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Volume 20 No. 42


It’s not Google buying “Sunday Night Football.” It’s not Apple picking up a national baseball package. It’s not even as significant as Yahoo’s one-game NFL streaming deal from 2015.

But a flurry of recent sports rights deals by digital media companies has energized league executives that the presence of these competitors to traditional television companies will keep rights fees high during the next round of media negotiations.

“It feels like it’s finally getting here,” said Doug Perlman, CEO of Sports Media Advisors, who consults with properties such as NASCAR and the U.S. Tennis Association. “There has been a drumbeat of deals over the past few weeks that suggest digital media companies are more engaged than before. It will be interesting to see how the size and nature of these deals evolve.”

It’s hard for league executives to hide their enthusiasm from the fact that companies have struck at least four digital rights deals in recent weeks: Twitter’s two-year pact with the National Lacrosse League, Facebook’s one-year deals with the Word Surf League and Univision/MLS, and Turner’s UEFA Champions League deal.


Twitter and Facebook

Twitter: NFL ‘Thursday Night Football;” MLS; NBA; Copa America via Univision and Fox; Wimbledon; MLB and NHL games via MLBAM; PGA Tour; UFC 207; NLL

Facebook: NBA D-League: USA Basketball exhibition games; MLS via Univision; World Surf League; CONCACAF Champions League; Liga MX via Univision; IOC; PGA Tour; College Coach’s Corner Series presented by Nissan; MLB World Series pregame shows via Sports Illustrated and Fox; Conference USA football via BeIN Sports; Atlantic 10 basketball; WTA Dubai Duty Free Tennis Championships via BeIN Sports

Source: SportsBusiness Journal research

Most executives are encouraged by the fact that digital media companies — ones that typically have been resistant to paying for content — increasingly are sticking their toes in the sports rights waters. Speaking both on the record and via background, more than a half dozen media and league executives interviewed for this story were careful not to overstate these moves ­— it’s laughable to compare the World Surf League to the NFL, of course.

“I wouldn’t come to the conclusion [that these deals mark the start of a trend] based solely on the English-language deal that we just did with Univision and Facebook,” said Gary Stevenson, MLS Business Ventures president and managing director. “But it certainly could portend for the future.”

These aren’t the first digital deals cut by Facebook and Twitter. Twitter has deals with several top properties, including MLB, the NHL and PGA Tour. Facebook has put a priority on live video and has deals with smaller properties such as the NBA D-League and Atlantic 10 basketball.

Last month’s bidding for the UEFA Champions League shows just how much the rights fee environment is changing with digital rights. Turner Sports will spend more than $60 million per year for UEFA Champions League rights, a deal that was made more with Bleacher Report and over-the-top considerations than television. Surprisingly, the second-place bidder was not a traditional media company. Rather, it was BAMTech, which also wanted the UEFA Champions League rights for an over-the-top service.

As a sign of how far these digital companies still have to go to be significant players for sports rights, ESPN’s programming team took the lead in helping BAMTech develop its bid, sources said. ESPN’s parent, Disney, owns a 33 percent stake in BAMTech.

“It’s not ready now, which is why you’re seeing World Surf League deals instead of ones with bigger leagues,” said longtime media consultant Lee Berke, president and CEO of LHB Sports Entertainment and Media who consults with the San Francisco Giants, Carolina Panthers and University of Oklahoma. “But these are toes in the water. These are baby steps. The steps are only going to get louder. The ground is being prepared for a number of these digital platforms to be making bids for the major properties and for packages as they come up in the early 2020s.”

Observers describe the World Surf League and NLL deals as tests for Facebook and Twitter, as they figure out whether the stream will work, how much it will cost and if their audience even wants it.

The deals are more than simply tests for many smaller properties, however. In many cases, these digital outlets provide bigger-than-expected audiences and the younger viewers that advertisers want to reach.

Some of the bigger leagues, though, have been reluctant to sell big programming packages to digital companies, worried that they do not have enough bandwidth to handle 15-20 million simultaneous viewers. MLS had to scuttle a deal with Twitter early last year because the service was not ready to host the league’s live game video.

