Facebook about to get serious?
Questions about when companies like Facebook and Google will start paying — really paying — to pick up major media rights have dominated sports business conversations for years.
Those conversations became more amplified last week following two Facebook deals announced in the span of six days, even as making conclusions became even more opaque.
Facebook picked up a package of midweek, mid-afternoon MLB games for $30 million, and sublicensed packages of Conference USA games from CBS Sports and Stadium for more than $1 million — two deals that should demonstrate that the company is serious about getting into the sports rights business in a big way. The deals come a couple of months after Facebook hired Peter Hutton from Eurosport to head up its global sports rights deals division. Hutton has a well-earned reputation as a dealmaker and is expected to be at the negotiating table whenever rights deals come up.
“Facebook is clearly on the prowl for content,” said sports media consultant Ed Desser. “There’s no question that it has the resources to go after big packages opportunistically and strategically today. Right now, it doesn’t look like they want to spend $2 billion for the privilege of carrying ‘Monday Night Football.’ But that could change.”
Even as Facebook executives negotiated these two exclusive sports deals, the company’s executives took pains to assure leagues and broadcasters that it is more comfortable moving forward as a partner than by itself. The company’s deals this month underscore this point, as Facebook will outsource production on all the games. MLB Network will produce the 25-game MLB package for Facebook, and CBS Sports and Stadium will produce the Conference USA games that will be on the social media site.
Plus, the packages Facebook acquired do not have marquee games. Both the MLB and Conference USA packages include the least-attractive games, at least in TV terms. The midweek, mid-afternoon MLB games Facebook will carry traditionally draw the lowest TV ratings by far. Similarly, Facebook is below both CBS Sports Network and Stadium in the pecking order for a college conference outside the power five.
While leagues and conferences are seduced by the thought of bringing more bidders to their media rights negotiations and are willing to test some packages on those sites, sources said they have been hesitant to entrust their high-profile packages to these digital companies — at least right now. Privately, league and conference executives have said they are more comfortable aligning with the distribution and production experience that broadcasters offer.
“We are a long way from these guys ever supplanting the status quo,” said one broadcast executive. “Facebook only got the scraps in these deals.”
Still, these deals show that Facebook is interested in paying for exclusive sports content. After all, ESPN did not carry the NFL, MLB or NBA at launch. This is still early days for digital media companies dabbling in sports. Facebook is expected to use lower-profile games to see what works and how it can better integrate sports into its offering.
“This gives greater clarity that this is not just a dalliance. It is a full-fledged step in the evolution of sports media,” Desser said. “It’s not a full-frontal attack on traditional sports media right now. It’s more of a rifle shot for particular pieces of content that are well suited for them.”
Some media industry veterans suggested that sports networks should be wary of getting too close to Facebook. Several sources pointed to mistakes entertainment networks made that led to the rise of Netflix. Those networks took short-term cash and licensed many of their shows to Netflix. These sources worry that sports networks are making similar decisions by partnering with companies like Facebook and Twitter.
“The entertainment networks trained consumers to go to Netflix to see those shows,” one industry executive said. “It seems like sports networks are doing the same thing now with these social media companies.”
The MLB deal is for 25 games that will be carried weekly. MLB had a contractual right to take back a certain number of games from regional sports networks, which it is using for its Facebook package. The Facebook deal also includes digital highlight rights. Interestingly, RSNs do not have the rights to show highlights digitally, a thorny point of negotiations over the years.
The Conference USA deal was being negotiated by Commissioner Judy MacLeod along with IMG advisers Karen Brodkin and Hillary Mandel. Dan Weinberg, executive vice president of programming, represented CBS; Robert Shaw, lead of sports media and league partnerships, represented Facebook; and CEO Jason Coyle represented Stadium. Facebook will get an annual total of 10 football games and 16 basketball games from CBS and Stadium.
The deal is expected to deliver revenue in the mid six figures annually for each school, up from around $200,000, sources said. The last round of deals in 2016 had delivered an 80 percent reduction in revenue, so news of an increase has been welcomed by conference athletic directors, sources said.
Conference USA has one year left on a streaming deal with beIN. The conference has not finalized its arrangements for Olympic sports, most of which aired on a league premium channel, CUSA.TV, in the past. Whether that content stays on a conference site, goes to beIN or perhaps becomes part of a streaming deal remains to be seen.