the original filing, despite it containing many of the same allegations of fondling, sexual propositions and other inappropriate conduct." Horton on Monday "amended the complaint that named several current and former NFL Network employees." Horton said, "I had to amend it for procedural reasons. Since I had to amend it anyway, I thought it was appropriate to add the names" (USA TODAY, 12/14).

SAPP ADDRESSES ALLEGATIONS: Pro Football HOFer Warren Sapp yesterday appeared on Miami-based WINZ-AM and denied the allegations leveled against him in Cantor's lawsuit. Sapp discussed the incident in which Cantor claims he urinated in front of her, saying, “She was not in the bathroom. I was not urinating in front of her at no time, no point, no how. I walked in, asked her to leave, she left.” Sapp also denied the allegations of giving Cantor sex toys as gifts. On whether he showed Cantor nude pictures of a women he'd slept with, Sapp said he "never showed" her "anything in my phone other than someone that I might have been dating." Sapp said of why Cantor included him in her lawsuit, “I’m the notorious one, right? I’m always the bad guy. That’s why I’m in here today. (But) we’re not having this. No, ‘Me Too.’ Nothing. No sexual harassment. Are you kidding me? No way. ... You’re not going to put that one on me" (“The Andy Slater Show,” WINZ-AM, 12/13).

ESPN President John Skipper and a host of senior management yesterday "addressed the company’s front-facing talent" in Bristol and touched on topics like the net's "current priorities" and the "recent changes to the company’s social media policy," according to Richard Deitsch of SI.com. Other issues discussed at what was called "Talent Gathering 2017" include "how political and social issues should be handled by editorial staffers, how the company approaches sexual harassment allegations and upcoming initiatives." One staffer in attendance said, "Skipper’s message was we need to control the sky-is-falling narrative better since that’s just not the case. I would say the first hour was rally the troops, a big-time pep rally: here’s our great data, look at our great numbers. The next time someone is telling you we are losing steam, it just isn’t the case." Social media was a "major topic of discussion, especially given the many times ESPN has found itself in the news in this area." That part of the presentation was handled by The Undefeated Editor-in-Chief Kevin Merida, who emphasized "not to enter into political areas, though made clear that if a politician waded into the sports sphere, commentators could comment." Merida pointed out to the group that there was a "clause in the social media policy where management reserved the right to take action if staffers violated it." At the two-hour mark, Skipper "asked for questions." A source said that there were just a "handful [of] questions." One was about how ESPN "handles sexual harassment." A source said that Skipper told the crowd he "did not believe sexual harassment was a major issue at ESPN and reiterated in strong terms that he encouraged all staffers to send him emails or set up a meeting with him if they believed any HR violations existed" (SI.com, 12/13).

ESPN's "Sunday NFL Countdown" will broadcast live this week from Pro Football HOFer Jerome Bettis' Grille 36 on Pittsburgh's North Shore to "add even more pregame buildup" to Patriots-Steelers on Sunday afternoon, according to Ben Schmitt of TRIBLIVE.com. The show will "mark the second time" that the Sunday pregame show has "traveled to a regular season game site in the program's 32-year history." Sunday's show is "expected to include special guests on-set, including former Steelers and prominent sports figures from Pittsburgh" (TRIBLIVE.com, 12/12). Patriots-Steelers is the featured game on CBS' Sunday afternoon national window, but ESPN Senior Coordinating Producer Seth Markman said, "We want a piece of this game. This is how we're going to get it. ... This is as close as we come to Super Bowl-type coverage during a regular-season game." Markman said that the net "began seriously kicking around the idea of taking the program on the road about a month ago" when it became clear the teams "were on a collision course." ESPN decided broadcasting live from Heinz Field "wouldn't make much sense" since the pregame show "goes on 6 1/2 hours before kickoff and the stadium would still be empty" (BOSTONGLOBE.com, 12/14).