That stance, though, rapidly is changing, as later in the year Twitter received plaudits for the high quality of its NFL “Thursday Night Football” video.

“The bandwidth is getting prepared and developed,” Berke said. “It’s getting cheaper.”

The Univision-Facebook deal that Stevenson referred to illustrates how these digital media companies increasingly are looking for sports rights. The deal, which will see Facebook carry 22 regular-season Univision games in English, was led by Facebook executives who had approached the league earlier this year, looking for any kind of live programming that it can put on its Facebook Live application. MLS, which has contractual commitments with ESPN, Fox and Univision through 2022, came up with the idea of Univision’s telecasts. Eager to expand the reach of their games, Univision executives quickly agreed as part of a deal that pays MLS a small rights fee.

“Our ESPN and Fox games are shown in both English and Spanish on their respective English and Deportes networks,” Stevenson said. “In this case, our solution in Univision games has always been the SAP button on your remote control, which is a clunky user experience. This gives English-speaking fans an opportunity to have a better user experience for the Univision games.”

Choices for the sports consumer clearly are increasing in this new media landscape. But how that landscape evolves and what it means for major sports rights holders still remains the big unanswered question.

“The digital platforms are increasingly aggressive,” Berke said. “It’s feels like a startup industry for media again.”

The content being created by collegiate athletic departments is changing. So is the way it’s being distributed.

Schools now are looking for short, punchy videos with exclusive behind-the-scenes footage rather than the 30-minute production. That might be as simple as the team’s walk to the bus or its entrance into an arena. More and more, video coordinators with insider access — because they work for the school — are looking to push out their content as quickly as possible, which often means shooting on Facebook Live.

Winthrop showed its team arriving for the NCAA tourney in Milwaukee on Facebook.
That was certainly the case during last weekend’s opening rounds of the NCAA tournament. Whether it was third-seeded Oregon or 13th-seeded Winthrop, schools are pushing out as much live content as they can gather. One of the primary benefits for the schools is the ability to stream live content from an event, like a locker-room scene or the team breakfast at the hotel, without infringing on the broadcaster’s media rights.

“It’s really the best way for the most people to see your content,” said Everett Hutto, Winthrop’s director of new media.

Until the last year or two, the official athletic website was considered a school’s channel to deliver content. Often that content was a full-length news conference or perhaps a 30-minute insider show from football practice.

But schools are moving away from that kind of production in favor of live shots filmed and distributed on social media. At times, Winthrop’s director of video services, Jeremy Wynder, will activate Facebook Live on his phone and hand the device to students in the stands for spontaneous crowd reactions.

Craig Pintens, Oregon’s senior associate athletic director of media and public relations, said that kind of unscripted, reality content is more desirable than packaged shows.

“We spend a lot more time worrying about our content on social media than we do on our website,” Pintens said. “The website has become an archive for information, stats and stories. But for real content, Facebook Live and other social media platforms are where it’s at. It’s instantaneous. The world has changed and we’re looking for that content.”

Facebook, with an audience of 1.86 billion, simply is the best one-stop shop to get the school’s content in front of the most eyeballs, school officials say. There are 650 million people connected to at least one sports page on the platform.

The Ducks also are beefing up their video services by bringing in Brandon Barca from Vanderbilt to be the director of multimedia integration. Barca is charged with developing a roster of student talent at Oregon that can capture the videos and stream them live.

“We’ve got the access and we’ve got the behind-the-scenes content,” Pintens said. “The Ducks also have a large following on Facebook and that’s something we’re taking advantage of.”

— Michael Smith

ABC and NBC Sports now hold the series’ rights.
Weeks away from opening negotiations on new media rights deals, IndyCar executives will highlight the sport’s recent ratings gains as the main reason it expects to see double-digit percentage growth.

ABC and NBC Sports are the incumbents, with rights going through 2018. Mark Miles, CEO of Hulman & Co., which owns IndyCar, said talks would start in the coming weeks but would not say which of the networks asked to open the exclusive first negotiation period.

