Call it “The Big Bang,” a series of events that will forever change the universe as we know it. And for the sports television universe, it may be only a few weeks away.
Like sharks eyeing their prey, News Corp., Comcast Corp. and the Walt Disney Co. are circling major rights packages that will be used to create new sports networks or lock out competitors.
The NFL Thursday-Saturday package, NASCAR’s primary television deal and what’s left of Major League Baseball’s TV rights, in that order of importance, sit on a fault line that could lead to a seismic shift in the industry, with at least one new or greatly fortified sports cable network emerging from the scrum.
The jockeying has put the properties in a commanding position, one that could see them realize not just mega-million-dollar price increases but also equity in new ventures and guaranteed distribution across cable and interactive platforms.
With so many pieces and players, the permutations are virtually infinite. None of the parties involved would comment publicly, but here’s where things stood as of last week, according to multiple league, network and industry sources:
• ESPN and the Walt Disney Co. are talking to the NFL about taking an equity stake in the NFL Network, which would pick up rights to the Thursday-Saturday games. The NFL Network would pay a rights fee for the Thursday-Saturday games and ESPN would fund losses, while also supplying the network some college football programming.
• News Corp., which owns Fox Broadcasting Co. and DirecTV, has been talking to the NFL, NASCAR and MLB about television rights for a new sports network.
• The NFL deal will likely go for $400 million a year, up $100 million from previous estimates, and sweetened further by equity or cable carriage components.
• Comcast’s OLN is still a player for NFL rights. Turner Broadcasting is also talking to the league but will likely be priced out.
• NASCAR is seeking a massive increase for its television rights — 50 percent by some accounts and 75 percent or more by others — bringing total annual fees to as much as $700 million.
| Rights Deals In Play: The Players |
| News Corp. |
 2004 worldwide revenue: $20.45 billion |
| CEO: Rupert Murdoch |
| Assets: Fox Broadcasting Co., Fox Cable Networks, DirecTV, BSkyB |
| Game plan: Keep NASCAR and MLB broadcast rights. Launch a new sports network with NFL Thursday-Saturday rights. |
| Comcast Corp. |
| 2004 worldwide revenue: $20.31 billion |
| CEO: Brian Roberts |
| Assets: Cable systems with 21.5 million subscribers, OLN, Comcast SportsNet, Philadelphia 76ers and Flyers, Wachovia Center |
| Game plan: Turn OLN into a broader sports network, starting with the NHL and continuing with the NFL and possibly MLB. |
| Walt Disney Co. |
| 2004 worldwide revenue: $30.75 billion |
| CEO: Robert Iger |
| Assets: ESPN Networks, ABC, theme parks, studio |
| Game plan: Acquire NASCAR rights, including the Chase for the Nextel Cup and all Busch Series races. Take a possible equity stake in the NFL Network with rights to Thursday-Saturday package. |
| Time Warner Inc. |
| 2004 worldwide revenue: $42.09 billion |
| CEO: Richard Parsons |
| Assets: Turner Broadcasting, AOL, Time Warner Cable, Time Inc. |
| Game plan: Keep small second-half NASCAR package. Bid on the NFL if the price is lower than anticipated. |
| NBC Universal (General Electric) |
| 2004 worldwide revenue: $12.89 billion |
| CEO: Bob Wright |
| Assets: NBC, USA Network, Bravo, CNBC, MSNBC, Telemundo |
| Game plan: Drop NASCAR unless the price unexpectedly drops. |
| Source: Street & Smith’s SportsBusiness Journal |
• NBC, for all intents and purposes, has passed on renewing its NASCAR deal, but its exclusive window runs through December and the network is still talking to the racing circuit.
• Turner will try to keep NASCAR rights without NBC, getting a six- to 10-week leg of Nextel Cup races before the season-ending Chase for the Nextel Cup.
• ESPN2 expects to land exclusive rights to all NASCAR Busch Series races.
• ABC and ESPN expect to get rights to the Chase, with all but two races on ABC.
• Fox Sports will keep its rights to NASCAR, but first-half cable races that are seen on F/X will move to the new sports network if Fox lands the NFL Thursday-Saturday package.
The dizzying possibilities have created what one network television executive described as “the most robust period the industry has ever seen.”
Major media companies have always recognized the strategic value of sports rights, but never before have multiple ones simultaneously been willing to fund major new initiatives with sports as the centerpiece.
