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Volume 21 No. 30

Media

LeBron James is the rare athlete who can affect the business fortunes of an entire television channel.

 

The future NBA hall of famer’s move from Cleveland to Los Angeles could result in a doubling of advertising revenue for Lakers games on Spectrum SportsNet, the regional sports network half-owned by the team.

 

Last season, Spectrum SportsNet charged around $7,000 per 30-second spot for a young team that was 12 games under .500 and didn’t make the playoffs.

  

This season, sources expect that advertising rate to climb to $14,000 per 30-second spot — a price that could climb much higher if the Lakers’ ratings beat the already optimistic projections.

 

The reason why RSN executives are so bullish on the television performance for this year’s Lakers is because James already has provided a blueprint for them. James’ teams have proved to be ratings gold in both Cleveland and Miami.

 

It’s hard to think of another single athlete from a team sport who has had such an effect on an entire television channel’s performance.

 

Take 2010, for example, when James left Cleveland to take his talents to South Beach.

 

In 2009-10, when James led the Cavaliers, the Heat’s ratings on Miami’s RSN, Sun Sports, averaged a measly 2.51. The next season, when James joined the team, Heat ratings jumped to a 4.92 — a 96 percent increase. Two seasons later, in 2012-13, Heat ratings had climbed to a 7.14, a rating that was nearly three times higher than Heat ratings before James.

 

It was the same story when James returned to Cleveland in 2014-15, when television ratings tripled for the hometown hero’s return to the market. During James’ final season in Miami, 2013-14, Cavs games on FS Ohio averaged a paltry 2.79 rating. The following season, that jumped to 7.94, and during the Cavs’ championship season, it reached a 9.31 rating.

 

In the season following both moves, sources said advertising revenue doubled.

 

Conversely, the markets James left saw their local NBA ratings tank. The season after he left Cleveland for Miami, ratings for Cavaliers games on FS Ohio dropped 54 percent. The season after James left Miami to return to Cleveland, Heat ratings on Sun Sports dropped 28 percent. Last season, Heat games averaged a 2.74 rating — a 60 percent drop from James’ last season in Miami.

 

With such ratings drops, these RSNs obviously see an advertising revenue drop post-James. Even though they pulled half the rating after James left, the RSNs did not see their advertising revenue cut in half. One source described “a halo effect” that existed around these teams for a season or two after James left.

 

Two areas that James will not affect are rights fees and distribution.

 

When Spectrum SportsNet launched in 2012, it signed distribution deals that lasted eight to 10 years — a much longer contract than normal, sources said. Most of those will not be renegotiated until early next decade, at the end of James’ planned four-year run in Los Angeles.

 

Sources say the RSN will renew its Verizon deal before the 2019-20 season and its AT&T U-verse deal is believed to be up soon thereafter. But the bulk of the RSN’s distribution deals run through 2022, sources said. James’ deal with the Lakers runs through the 2021-22 season.

 

Distributors pay Spectrum SportsNet $4.57 per subscriber per month, according to SNL Kagan, a rate that is higher than two other Los Angeles-based RSNs — Fox Sports West and Prime Ticket.

 

Spectrum SportsNet holds the Lakers’ local TV rights through the 2033 season. The channel is jointly owned by Charter and the Lakers.

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

Controversial sports media personality Clay Travis signed a multiyear deal to remain a national radio host for Fox Sports Radio and Premiere Networks.

Travis has hosted his morning show, “Outkick the Coverage,” since September 2016. Produced from Nashville in the 6 to 9 a.m. time slot on weekdays, the show is carried by 292 affiliates across the country.

Terms of the deal were not disclosed.

“There’s a huge opening in national sports talk radio, and I think we fill an untapped void,” Travis said. “What I try to do on radio is to be smart, original, funny and authentic every day. People may not agree with my opinions … but I think they do over time come to understand that there is a smart, original, funny and authentic vibe to what we do.”

Premiere executives point to the growth of Travis’ show over the past two years as a reason it wanted to sign the host to a multiyear deal. Statistics provided by Premiere have Travis’ radio show growing among the adult 25-54 and men 25-54 demos. As part of the deal, Travis picked up an undetermined amount of equity ownership in the radio show.

For Travis, the deal gives him a national radio platform that supplements the rest of his media business. Travis is active on several platforms, including YouTube, Facebook Live and Periscope.

