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Volume 21 No. 2


Surprising subscriber numbers out of Houston suggest that CSN Houston’s much-watched carriage impasse is not likely to be resolved any time soon and, in fact, could start to shift the national debate over the carriage of local sports channels.

Industry sources say that DirecTV and AT&T executives believe they have withstood the pressure that came from the RSN’s launch and now have most of the leverage in their carriage dispute with the recently launched regional sports network. They believe that recent subscriber trends in Houston show that Comcast’s exclusive access to CSN Houston — and its high-profile sports programming — has had virtually no effect on subscriber numbers.

Multiple sources say DirecTV and AT&T have gained subscribers in Houston in the first six months since the RSN’s October launch, even though they did not have access to the channel’s schedule of Rockets games.

Comcast spokesman John Demming said Comcast’s Houston system also had registered video subscriber increases during the same time period — the fourth quarter of 2012 and the first quarter of 2013.

But the fact that DirecTV and other providers are growing their video business in Houston, even without access to Houston’s main pro sports teams, has convinced the distributors to wait out the deal.

And that’s something that worries local sports executives in other markets. They fear that a long-term CSN Houston impasse — coupled with similar carriage problems that CSN Portland, the Pac-12 Networks and FS San Diego are facing — will embolden distributors to take a tougher stand against paying for local sports channels, which are among the most expensive on every cable system.

“It depends on the market,” said Lee Berke, president and CEO of LHB Sports, Media & Entertainment. “Last fall, DirecTV publicly said no to the Lakers. Three weeks later they did a deal. At the same time, DirecTV also said no to the Pac-12. It still doesn’t carry those [Pac-12] networks.”

The nine-month carriage dispute has dominated local headlines in the Houston market and has severely cut into viewership for Rockets and Astros games. The Rockets finished the season with a 1.07 rating, down 33 percent from the previous season even though the team made the playoffs. Through the first 50 games this season, Astros ratings are down 69 percent, to a 0.43 rating. The Astros have one of the worst records in baseball.

The controversy over CSN Houston has had little direct effect on subscriber numbers in Houston, according to every source contacted for this story. As competition from telephone companies has increased, cable operators like Comcast have been losing subscribers across the country.

Sources said the losses are not the result of cord-cutting; rather, consumers are shifting to other providers.

The distribution problems have caused a rift among the channel’s owners, sources say. Comcast and the Rockets have advocated dropping the channel’s asking price to try and work out a deal. The Astros have resisted.

At a rate of $3.40 per subscriber per month, CSN Houston is one of the most expensive RSNs in the country. Distributors have complained that the rate is virtually double the rate they were paying for the same games on FS Houston just a year ago.

“The problem is that there was a substantial bidding war to get these rights a couple of years ago,” Berke said. “CSN Houston ended up asking for a higher subscriber fee than they have before in order to make things work financially.”

Talks also have been plagued by a round of musical chairs in the negotiating room.

In May, George Postolos resigned from the Astros after an 18-month stint as its president and CEO. He was the point person on the negotiations for CSN Houston, and the club’s point person on stalled distribution negotiations with the RSN.

CSN’s distribution team also took a hit last month when longtime affiliate executive Dana Zimmer left to take a similar job at the Tribune Co.

Mandalay Sports Media is developing a TV comedy loosely based on the life of acerbic Los Angeles Times sports columnist T.J. Simers, one of several projects the 15-month-old sports production company has in the pipeline.

Formed last March by Warriors co-owner Peter Guber and Hollywood producer/director Mike Tollin, Mandalay plans to pitch the Simers show to broadcast networks in the coming months.

T.J. Simers joined the Lakers’ Dwight Howard in a video that went viral.
“The series is about an old-school reporter in a medium that is quickly evaporating and a daughter who is a participant in the new media,” Tollin said. “Ultimately, it will be a comedy focused on their relationship and the relationship they never had because he was always on the road and was kind of an absentee dad. He’s kind of trying to make up for lost time. She’s trying to teach the old dog new tricks.”