IndyCar consults with Bevilacqua Helfant Ventures on media rights. Miles and Chris Bevilacqua, co-founder of BHV, said that given IndyCar’s upward ratings trajectory, plus the relatively antiquated structure of IndyCar’s current deals, the new deal could have some interesting new elements and interested suitors.

Miles said IndyCar wants a double-digit increase in rights fees, but added that “trying to increase exposure is probably our highest priority.”

IndyCar averaged 1.28 million viewers in 2016, up 10 percent from 2015 and its best since 2011. The number was less than half that — 488,000 — for NBC Sports’ portion of the campaign. But the series retains one of the world’s most prestigious sporting events in the Indianapolis 500, which drew more than 350,000 attendees and 6 million TV viewers for last year’s 100th running.

IndyCar’s current deals are structured differently. ABC’s deal “is more of a traditional rights buy,” Miles said, where IndyCar receives a rights fee and ABC gets to show the Indianapolis 500 and five other events. NBC’s deal “is more of a partnership,” where there are shared expenses and revenue-sharing opportunities, with races shown on NBC Sports Network.

IndyCar’s negotiations come as the traditional media industry is in upheaval, dealing with overall declining TV ratings, a tepid ad market and increased cord cutting. One of the sport’s TV partners, ESPN, went through a round of layoffs in 2015 and is now planning to lay off on-air talent.

IndyCar’s advantage is that it does not have a lot of competition for media rights money right now — it is one of the few big sports brands that is renegotiating its deals. But the talks do come as the new ownership of Formula One looks at the U.S. as a big growth market and will seek opportunities with media rights partners.

Jon Miller, NBC Sports’ president of programming, said in a statement that “we love our relationship with IndyCar” and “look forward to discussing the future media rights later this year.”

Julie Sobieski, ESPN’s vice president of league sports programming, said that “right now, the property is doing really well for us,” and “we’re feeling really good about that future.” As for a possible renewal, she would say only that the network is looking forward to the negotiations.

Fox Sports was viewed by some inside IndyCar as a possible suitor, but a Fox Sports spokesperson said last week that the network has no interest.

Bevilacqua said it could make sense for IndyCar to have only one media partner, which could give that partner incentive to promote the entire season instead of only its portion of the schedule. However, the series isn’t ruling anything out.

IndyCar also is examining how it will structure over-the-top rights. Bevilacqua expects IndyCar to offer robust TV Everywhere rights to whichever partner picks up its U.S. rights. And he said that if talks open to the outside market, IndyCar will test interest among nontraditional players like Amazon, Google and Facebook, and how to handle its international rights, which are now owned by ESPN.

Moreover, IndyCar’s title sponsorship with Verizon expires after 2018, too, which adds another element to negotiations and the way media rights content could be offered.

ESPN expanded coverage of the Special Olympics at the Los Angeles 2015 World Games.
For three decades, ESPN saw its work with the Special Olympics as a charitable act. Now it’s business, too.

On Saturday, ABC broadcast the opening ceremony of the Special Olympics Winter World Games live from Austria, and both ESPN and ABC will air highlight shows through the closing ceremony on Sunday.

It’s the first commitment under a three-year rights deal ESPN signed with Special Olympics International in October, which followed a successful experiment to expand coverage at the Los Angeles 2015 World Games.
Terms aren’t public, but in the new relationship, ESPN views the Special Olympics as a property expected to provide a financial and strategic return like any other sport it airs.

“The summer of 2015 really transformed our relationship with the Special Olympics from one of corporate citizenship to a business one,” said Russell Wolff, ESPN International executive vice president.

Wolff said ESPN has featured Special Olympians in one-off segments on “SportsCenter” and other platforms for years, but thought it had more potential, based in part on the success of the Invictus Games and the Paralympics.

“The concept of athletes with differences was starting to resonate in our shop, and we thought expanding that to athletes with intellectual disabilities was a natural next step,” he said. “And I think we found we were right.”

Along with broadcasting on ESPN and ABC, ESPN is a distributor of international coverage to 190 territories, syndicating to TSN in Canada, Sony ESPN in India and Tencent digital platforms in China, among others.