Travis was represented by his agent, CAA Sports’ Josh Santry.

When Octagon launched its media rights consulting business last August, it focused on two areas where it could stand out in a crowded market.

It wanted to use Octagon’s global reach to attract clients around the world. It currently has clients on five continents. And it wanted to set up an advisory board of sports business veterans who could set strategy.

This week, Octagon started to fill out that board with Lydia Murphy-Stephans and Nic Coward taking the first two seats. Murphy-Stephans led Pac-12 Networks as president until stepping down in June 2017. Coward was general secretary of the Premier League, a post he left in 2015.

Octagon is looking to add an executive steeped in the Asian sports media rights business, but it has no quota for how big it wants the board to become.

“We’re going to continue to expand this advisory board when we think that there’s a perfect match in people that complement our offerings,” said Daniel Cohen, a senior vice president at Octagon. “Budget’s not an issue. It’s really more about strategic value. When we hear that our clients want to know more about a specific area or region, we will respond accordingly.”

Since launching the business last year, Octagon has advised on more than $110 million worth of media rights, Cohen said. Its clients include traditional leagues, broadcasters and investment banks looking to get into the business.

The market for these services is crowded with big agencies such as Endeavor and the CAA-backed Evolution Media focusing on the business. Independent companies such as Doug Perlman’s Sports Media Advisors and Chris Bevilacqua’s BHV also are competing in the market.

As Univision enters the third week of its contentious carriage battle with Dish Network, one of the network’s top executives predicted that the start of Mexico’s Liga MX this week and the UEFA Champions League next month will force the satellite company to cut a deal.

Dish Network and its over-the-top platform, Sling TV, dropped several Univision networks on June 30, right in the middle of the World Cup. Sling TV dropped Univision’s sports channel, Univision Deportes, though the channel still remains on Dish.

It’s unlikely Dish would have made any of these moves this summer if Univision had kept the rights to carry World Cup games. But Univision’s chief revenue officer, Tonia O’Connor, defended the decision to pass on World Cup rights because of the wide variety of soccer rights Univision holds. “If Dish believes that the World Cup is so important, they’ll come to realize that the portfolio of soccer rights that we offer is exceedingly more important,” O’Connor said.

Univision’s Tonia O’Connor says the variety of soccer rights the company holds makes its networks valuable to distributors.
Photo: Getty Images

In 2011, NBCUniversal’s Telemundo paid $600 million for the Spanish-language rights to the 2018 and 2022 World Cups, a huge increase over the rights fee Univision paid for the 2010 and 2014 World Cup events.

O’Connor said Univision decided to spend its money on volume, using the funds it would have spent on the World Cup to pick up the media rights to other leagues, like Liga MX and UEFA. “We made a big strategic decision during the last bid for the World Cup,” she said. “Rather than investing in 60 matches every four years, instead we wanted to invest heavily in soccer that was year-round.”

Univision executives expect the popularity of these soccer matches to the U.S. Spanish-speaking audience will pressure Dish Network into doing a deal.

Last weekend, Univision carried the Liga MX doubleheader Campeón de Campeones and Supercopa MX. The Liga MX Torneo Apertura starts July 20 and will provide around eight matches each weekend across Univision networks. And its UEFA deal kicks in this August and will be carried by multiple Univision networks.

“In total, we’ll be doing 1,100 soccer matches per year,” O’Connor said. “That’s 4,400 matches every four years, the same period as the World Cup; 4,400 matches versus 60 seemed like a no-brainer for us to invest and pursue this strategy that we have in place.”

As with most carriage disputes, the one with Dish Network comes down to price. Univision wants distributors to pay it a rate more in line with English-language broadcasters. O’Connor cited stats that show Univision is the third-most-watched network on Dish’s platform, and Univision Deportes is the second-most-watched sports network on their platform.

On June 30, when Univision went dark, Dish Network released a statement citing Univision’s failure to secure World Cup rights in 2022 and 2026 as one of the reasons the carriage negotiations became so difficult.

“Despite ratings for these channels decreasing by approximately 30 percent over the past five years among Dish customers, Univision is demanding rate increases of roughly 75 percent,” said Alfredo Rodríguez Diaz-Marta, vice president of DishLatino and Sling Latino. “Univision’s attempted price hikes target Hispanics despite the fact that fewer members of our community are watching Univision.”