Mandalay has not made casting decisions for the show yet — neither Simers nor his daughter will star in it.

But Simers and his daughter played a starring role in a viral video Mandalay produced last month with Lakers All-Star center Dwight Howard. The video, of Simers’ daughter beating Howard in a free throw shooting contest, was picked up by some of the most popular sports and entertainment websites, garnering more than 250,000 views.

Tollin credited Mandalay Sports Media CEO Rich Battista and executive vice president Jon Weinbach for pushing the video out to such sites as AOL, Yahoo, and

Carrying no advertising or sponsorships, the three-minute video did not make money for Mandalay Sports Media. But Tollin believes it helped create buzz, not only around the show but also around Mandalay’s YouTube channel, which it launched last month.

“You’ll never know if the viral video will help the series get off the ground. But we know that it won’t hurt,” Tollin said.

Since the launch of Mandalay Sports Media last March, it has been attached to several TV and broadband projects. It recently sold a pilot for a 30-minute comedy series based on Miami Heat All-Star Dwyane Wade’s book, “A Father First,” to an unnamed broadcast network. It sold a series of digital shorts to AOL called “My Ink,” which is about athletes and their tattoos.

NASCAR posted its biggest year-over-year ratings increase for the Daytona 500 on Fox, but the sport failed to convert that momentum into an increase in ratings for the early part of the Sprint Cup season.

Fox averaged a 4.8 Nielsen rating and 7.8 million viewers through the first 13 races of the season. Ratings were flat and viewership was down slightly from the 7.9 million viewers the sport averaged over the same period last year.

NASCAR on Fox ranked among the top two sports on TV during 11 out of 12 weekends. Fox’s NASCAR ratings wound up about 40 percent higher than the nine NBA playoff games on ABC this season and about 10 percent higher than the combined rating for the NBA conference finals across ABC, ESPN and TNT, according to Mike Mulvihill, Fox Sports senior vice president of programming and research.

Steve Herbst, NASCAR’s vice president of broadcasting and production, said, “We got off to a great start and were thrilled about it, but over the course of a long 13-week season [for Fox], a lot of variables come into play. We got hurt by the weather in Talladega. We were up against some good, competitive sports weekends. So the overall number came down a bit, but the overall story is about the enormous audience that joins us every week.”

For the second consecutive year, ratings dropped in the male 18- to 34-year-old demographic. But the decrease, which was just 5 percent, was far less than the 20 percent decline that Fox saw in 2012, and the overall 18- to 34-year-old demographic decreased just 2 percent in part because female viewership among 25- to 34-year-olds rose 13 percent. Fox Sports executives attributed much of the increase in female viewership to Danica Patrick, who began racing full time in the Sprint Cup Series this year and won the pole position for the Daytona 500.

“Obviously, we’d like for that male 18-34 demo to be a little bit stronger,” Mulvihill said. “But even that notwithstanding, the story we have in the other sellable demos is really favorable.”

In particular, Mulvihill pointed to NASCAR’s performance compared to TV’s entertainment shows. From February to June, Fox’s NASCAR races attracted more men aged 18-49 than any prime-time entertainment show except for CBS’s “The Big Bang Theory.”

“When you’re looking at a scenario where this package would be the No. 2 show [in prime time] on men 18-49 live viewing and men 25-54 live viewing, I think that’s a pretty positive place to start,” Mulvihill said. “At some point, you recognize that the clients can’t buy last year. They can’t buy 2003. They can only buy what’s on TV right now. Compared to everything that’s out there, I think we have a really positive story.”

Fox and NASCAR last year finalized an eight-year, $2.4 billion extension of their TV rights agreement. NASCAR is expected to begin media rights negotiations with its other two rights holders, Turner Sports and ESPN, later this summer. Both networks have exclusive negotiating windows that end in August. Their current media rights deals run through the 2014 season.

