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A Look at Online Sports Activations

The Future of Sport Broadcasting Rights

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When the clock strikes midnight in Time Square, strangers will embrace, lovers will reminisce, and executives at CBS, NBC and ABC will understand; they will understand the cross they have to bear when they attempt to negotiate retransmission consent fees with cable operators.  What’s at stake is billions of dollars.  Currently, the over-air broadcasters receive between $0.25-0.50 from cable operators per subscription, Fox is looking to receive $1 per subscription from Time Warner Cable, a fee that TWC is loathe to pay.  The immediate impact of the dispute could be TWC customers being unable to watch three BCS  bowl games and four NFL playoff games – which TWC customers should be accustomed too as the do not have the NFL Network – however, the dispute will end up affecting the broadcast rights the ACC, PAC 10, Olympics and the NFL will be able to command.

ESPN bullied its way to the rights to the BCS by being offering $595 million over 4 years, a sum which surpassed FOX’s bid by more than $100 million.  ESPN was able to bid that much because they receive $4 per subscription from cable operators.  That $4 is multiplied by the 98 million homes it is in and by the 12 months of the year, for an astonishing $4.7 billion in revenue for ESPN prior to them selling a single advertising unit.  FOX’s battle with TWC will have a substantial impact to the coffers of  leagues, conferences and governing bodies in the future.  Broadcast channels must begin to generate revenue from cable operators if they are to compete with ESPN for broadcasting rights.  A decrease in competition for broadcasting rights will undoubtedly hurt the strength of entities such as the IOC’s during negotiations.  Which explains why they have not awarded the American broadcasting rights to the 2014 or 2016 Olympics.  The acquisition of the incumbent Olympic broadcaster by a cable operator may be advantageous to the other broadcasters.

Comcast taking control of NBC is welcome news to sport entities.  Whether they are going to develop Versus into a legitimate rival to ESPN remains to be seen, but what must be expected is they will lead the charge for retransmission consent fees.  While they are the largest cable distributor with over 24 million customers, the benefits of receiving retransmission fees for NBC from other cable operators would far exceed the fees it would have to deliver to its rival broadcast networks.  Their position would be strengthen if FOX is able to make TWC acquiesce to its demands.

My prediction is that TWC and FOX will arrive at a compromise of $0.85 prior to the New Year’s deadline, NBC will retain the rights to the Olympics in 2014 and 2016 and Versus will develop into a respectable competitor to ESPN boosted by the broadcasting rights to the PAC 10.

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Written by Peter Amador

December 28, 2009 at 7:39 PM

Posted in TV Rights

Tagged with , , , , , ,

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