“I don’t think the calendar of sports rights fee negotiations is any busier than it normally is,” said Neal Pilson, a top industry consultant who represents NASCAR. “What’s different is the cast of characters that are chasing the sports rights.”
He added, “The growth in competition … is coming along at just the right time for certain sports,” citing the NHL’s two-year, $135 million deal with OLN as an example.
The NFL Thursday-Saturday package is expected to be awarded within the next 30 days, numerous industry insiders said, and that would set off a chain reaction with NASCAR and MLB following in short order, and the PGA Tour left picking up whatever pieces are left early next year.
“I don’t think anyone really knows how it’s going to play out other than that the NFL will be a key component to any outcome,” said Steve Greenberg, a managing director at the Allen & Co. investment firm.
News Corp. Chairman Rupert Murdoch said publicly last winter that launching a new network was contingent on getting NFL rights for it, and the consensus among various television executives is that the Thursday-Saturday package is also key to Comcast’s long-term plans for OLN.
That may be why Disney wants to keep that piece on the NFL Network, leaving ESPN as the only general sports network with the NFL.
The strategic value of the Thursday-Saturday rights package has sent the market value up to about $50 million per game, industry insiders say, just shy of the $55 million per game that ESPN will pay for “Monday Night Football” (counting preseason games). This, for a package that does not promise to deliver prime matchups.
NASCAR, meanwhile, emboldened by the 50 percent rights fee increases that MLB got for its renewal with ESPN, has been asking for rights fee increases of about 75 percent to current rights holders, sources said. Rights talks could be slowed by NBC and TNT, which have exclusive negotiating windows that run through December. But NASCAR CEO Brian France recently said publicly that he expects new deals to be completed in the next several weeks, and hinted that the landscape may change dramatically.
NBC has told NASCAR that it will not agree to the sort of increases NASCAR is seeking, effectively ending substantive negotiations, said sources close to the talks. But the network has not officially passed and talks continued into last week, according to people who’ve spoken to the principals involved.
Turner Broadcasting also has said it won’t pony up the sort of rights fees NASCAR is asking for, but is hoping for some sort of incumbent discount and the chance to keep a scaled-down package.
Turner is trying to carve off a small piece of the Nextel Cup, with races in late summer and early fall. Currently, NBC and Turner share NASCAR rights through a 50/50 joint venture, with most second-half Nextel Cup races airing on NBC and Busch Series races on TNT.
In the new deals, the Busch Series is expected to be the exclusive domain of ESPN2, officials at ESPN said, speaking on the condition of anonymity. ABC and ESPN also would pick up rights to the Chase for the Nextel Cup, the final 10 races of the season.
While NASCAR is legally barred from negotiating with ESPN due to NBC’s exclusivity window, ESPN/ABC Sports executives have been speaking with an air of confidence for some time that they expect to land Nextel Cup and Busch Series rights.
MLB’s broadcast package is expected to stay with Fox when the current deal expires at the end of next season. The former Fox Family package, which includes the Division Series and weekly games on national cable, is also up next year and still up for grabs. Inherited by ESPN when Disney acquired Fox Family, it offers a combination of marquee playoff programming and the raw tonnage that any new cable network would covet.
“Major League Baseball delivers bulk, and that’s how you build a network,” said Barry Frank, vice chairman of TWI, part of sports management and marketing agency IMG. “It’s tough to build it with one or two events.”
NBC Universal, a player for major sports rights once again and now with cable in its arsenal via the USA Network, also is being mentioned as a possible bidder for that MLB package.
Analysts say the impetus behind all this competition is that competing media companies have taken notice of the enormous profits ESPN generates for Disney, driving the lion’s share of the company’s $1.92 billion in earnings from cable networks last year. Those profits have largely come out of their own bottom lines because of the licensing fees companies such as Comcast and DirecTV pay to ESPN.
Even creating a viable No. 2 network in the sports space may be difficult because the cable sports rights market is largely set against ESPN’s economics. Those industry-high licensing fees, the cash cow that is “SportsCenter” plus other platforms such as ESPN.com, ESPN The Magazine and the soon-to-launch ESPN Mobile help ESPN offset massive programming costs in ways no other network can.
Then again, Murdoch has never been afraid to shoulder losses to build an asset, as evidenced by Fox’s initial NFL deal more than a decade ago, or the risk he took on the Fox News Channel challenging CNN. Now, he and Comcast CEO Brian Roberts both have their eyes on owning a major sports television network on cable and satellite, and have the distribution platforms to help make it happen.
The battle is on.