Turner broadcast the first of its six races last Sunday, and ESPN and ABC will show the final 17 races of the season.

NASCAR delivered its best Daytona 500 rating in years. The event got national news coverage after Patrick became the first female driver to earn the pole position for the race and a wreck at the Nationwide Series race that Saturday injured several spectators. Both events raised awareness of the race among casual fans and helped it average a 9.9 rating and 16.7 million viewers, a 24 percent ratings increase from 2012 and the best rating since it posted a 10.2 in 2008.

But two races following Daytona saw double-digit viewership declines, which eroded the momentum NASCAR had coming out of the season opener. The Kobalt Tools 400, which was held two weeks later in Las Vegas, earned a 4.7 rating and 7.5 million viewers. Ratings and viewership were down 10 percent and 12 percent, respectively, and NASCAR pointed to head-to-head competition from the WGC Cadillac Championships, which saw Tiger Woods win, as a possible culprit.

The Aaron’s 499, which was held May 5 at Talladega, suffered a three-hour rain delay. It earned a 4.6 rating and 7.3 million viewers, down 10 percent and 12 percent, respectively, from last year.

For eight of the 13 Sprint Cup races on Fox, NASCAR delivered ratings equal to or better than a year ago. The sport was encouraged by the increase it saw among Hispanic viewers for its English-language broadcasts on Fox. Viewership in that demographic increased 21 percent to an average of 211,000 viewers per race. Fox Deportes also began showing Sprint Cup races for the first time this year.

NASCAR’s secondary series, the Nationwide Series, didn’t fare as well on TV as the Sprint Cup Series. Through 10 events on ESPN and ABC, it is averaging 2.1 million viewers per event, down 15 percent versus 2012. (Final numbers from the June 1 race in Dover weren’t available at press time.)

NFL executives received an earful from their TV partners when the league informed them of the plan to sell Verizon the rights to stream all NFL games to their mobile phone users starting in 2014.

Agitated media partners pushed them on how the league was further diluting the most popular programming on TV. It was the same argument the league heard when they launched NFL RedZone and expanded NFL Network’s Thursday night package to a full season.

“When I pushed back, they asked me how my TV ratings were,” one exasperated TV executive said last week after the NFL announced the whopping four-year, $1 billion extension of its NFL rights deal. The deal represents a 40 percent increase over the four-year, $720 million deal Verizon signed in 2010 that allowed it to stream NBC’s “Sunday Night Football,” ESPN’s “Monday Night Football” and NFL Network’s “Thursday Night Football.”

With the new deal, Verizon gets access to the Sunday afternoon schedules from CBS and Fox for in-market streaming as well as the playoffs. The deal also allows Verizon to develop an NFL app and pick up the tab for wiring many league stadiums for increased connectivity.

As the NFL expanded its content to more channels and more platforms in recent years, the league has become the most popular programming on TV. When TV network executives complained that more games available on mobile phones could harm the TV product, the gripes fell on deaf ears.

NFL ratings were down slightly last season on CBS, ESPN, Fox and NBC compared with 2011, but they still were the strongest marks on television, with NBC’s “Sunday Night Football” and ESPN’s “Monday Night Football” continuing to be the biggest prime-time shows on broadcast and cable, respectively.

“There once were fears of TV rights cannibalization, but obviously that has disappeared,” said Chris Russo, the former NFL senior vice president of new media, who engineered Sprint’s content deal with the NFL in 2005. “We’ve gone from highlights and ring tones on cell phones to showing every game.”

Insiders note that the media partners had a chance to scoop up the mobile rights, as the league offered to sell the rights to them, but they balked at what they considered an exorbitant price tag.

Many analysts now feel Verizon stands to profit from this deal in ways that the TV networks can’t.

“A lot of people will select Verizon because of NFL content, similar to the way DirecTV grew with its NFL exclusive content,” Russo said. “Cell customers are worth a couple of hundred dollars a month to big carriers, and this is a good way to keep them.”

