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Volume 21 No. 2

Media

Following a season dominated by news of falling TV ratings and declining interest, I paid closer attention than usual to the NFL’s schedule release this year. The league appears to have front-loaded its 2017-18 schedule with marquee games to ensure a fast start, build momentum and post TV ratings jumps.

Here are some areas where I plan to focus this fall.

NBC’s “Sunday Night Football” remains the league’s top package, so it’s no surprise that it has the strongest schedule. One network executive pointed to the first part of NBC’s schedule, which features intriguing quarterback matchups — Eli Manning vs. Dak Prescott, Aaron Rodgers vs. Matt Ryan, etc. The belief is that stars not only will bring viewers to “Sunday Night Football,” but they will help retain viewers later in the schedule.

Because it has the NFC package, Fox’s Sunday afternoon schedule always seems strong. It looks particularly strong to me this season, thanks in large part to the number of Dallas Cowboys games it has. The Cowboys will anchor seven of Fox’s nine doubleheader weeks this season. That’s important for Fox because the Cowboys are the league’s top TV draw, by far. Last season, for example, Cowboys regular-season games in the second half of the season drew larger TV audiences than the Chicago Cubs’ historic seven-game World Series win.

In lobbying for its “Monday Night Football” schedule, ESPN asked the league for more intradivision games. The network found it difficult to market a game like its Week 9 contest last season between Buffalo and Seattle, two franchises that are hardly rivals. The league responded by giving ESPN nine intradivision games last season. Why does that matter? As one network executive explained, “Anytime you have a division matchup between two teams that are expected to be at least decent, mathematically it’s hard for both of them to be terrible, and that makes ESPN’s schedule better insulated against matchups falling apart than it was last year.”

Dallas, the league’s top TV ratings draw, appears in seven of Fox’s nine doubleheader weeks.
Photo by: GETTY IMAGES

Network executives are not thrilled by the Chargers’ move to the country’s second-biggest media market. Los Angeles now has two teams in the same market that cannot play a 1 p.m. ET home game. The two L.A. teams combined for only three prime-time appearances, which must have created a logistical nightmare. Six Chargers and Rams games will compete against each other head-to-head on CBS and Fox, which is not great for TV ratings in the market. “Until at least one team in L.A. becomes a real contender, the scheduling in L.A. is going to remain a vexing problem,” one network executive said.

I am always interested in the games that the NFL decides to crossflex — i.e., NFC games that appear on CBS or AFC games that move to Fox. It appears that CBS picked up the best crossflex game this season, with the Seahawks-Giants Week 7 matchup.

There’s an interesting change to NBC’s “Sunday Night Football” flex schedule this season. If the NFL flexes a CBS or Fox late-season game to NBC, the network that loses the game will get the Sunday night game, regardless of whether it’s an AFC or NFC matchup. This change came about last season, when the NFL flexed a Week 15 Tampa Bay-Dallas game from Fox to NBC. The league then put the original “Sunday Night Football” game — Pittsburgh-Cincinnati — on CBS, since it is a traditional AFC contest. That meant that Fox lost a Cowboys game, and CBS gained an intradivision matchup that rated well.

John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.

I was interested in several answers that Turner President David Levy gave during our interview at the CAA World Congress of Sports last month.

On Bleacher Report streaming live rights

Bleacher Report will always have scores, highlights and game recaps. Those are the “table stakes,” Levy said.

“I can also see Bleacher having live sporting events at some point,” he said. “It doesn’t have to be a sporting event. It could be Drake playing Reggie Miller in a ping-pong tournament — charge 25 cents or 50 cents, whatever. I bet you would have a lot of people that would be interested in seeing that. Yes, you may have live sports, but you may have that as well. That’s the future of what we’re heading into.”

Levy says smaller leagues would benefit from a pay-per-play model.
Photo by: TONY FLOREZ PHOTOGRAPHY
Levy envisions a Bleacher Report that is a cross between sports and pop culture. He brought up the Bose commercial with Seattle Seahawks quarterback Russell Wilson and hip-hop star Macklemore as an example of the type of content Bleacher Report wants.

“We care about what people wear,” he said. “We care about the sneaker industry … the selling of sneakers and the style and the fashion. That’s all part of the essence of what Bleacher is.”

Levy’s timetable for this is closer than you might think.

“We are three to five years away from seeing the definition of a network just be completely changed from what a network is today. [There’s still going to be] television. The opportunity of how you distribute your content is going to be very, very different.”

On the future of sports media

Traditional television channels and digital media companies will resemble each other as the business moves forward, Levy said.

The advantage television companies currently have over digital media companies is reach and high-quality programming. Digital media companies’ advantages are rooted in advertising — they have all the data that enables targeted marketing, Levy said.

“There’s a race toward the middle,” he said. “Amazon and Twitter are buying football. [There’s] baseball on Facebook. MLS is on Facebook. We’re selling pre- and postgame shows for the NCAA to Twitter …
“And our businesses are getting into analytics. I can buy set-top-box data. I can buy credit card data. Then I start understanding my consumer from a TV perspective.”

