93 Out Of 100

Every year, the folks at Nielsen put out a review of the previous year in sports media. This year’s report is out, and one statistic jumped out at me. In 2005, 14 of the top 100 programs watched live plus same day were in the sports category. Ten years later, 93 of the top 100 were sports. That’s right: despite all of the fragmentation that’s managed to kill most other forms of programming, nearly all of the most-viewed programs watched live or same day were sports. Is it any wonder that demand for sports inventory is so high when it’s the only form of programming that is both widely viewed and watched in real time?

One would think, therefore, that being a sports programming distributor would put one, as Red Barber used to say, in the catbird seat. Looking, however, at the recent negative reports on ESPN’s financial future in the above context might cause some head-scratching (disclosure – I’m a Disney stockholder as well as a former employee). The issues, I think, are several things. First, sports, like any other form of media, is fragmented. You might never miss a NASCAR race but I couldn’t pay you to watch golf. Sure, you’re a college football fan, but turn on the tube any Saturday afternoon and you can choose from dozens of games airing live. That’s fragmentation, and what’s happened is that the rights fees paid to acquire that programming by the distributors bear little resemblance to the audiences and, therefore, the advertising.

Not a problem, you say. There are affiliate fees. That’s true, and in the case of some sports rights deal, such as the NHL and NBC, the rights fee is paid on the come. After all, if NBC can raise what they get from distributors for NBCSN from 10 cents to a quarter (as an example – those aren’t real numbers), their affiliate fees more than double. Hopefully, the demand for NHL or any other brand of sports programming can make that happen.

All well and good until “skinny bundles” show up. Suddenly, people who never watch sports (yes, there are more of them than you think) have the option of reducing their cable bill by not paying $7 a month or more for sports shows they don’t watch. This is what is causing the negative predictions about ESPN. Smalle income from affiliates based on fewer subscribers to sports channels means smaller rights fees available for the leagues and other rightsholders. Smaller TV deals mean…higher ticket prices? More expensive concessions? Smaller player contracts? Labor strife?

93 out of 100 gets an A in most classes. It’s nice that sports is “bulletproof”. So was Superman, but he, and sports, have their weak spot. It will be interesting to see where this goes, don’t you think?

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Filed under sports business, Thinking Aloud

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