TV network executives said the length of Verizon’s deal, at four years, gives them a sense of relief. If Verizon starts to cut into NFL programming, they can address problems in four years. By comparison, TV networks’ rights deals run into the next decade.

“You could argue that this deal will fragment NFL programming, which could impact ad dollars,” said David Bank, managing director of equity research for RBC Capital Markets. “But of all the major sports, football is the definition of appointment viewing. I am not at all worried about the NFL’s audience fragmenting.”

What is certain to change is how leagues and teams view mobile phone rights. With the NFL having set this new bar, sports properties will reassess what their cell phone rights are worth.

“The trickle down will be interesting, especially among big colleges. Everyone talks about the small screen not being much, but if everyone has a small screen with them at all times, the definition of value has to change,’’ said Leslie Gittess, of New York consultancy Blue Sky Media. “You are talking about a billion-dollar deal which doesn’t include tablets? Watch that space.”

The TV partners have retained the right to stream their games to tablets and computers, just not to mobile phones. DirecTV also has a deal to stream every NFL game as part of its four-year, $4 billion deal to carry Sunday Ticket. DirecTV’s deal is not affected by the Verizon deal, sources said, but that is the next deal to watch, as the league is negotiating a new deal for Sunday Ticket.

Not all properties are created equal. The NFL is powerful enough to command a subscription model, but if cell streaming fees continue to escalate, it could be a catalyst for the development of a meaningful advertising model for mobile devices.

“There’s a powerful ad market demand for mobile devices, but it remains underdeveloped,’’ said former NHL executive vice president and COO Steve Solomon, who now heads consultancy SJS Sports. “The ad model on the digital side overall has been slow, and the mobile ad market is behind that. You’d think sports will push that, but it is still an uphill march.’’

The line between media and sponsorship deals has been blurring for some time, but this deal portends a time when traditional sponsorship assets are the tail on the dog.

“All other sports and entertainment properties are continuing to chase the NFL from a rights and content monetization perspective,’’ said Andrew Judelson, IMG senior vice president, college national sales and U.S. business development, who cut telecommunications content deals while a marketer at Sprint and during his time as NHL chief marketing officer. “This deal further indicates that the line of delineation between IP sales, media sales and content sales is just a thing of the past.”

Chris Russo, the veteran media executive and founder of the former Big Lead Sports, less than two years ago was leading one of the five largest digital sports properties in terms of monthly unique visitors. Early last year, he engineered a sale of the company to Gannett Inc., formerly a minority shareholder, for an estimated $30 million.

“The game has shifted away from just pure scale.”
CR Media Ventures
In his view, there’s no way a firm such as Big Lead Sports, a disparate rollup of more than 500 owned and affiliated sites that was previously known as Fantasy Sports Ventures, would be created and become viable in today’s digital sports media landscape.

“The game has shifted away from just pure scale,” said Russo, now an industry consultant with his own firm, CR Media Ventures. “It would be tough to build a new brand in this new environment. Scale is still a definite prerequisite, no doubt, but it is no longer the one thing that drives the ad buy. The ante in the market has been upped.”

Pete Vlastelica, the new senior vice president of Fox Sports Digital, tells a similar story from several years ago, when he was running the Yardbarker blog network and monthly comScore traffic rankings of unique visitors were a focal point.
“Back then, as a new entity, we were looking for any way to get the attention of media buyers and gain credibility, and we were engaged on a rollup strategy of aggregating enough traffic where we’d be worth a brand advertiser’s time,” Vlastelica said.

It was all about raw traffic, all the time. But as digital advertising revenue continues to surge — total annual U.S. spending is projected to rise more than 50 percent compared with the past two years, to more than $48 billion, according to eMarketer — a new, more mature marketplace has emerged. Big traffic often gets a site in the door with a prospective advertiser, but the value of proprietary content and the engagement it creates increasingly is what closes deals.