On pay-per-play

It’s already harder for smaller leagues and conferences to get paid for their media rights. Cable networks like ESPN that are enacting cost-cutting measures increasingly are basing many of their decisions on how much a deal can help with pay-TV carriage.

Levy believes many smaller leagues and conferences should embrace a pay-per-play model.

“There are leagues that can’t get distribution,” he said. “There are midlevel conferences that are playing in time periods that they don’t want to play in. I think there will be opportunities to actually now play when you want to. And you can sell it direct to consumer and not have to play at 9 a.m. on Saturday morning on some network when you’re not filling the stadium. That’s not helping their brand. Originally, they were doing it for recruiting purposes …

“I believe there’s a pay-per-play with a lot of different conferences in college and with leagues that maybe aren’t getting the distribution with the rights they think they can. It doesn’t have to be a million people doing it.”

On NBA League Pass

Turner and the NBA have talked about the possibility of selling the last several minutes of individual NBA games. Levy said Turner, which runs the league’s digital businesses, already sells individual games in addition to seasonlong packages. Neither Turner nor the league have made any decisions on that possibility.

“We’ve been having discussions about the possibility that you could buy the last five minutes or the last two minutes of a game at some point,” he said.

In the weeks before ESPN laid off 100 anchors, reporters and analysts, one anchor renegotiated a salary that paid one-fourth of the previous deal. The hope was that a smaller salary would keep the anchor from being laid off. It worked.

In March, more than a month before the layoffs were announced, a talent agent approached a rival network executive to see if there were any openings for his client. The agent said ESPN was looking to cut his client’s salary by more than 60 percent.

Similar stories played out for several other anchors and reporters, many of whom ultimately agreed to salaries that were more than 50 percent lower than they had been getting paid.

The atmosphere among ESPN’s on-air talent has been tense for the past two months, as rumors swirled about how deep the network’s cuts would go. Last week, the rumors became reality as some of the network’s best-known reporters and anchors were cut, recognizable faces like NFL reporter Ed Werder, college basketball reporter Andy Katz and MLB analyst Jim Bowden.

Because much of the talent is outside of ESPN’s Bristol headquarters, department heads and HR executives made phone calls for most of Wednesday, with most lasting only a couple of minutes.

NFL reporter Ed Werder is among the most recognizable personalities who lost their jobs at ESPN last week.
Photo by: ESPN IMAGES

ESPN agreed to pay out full contracts, which in some cases lasted more than five years. Several reporters offered to continue working through their contracts without incurring expenses, but they were told they couldn’t.

Talent that had contracts were told that they were still employees of ESPN on payroll, but they no longer worked for the company. Many have non-compete clauses in their deals, which means they can’t report their beats, even on social media, until their contracts end or they are released. In order to get around the non-compete clauses, they would have to report on entirely different beats than the ones they spent years developing at ESPN.

What already had been a rough market for on-air talent became a lot rougher.

“It’s rare that you see such a huge shift in the marketplace for talent,” said Jim Miller, author of best-selling books on ESPN and CAA.

It also marks a stark difference from four years ago. That was soon after NBC Sports rebranded its sports channel to NBC Sports Network and FS1 launched. Throw in CBS Sports Network and all the league-owned channels, and the market for on-air talent soared. Wanting to keep people from going to the rival networks, ESPN, in particular, was generous about paying to keep its talent roster intact.

“ESPN didn’t want to create the perception that the new kid on the block in FS1 was a good place to go,” Miller said. “ESPN paid extraordinary increases in new contracts because FS1 expressed interest.”

Top talent agent Sandy Montag, founder of The Montag Group, said the feeding frenzy as those channels battled for talent “created a false sense of security in the market.”

Much of last week’s press blamed the layoffs on “cord cutters,” consumers who are going without traditional cable or satellite service. And for good reason: Since FS1’s August 2013 launch, ESPN has lost 10.8 million subscribers, according to Nielsen. It currently is in 86.9 million homes.

During that time, though, ESPN also spent big on sports rights, including its multibillion-dollar NBA deal that kicked in last fall.

College basketball reporter Andy Katz also was let go.
Photo by: ESPN IMAGES

“The layoffs showed that sports is big business,” Montag said. “The amount of money ESPN and Turner are paying for the NBA has a direct impact on their costs.”

For tech and media investor Eric Jackson, last week’s layoffs will have little effect on ESPN’s overall business. He’s more interested in its digital plans, including its investment in BAMTech and upcoming over-the-top launch, even as he acknowledges that the layoffs will garner more attention.

“This is a drop in the bucket compared to the size of the new sports rights deals,” he said. “At least it shows that they are putting their toe in the water.”

Montag said the market for on-air sports talent remains frothy for A-listers who can command an audience. But many of the people now in the market will find it hard to find similar TV jobs.

“With so many talented people in the market, it could change the landscape,” he said. “ESPN created positions that have never existed before. CBS does not need an MLB reporter, for example. ESPN set the market on a lot of these positions.”

