NBC Universal Sports and Turner Broadcasting have told NASCAR they won’t pay the sort of double-digit rights fee increases that the racing circuit is seeking, and also rebuffed NASCAR’s request to move up the negotiating timetable, multiple industry sources said.
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| Fox is expected to renew its NASCAR television deal, but NBC and Turner have had difficulty making the numbers work. |
The two share NASCAR rights under a 50-50 joint venture that expires at the end of 2006. Although sources say Turner will likely try to strike its own deal if NBC balks, Turner Sports President David Levy said they’re still in it together and they expect to renew as a team.
“There’s a tremendous amount of interest in keeping NASCAR. The question is, at what price?” he said.
Referring to NBC Sports Chairman Dick Ebersol and President Ken Schanzer, Levy said: “Dick, Ken and I have been in conversations. We’re trying to find a model that works.”
NBC declined to comment.
The current rights holders, a group that also includes Fox Broadcasting Co., have exclusive negotiating windows that expire in December. When NASCAR was unable to secure an early renewal, it asked for permission to speak to other bidders. But the networks, with little incentive to do otherwise, turned down NASCAR’s request, sources said. That’s left the talks somewhere between first gear and neutral, with sporadic meetings throughout the summer but little progress, according to various executives involved.
Ebersol and NASCAR CEO Brian France were at odds with each other in mid-August, a source said, but since then have made amends and now NBC is more interested in renewing than it was several weeks ago.
Fox is widely expected to renew, but NBC and Turner officials have told NASCAR that, while they would like to keep the property, they have sustained losses under the current six-year deal. Therefore, they’ve told NASCAR officials, they have no appetite to pay a considerably higher rights fee. Turner, which enjoys the dual revenue streams of the cable model, may be more willing to take on red ink from NASCAR. But for NBC, losses run cross-current to the network’s stated philosophy that it must at least break even on all sports programming. And with the network now committed to pay $600 million a year for NFL rights starting next season, it has an anchor property with the power to drive viewers to the network, potentially diminishing the strategic importance of NASCAR.
The expiring deal called for total rights fees that averaged about $400 million a year, with Fox paying slightly more than NBC and Turner because it has the higher-rated first-half package. Next year, the final year of the agreement, NASCAR will receive about $570 million from the networks because there is a 17 percent annual escalator built into the deals.
NASCAR, meanwhile, has taken notice of the very public (and a few private) overtures from ABC Sports and ESPN, whose president, George Bodenheimer, has said he would like to bring NASCAR back to those networks. With that in mind, NASCAR officials believe their sport can command the sort of 27 percent increases that the NFL got for its Sunday afternoon packages from Fox and CBS.
NASCAR vice president of broadcasting Dick Glover would not comment on the specifics of the negotiations, other than to say, “They continue to move along a slow but steady course.”
“From NASCAR’s point of view,” he said, “nothing has changed from what we’ve been saying for several months, which is we anticipate, and it is our goal, to renew with the current partners.”
Glover said he expects NASCAR to maintain the current setup of having a first-half and second-half rights holder, each with a cable and broadcast arm. The only exception to that might be creating a separate deal for the Busch Series, which gets some of the best cable television ratings of any sports property — averaging a 1.9 this year — and also out-rates most other sports on network television, drawing a 2.6 average.
Another potential change relates to the Daytona 500. Fox is pushing for rights to the race every year. It has alternated between Fox and NBC in the current deal.
Fox also may want to move cable rights off FX, which shows a dozen Busch Series races and three Nextel Cup races each year under the current deal. FX has grown from 58.6 million to 86.8 million households since adding NASCAR in 2001, so the programming has more than served its purpose from a distribution standpoint. Fox-owned Speed Channel, meanwhile, is in only 64 million homes. It has a separate rights deal with NASCAR that includes the Craftsman Truck Series and various other programming, but it has no rights to air live Busch or Nextel Cup races.