That dynamic has driven several market-reshaping moves over the past seven months, including the high-profile digital alliance between NBC Sports and Yahoo Sports, CBS’s new affiliation with fast-growing college sports and recruiting hub, and the new Sporting News Media joint venture between U.K.-based Perform and American City Business Journals (parent company of SportsBusiness Journal).

Each deal, combined with Turner Sports’ record-setting, $175 million purchase last summer of Bleacher Report, is far more than a simple rollup or traffic aggregation.

The new sweet spot in digital sports media includes not just a top-10 ranking in the monthly comScore rankings, but also a strong role in digital video and exclusive content that resonates in social media.

“Having that premium-level content is just a must now,” Russo said. “Things have changed pretty quickly, and there’s a realization now that if you’re a buyer just looking for scale, there are often much more efficient ways to do it elsewhere than through sports.”

The New Scorecards

Despite the seismic shifts in the market, the ritual that greets comScore’s release of its monthly rankings report remains the same: The numbers come out, and then come the cheers, complaints or recriminations, depending on the camp.

It’s fashionable among much of the executive ranks to dismiss comScore as an unrefined tool vulnerable to manipulation. But those numbers still represent the closest thing there is to a universal scoreboard, and something that easily taps into the egos and competitive drive common in the industry.

Change, however, has been a major factor in comScore. The company earlier this spring took its new Media Metrix Multi-Platform out of beta. The new measurement data blends traditional online traffic with audiences for video and those arriving on mobile platforms. The goal is to provide a truer snapshot of the current, more layered media consumption environment.

Digital sports media outlets, compared to many other content categories, for years have been particularly vocal advocates for a blended metric. ESPN and MLB Advanced Media, by many accounts the two most successful outfits in the category, each spent several years publicly railing against many panel-based online measurement methodologies. That’s because some of the most heavily trafficked periods, such as weekends, and the large audiences arriving on mobile platforms often went heavily undercounted or not counted at all.

It’s all about how many, how often, and how long. That’s the mantra. Those are the basic questions we’re trying to answer, regardless of platform.”
The initial months of the multiplatform metrics have shown some sizable changes in the sports category. Nearly every major player has seen at least a mid-double-digit percentage lift in its overall reach because of the inclusion of mobile traffic. More video-centric entities, such as the new Sporting News Media, have seen their highest rankings ever, a critical development given the higher advertising rates typically afforded to video compared with digital display inventory.

“We’ve had really strong support from sports sites, and the [multiplatform] product has continued to gain momentum since its official launch,” said Andrew Lipsman, comScore vice president of industry analysis.

But newly blended audience metrics are by no means limited to comScore, or even digital platforms. Arbitron, long known for its radio ratings, is participating along with comScore in Project Blueprint, a pilot effort aimed at measuring content consumption at ESPN across TV, radio, online and mobile, both in terms of reach and engagement. Initial results are expected later this summer.

“It’s all about how many, how often, and how long. That’s the mantra,” said David Coletti, ESPN vice president of digital media research and analytics. “Those are the basic questions we’re trying to answer, regardless of platform, but digital is certainly a big part of that.”

Other emerging digital measurement strategies are focused on tracking social media-based activity, particularly as efforts, such as the Twitter Amplify in-stream video advertising platform involving several major media brands, take root.

“The market is much more sophisticated now,” said Jeff Price, president of Sporting News Media. “There are big questions out there in terms of how you accurately compare TV [gross ratings points] to digital metrics, particularly as more and more ad dollars now go into digital video. You layer in social on top of that, and those are the places we’re watching very closely.”

Some sports properties, meanwhile, are shedding unrelated entities that previously made up part of their overall totals of unique users, as ad buyers have grown far savvier about identifying odd or improper fits.

Adding them all up

A look at some of the key building blocks that help make up the individual listings in monthly comScore traffic reports of U.S. sports destinations.