Playbook Inc. founder and CEO Reed Bergman agreed.

“When they have a need, networks will go out and spend on top talent,” he said. “When it’s the right kind of talent, they’re going to pay for it.”

Both Bergman and Montag said many of the people looking for work should look beyond television to companies such as AT&T, Amazon and Apple.

“I am still very bullish,” Bergman said. “I believe that while the landscape is changing, you will start to see more impact players that are non-traditional.”

Montag agreed.

“We are going to see more programming on non-linear devices,” he said. “So many people have gotten into sports broadcasting. There aren’t enough TV jobs for everyone who wants to be an anchor. It’s more of a buyer’s market than a seller’s market.”

Even though rumors of the pending ESPN cuts had been swirling for months, executives in the sports business reacted with a mix of shock and sadness when names became public.

“It’s just a sad day,” said Todd Goldstein, AEG’s chief revenue officer. “One of the reasons I got into sports is because of ESPN … To see this public, high-profile letting go of some immensely talented individuals, you can’t help but feel sad and disappointed.”

Goldstein spoke on a panel session at the annual National Association of Broadcasters convention in Las Vegas last Wednesday, the same day the layoffs became public. Despite the layoffs, Goldstein and others on the panel remained bullish about the sports media business, especially for companies that are able to adapt to the changing landscape.

“ESPN is still the Worldwide Leader in Sports, so it’s hard to write an obituary for ESPN based on today,” said Sacramento Kings President Chris Granger. “This is another reminder that the market is shifting. It’s another reminder that you have to meet people where they are. It doesn’t mean that broadcast television is going to go away. The audience is becoming more fragmented. You have to meet them online. You have to be mobile-centric in terms of how you’re providing content to people going forward.”

Craig Barry, Turner Sports executive vice president and chief content officer, agreed.

“People who are cutting cords are actually going to other destinations to consume content,” he said. “In sports in general, there’s a lot of fatigue. There’s a lot of places to consume sports.”

Many of ESPN’s top hockey writers, like Scott Burnside, Pierre LeBrun and Joe McDonald, were released. But Keith Wachtel, NHL executive vice president and chief revenue officer, remained confident that ESPN will continue to cover the league’s games and news.

“ESPN covers sports,” he said. “As a major professional sports league, they will continue to cover it.”

What began as a rights discussion between A&E Networks and the National Women’s Soccer League turned into an equity stake and joint venture that both sides feel will drive the league to its next level.

The league, which began its fifth season in April, broke barriers for women’s professional soccer in the U.S. simply by lasting this long — no other league had survived more than three seasons. However, while the league is financially stable due in part from backing from the U.S. Soccer Federation, the lack of a robust broadcast deal and an extensive partnership portfolio has hampered its growth.

Amanda Duffy, NWSL managing director of operations
Photo by: BRAD SMITH / ISI PHOTOS
Lifetime, which had been evaluating getting back into sports programming since phasing out live coverage of the WNBA in 2000, was drawn to the NWSL by the popularity of the players and ratings for the 2015 Women’s World Cup. Dan Suratt, president of corporate development and strategy and investments at A&E Network, said while it thought just doing a media rights deal would lead to growth, the network thought a larger investment could supercharge things.

“This is a league that had no broadcast partner, and to make a real sponsorship deal, you have to have that,” Suratt said. “Not only did we feel we could grow the game by doing that, but by also infusing some capital without diluting the player pool, we thought it was a great opportunity.”

While the investment was not disclosed, sources said the multimillion-dollar deal struck in January gives A&E a roughly 25 percent stake in the league, along with two seats on the league’s board and a sponsorship patch on every jersey sleeve. The deal also includes a three-year television deal with an optional extension that will see 25 games aired this season, including 22 in a new Saturday time slot at 4 p.m. Eastern. Perhaps most important, the partnership creates a joint venture that manages the league’s commercial rights, NWSL Media, which Suratt said is in talks with potential sponsors. The league also recently closed a deal with Verizon’s Go90 streaming service to broadcast the rest of its games.

Amanda Duffy, NWSL managing director of operations, said that the national reach on both the broadcast and commercial sides will further elevate the league. “To have this added expertise from A&E now, this really enables us to move forward on these opportunities,” she said. “To have the human resources now to dedicate a team to national sponsorships is going to be a big step in making inroads with those who want to get involved in the game.”

The NWSL has partnerships with Cutter insect repellent, Nike and nutritional supplements company Thorne.

Duffy said that the deal has also elevated the thinking across the league from local to national growth. The league is expected to nearly quadruple its staff to more than 20 by year end. Duffy is overseeing the league’s operations after former Commissioner Jeff Plush left in March, and the search continues to replace him.

“The front of mind for everyone has been just getting past year three or four. Now it’s very much about how do we operate and function in a way that grows how we believe it can,” she said.

Suratt said A&E’s belief in NWSL’s future means it would even accept losing the media rights in the next bidding cycle. “This is not Lifetime buying into a league and sitting on top of it. We want to make this a partnership that really accelerates the league and teams to levels they haven’t seen before.”