In 2015, the opening ceremony drew 525,000 viewers to ESPN, about the same as a Feb. 28 Indiana-Purdue men’s basketball game, with viewership ranging from 244,000 to 295,000 for highlight shows. ABC aired two taped shows in 2015 that drew in the low 500,000s.

Wolff says the coverage has brought corporate partners Toyota and Bank of America on board, and encouraged ABC affiliates to promote local send-off parties for athletes. ESPN also sees the natural audience for these events as especially passionate compared with most sports fans, echoing thoughts of Paralympic partners.

Special Olympics International CEO Mary Davis said ESPN’s commitment has given the organization new assets to promote while negotiating with sponsors, and has helped the search for new fans.

But also, she said, ESPN is advancing the nonprofit’s core mission merely by presenting the Games as an event like any other sport. ESPN has again hired retired Special Olympian Dustin Plunkett to join the broadcast crew with Robin Roberts and Kevin Negandhi.

“By having Dustin present alongside ESPN presenters, it shows the world that, yes, these are people who are as capable as anyone else,” Davis said. “You give them the platform, the necessary training, and they can achieve a heck of a lot.”

South by Southwest is an event that caters to interactive digital companies, so it should come as no surprise that media business’ biggest disrupters were the ones that had the biggest presence in Austin, Texas, last week.

YouTube posted with bigger presence than previous years, setting up shop in the first floor of an office building. Twitter worked out of a rented house for a week. Amazon built a large downtown set, primarily to promote its “The Man in the High Castle” series. Snapchat executives were spotted around town celebrating the company’s recent IPO. Netflix threw one of the biggest bashes of the week.

“These weren’t one-and-done parties like some of these other media companies,” said Justin Ching, a supervising producer at Fox Sports, who attended the event. “These are companies looking to own the entire week down here.”

Though SXSW launched a sports component in 2014, complete with sports-focused panels during the day, sports media companies have not invested in the week as much as other digital companies.

“Our No. 1 product — live sports — has continued to be a little more invulnerable to digital disruption,” Ching said. “There’s a lot of hype around sports, but sports is one of those places where technology adoption is slower than in a place like music. Sports hasn’t had to reinvent itself like music has in the last 10 years.”

As has been the case at most sports media events over the past several years, the sports-related technology that brought the most buzz dealt with virtual reality/augmented reality and wearable technology, according to sports business executives who attended SXSW.

“You couldn’t shake a stick without hitting another VR test area,” said ESPN NFL business analyst and MMQB columnist Andrew Brandt, who was on a panel at SXSW that was bullish on the future of legalized gambling in sports.

Figuring out how to program content for and around wearables was another common theme during the event.

“Media companies are looking to sell into that and see that space as another screen to create for,” Ching said.

Bill Squadron, special counsel for Genius Sports and a professor at Columbia University, agreed.

“The use of biometric data to tell stories about various kinds of sports certainly has gotten some attention in the past couple of years,” Squadron said. “We are moving into a new world. Nobody really knows what the ground rules are going to be five years from now.”

— John Ourand

The YES Network this baseball season will have its most advanced production capabilities in its 15-year history with the development of a custom-built, 4K television truck and a rebuilt studio set in Stamford, Conn.

The truck, created in partnership with Game Creek Video, is the first of its kind in the U.S. It’s built entirely with an internet protocol infrastructure, which allows for greater bandwidth and the ability to take full advantage of 4K resolutions and heightened color standards.

It will be the largest and most technologically advanced production truck among those used by regional sports networks for baseball, and also will service YES’s sister corporate entity, Fox Sports, for national MLB broadcasts of jewel events such as the All-Star Game and World Series.

The RSN’s primary studios in Connecticut, meanwhile, have been redesigned to allow for much more flexibility between desk-based shows and stand-up shots, as well as more of a visual variety between the network’s pregame and postgame shows for New York Yankees and Brooklyn Nets coverage, and its other programming.

“Our goal from the very beginning has been to do a national-level broadcast every night at the regional level, and these things really allow us to make that happen,” said Mike Webb, YES Network vice president of operations and engineering.

Financial terms for the projects were not disclosed. The truck is being used on a long-term lease from Game Creek.

— Eric Fisher