Yahoo Sports-NBC Sports
Golf Channel
Comcast SportsNet regional sites

ESPN City Sites (New York, Chicago, Los Angeles, Boston, Dallas)
X Games on MSN
Yardbarker Sports Media
Fox Sports Local
Fox Soccer

Bleacher Report-Turner Sports Network

Perform Sports/Sporting News Media
HuffPost Sports
Perform Group


USA Today Sports Media Group
USA Today Sports Digital Properties
USA Today Sports
For The Win
The Big Lead
USA Today Sports Local Media Group
USA Today High School Sports
USA Today UFC Media Group
BNQT Media Group

CBS Sports College Network

SB Nation
The Verge
SB Nation College
MMA Fighting

Sports Illustrated sites
National Football Post

Source: comScore Media Metrix

ESPN, for example, early last year parted with the traffic assignment of, a participatory sport destination with a sizable audience but far different mission than ESPN’s spectator sports focus. After the change, ESPN temporarily fell to third in the sports category in comScore online reach rankings, but its traffic has since grown to levels beyond what it posted with, thanks in part to an overall surge in digital consumption patterns and organic gains within itself.

ESPN thinks it has a cleaner value proposition for advertisers. “had a totally different user scenario, and we made the decision, we think rightly, to offer a more pure representation of our audience,” Coletti said.

The Buyer’s Needs

Amid all the rapid change in digital media, buyers and brands have started to become more vocal about what they want from content publishers, not just in sports. In short, what they’re looking for is a digital programming model similar to TV with big hits and sizable audiences congregating around major events.

But beyond that, they’re after much better measurement tools to accurately gauge audiences throughout every medium. A collection of senior executives from major digital media buyers such as Digitas, Universal McCann, GroupM and Starcom last month took an unusual step and wrote an open letter to “digital video publishers everywhere,” imploring them to step up their game in this new environment. Among the calls to action were for publishers to take an active role in improving audience measurements as opposed to leaving the job to third parties such as comScore.

“What are the bridge metrics that paint a portrait of a single piece of content or programming within the broader, nonlinear web of viewing and engagement?” the letter read in part. “We need you.”

The Interactive Advertising Bureau, which helps set industry standards around digital marketing, quickly responded, “We have to get not just reach and frequency right, but demographics, social sharing, and more.”

Even before the agencies sent their letter, many digital sports publishers had begun to more deliberately focus their online and mobile programming around big events such as the Olympics, Super Bowl and March Madness. The core thinking on both the buy and sell side of the table is that an online audience of several million concentrated on one event is far preferable to a reach number two or three times as large but spread over an entire month and myriad pieces of content.

“We’re trying to lead with our premier events,” said Rick Cordella, NBC Sports Digital senior vice president and general manager. “The idea is to offer a greater experience to advertisers with the events we have. For example, there’s only one place to be part of ‘Sunday Night Football’ and that’s with us.”

Then there is a simple care-and-feeding issue. Digital advertising is often difficult to sell and purchase relative to broadcast advertising, frequently because both publishers and agencies have online and mobile personnel siloed away from their broadcast counterparts. As a result, there is a keen focus in many camps on breaking down those walls, a conversation far away from conventional metrics.

“Sure it’s nice to be No. 1, but it still boils down to whether you are executing on behalf of the sponsors. Do you take good care of brands? Are you surrounding them with quality?” said David Katz, founder and chief executive of, which operates in partnership with Yahoo Sports. “Sites still need to legitimize themselves, but there are lots of ways to do that beyond metrics.”

Despite the turbulence in the content and marketing landscape, publishers, agencies and brands are looking forward to a day when determining digital supremacy and spending against that come with far less friction. If that happens, many executives expect a surge in brand advertising, as opposed to the strategies focused more on direct response that have dominated many segments of digital media.

“The dollars still haven’t caught up to the audience,” Coletti said. “And that reinforces why getting better common baselines is so important.”