Let's End the Game
Broadcast nets should get out of the sports business
By P.J. Bednarski, Editor -- Broadcasting & Cable, 4/6/2003 8:00:00 PM
Over the years, I have bought thousands of dollars of worth of insurance—for cars, homes, my health and something the insurance companies call my "life," whatever that is. Mainly, most of these policies have been a big waste of money, but I buy them unblinkingly (oh, yes, there's that optical plan, too) because you never know when something is going to go. (To be truthful, the one time something did—my roof, in Chicago—Allstate refused to renew my policy the next year.) Earlier, my dad bought all those policies for me and my siblings from an insurance company whose motto was "Better to have it and not need it than need it and not have it."
In the case of television, insurance over the years has turned out to be buying the rights to major-league sports. At one time, I'm certain, having the Game of the Week on NBC was a big deal for the network, and for Major League Baseball, too, but those memories are as dim as Curt Gowdy was even back then.
Now, pro baseball and football and basketball, at least on the broadcast level, are events that networks buy only because they don't want some other network to have them. Rights to pro sports are just protection. That's why it was revolutionary when NBC got out of the NFL business a few years ago. On this side of the business, lots of people predicted that Dick Ebersol had erred fatally. Actually, it was brilliant. (He did err, just about fatally, when he helped start the XFL, but that was one of the few times somebody nearly did go broke underestimating the American sports public.) NBC is still No. 1 in 18-49s in prime time.
We have a story on page 16 in this week's edition about a new study by Morgan Stanley analyst Richard Bilotti, who makes the rather unstartling conclusion that broadcast networks are wasting hundreds of millions of dollars buying sports. What's good in this report is that Bilotti puts some numbers to it and notes that, if the broadcast networks would exit the business, they would become fatter cash machines. Instead, they give a lot of their profits away trying to pay for the NFL or MLB or the NBA.
But it's so daring not to. CBS is the television example of this, the poster child of What Happens When You Cancel Your Insurance.
In 1994, it lost its long-time rights to the NFL to upstart Fox. Then Fox swiped some of CBS's best affiliates nationwide. At the same time, CBS had a pitiful prime time schedule and a miserly owner. CBS tumbled out of sight. This was the Tiffany network, all of a sudden transformed into the jewelry case at Sears.
"In three years, CBS went from first place in male demos to fourth place," said Les Moonves, the president of CBS Television, in a speech last month to the World Congress of Sports. "Six of our major-market affiliates went over to Fox. Some of those CBS markets still haven't recovered."
And so, when Westinghouse and then Viacom got CBS from Laurence Tisch, getting football back was as symbolic as raising the flag at Iwo Jima, and the Viacom-owned CBS had cross-platform opportunities—its cable networks, its Infinity radio stations—the old CBS did not. Still, if it weren't for CBS's owned-stations, the NFL apparently would be a money-loser for Viacom, too.
For all sports, though, I'd argue that, in most cases, the real risk of taking them off broadcast television is that it hurts a network's image more than its bottom line. In fact, I've read the same analysis for cities that lose sports franchises. Having a baseball team in Minneapolis doesn't mean that much. But losing the baseball team does; it's the equivalent of being delisted from the handful of major American cities. (This sounds like a version of the motto of my dad's insurance agent, I've just noticed.)
I say: So what? Broadcast networks have to have the nerve to change their ways of doing businesses. They say that all the time. If I were in the broadcast-network business, I'd give expensive sports up to cable and let the cable nets (or fans) deal with the ways to pay for them. Cruel. But it's the American way, and, in the long run, it would probably lower the ridiculous salaries teams pay to .220 hitters, hopeless point guards and stumbling cornerbacks.
Bednarski may be reached at pbednarski@reedbusiness.com
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