NUMBERS DOWN FOR "COUNTDOWN": In Pittsburgh, Sean Gentille notes ratings are down for "Sunday NFL Countdown," but figures also are "down for all pregame shows." Markman attributes the ratings decrease to "a lot of factors." Markman said, "I’m proud of our show. I think the show has gotten better and better. We’ve changed the cast entirely over two years, which is almost unprecedented in this industry." He added, "Like anything else, when you make a change like that, it’s different to people. It takes time, sometimes, A, for us for the chemistry to build but also for the audience that might’ve been used to -- and with all due respect, I love these guys -- but Chris Berman and Tom Jackson were on for 30 years, you know? So it becomes comfort food to people. And now it’s gonna take a little more time" (PITTSBURGH POST-GAZETTE, 12/14).

ESPN boxing analyst Teddy Atlas said it "doesn't look like" the net will return him to calling live fights in the near future and the move was not his decision, according to Lance Pugmire of the L.A. TIMES. Atlas has been a "constant presence on ESPN boxing reports" for more than 20 years. However, sources said that the "decision to move him from live broadcasts was based on his comments in two ESPN Top Rank cards this year." Atlas "harshly criticized the judging" in the Jeff Horn-Manny Pacquiao fight in July, while he "argued with newly hired co-analyst Mark Kriegel and questioned his credentials" during a card last month. ESPN and Top Rank "agreed to a lucrative four-year deal" earlier this year. ESPN used Atlas "in the studio" before and after last Saturday's Vasyl Lomachenko-Guillermo Rigondeaux fight, while Timothy Bradley Jr. joined Kriegel and Joe Tessitore ringside at MSG. Atlas said that he has "three years remaining with ESPN" on his current contract (LATIMES.com, 12/13). Tessitore and Kriegel called yesterday's coverage of the Horn-Gary Corcoran fight (THE DAILY).

Amazon has obtained the global streaming rights to the AVP pro beach volleyball tour through '20. Beginning May 3 with the Huntington Beach Open, Amazon Prime Video customers inside the U.S. will be able to see every match live, except for either the men’s or women’s final of each tour stop. NBC Sports continues to own the exclusive domestic rights to one final match at each stop. Outside the U.S., Amazon Prime customers will see every match. Amazon paid an unknown rights fee, two sources familiar with the deal said. “Beach volleyball is just a super exciting sport that’s popular with fans around the world,” said Amazon Head of Sports Jim DeLorenzo. “And AVP is obviously the premier pro volleyball organization. For us, the way we look at any content, whether you look at sports or non-sports, is working backwards from our customers. ... We feel this is content our customers are going to find really compelling and exciting.” Since entrepreneur Donald Sun bought the AVP in '12 and began rebuilding it, the tour had retained its digital rights and streamed action on its own platform. Talks with Amazon began at a Seattle event about 18 months ago, Sun said, and the partnership was right. “This past year our live stream numbers were great, and we just hope we can translate that to an Amazon audience,” Sun said. Amazon’s foray into sports is best defined by its NFL "TNF" rights package, but the AVP is its second deal in recent months with an international audience in mind. The Amazon-owned Twitch platform yesterday struck a short-term partnership to live stream up to six NBA G League games per week for the rest of the '17-18 season. Amazon this summer also outbid Sky for exclusive ATP tour rights in the U.K. An NBC Sports spokesperson said the net is “extremely pleased” with its limited arrangement with AVP, and the additional rights did not fit its programming plans.

The recent WWE-Facebook deal to create the Mixed Match Challenge represents a move to develop new content specifically for the emerging Facebook Watch platform, as opposed to just distributing existing programming more broadly. The new in-ring competition, involving a mixed tag-team pro wrestling tournament, will begin Jan. 16 and add to WWE’s existing slate of events and shows. “We saw a really clear opportunity to work more closely together, take the great community they already have on Facebook, and create something new,” said Facebook Head of Global Sports Partnerships Dan Reed. The 20-minute format for each episode and the 12-week single-elimination format also veers away from many of WWE’s other traditional competitions. The Mixed Match Challenge will additionally be produced to optimize mobile viewing and include user-engagement elements such as the ability to interact with wrestlers during the episodes and select certain matchups. WWE execs said the move is likely to be repeated as it explores other emerging formats. “We think this partnership highlights our flexibility to create new content,” said WWE Exec VP/Digital & Social Content Jayar Donlan. The Mixed Match Challenge will not initially include advertising, but Facebook is developing ad insertion formats and will ultimately sell into Watch content.