Fox Joining Cable Sports Rush

Media buyers cheer new national competition for ESPN

When News Corp. this week finally announces
its plans to launch a 24-hour sports cable
network, media buyers will have more choice
than ever about where to put their sports ad dollars.

Following a series of private individual meetings with
media buyers and clients, Fox Sports Group on March
5 hosts an upfront-style presentation where Fox Sports
1 will be unveiled. The rookie network—built on the
foundation of Speed channel—is seen as a heavyweight
challenger to ESPN, whose title as the worldwide leader
in sports isn’t all hyperbole. And Fox Sports 1 is following
NBC Sports Network and CBS Sports Network into
the national cable sports net fray.

Sports has been one of the brightest parts of the TV
business because the way fans view live events makes
commercials during games practically DVR-proof. The
proliferation of cable sports channels means additional
games to sponsor and new shoulder programming—
highlights and studio shows—that will help advertisers
reach those fans at lower cost.

Buyers say ESPN should not be too concerned, at
least not yet.

“The impact from a budget standpoint across the
marketplace to ESPN is going to be minimal until these
networks establish themselves and until ratings are relatively
consistent,” says Neil Vendetti, managing director
for national video at Zenith. “But five years down the
road, maybe there are one or two legitimate competitors
to ESPN. I just don’t think in the infancy stages these
other networks are going to make that big of a dent.”

As the new players try to storm the field, ESPN is
pushing its advantage. “ESPN has been on an innovation
agenda in terms of pushing out Watch ESPN and
other digital outputs,” says Miraj Parikh, media director
at Spark. “I would have to think they’re keeping an eye
on what the competition’s doing. That’s only the smart
thing for them to do. But I think they keep pushing
on providing more innovation opportunities and more
consumer engagement opportunities.”

0304 Upfront Sports chart

The competition also is good for buyers and their
clients because it presents new choices and added
inventory, which should put downward pressure on
prices. “From our vantage point, we always want more
competition,” Parikh says. “It does require ESPN to potentially
sharpen their
pencil and be better on
their game in terms of
how they go to market,
what sponsorships they
offer, even what they
offer the consumer.
Because what it comes
down to is you’re only
as good as the content
you offer.”

ESPN is in a league
of its own. It holds an
upfront the same week
as the big broadcasters. And it does a substantial part
of its business at the same time primetime upfront budgets
are being allocated, according to Ed Erhardt, ESPN
president of global customer marketing and sales. Erhardt
expects this year’s market to be strong, particularly
when you add in digital video and mobile video, two
areas beyond TV where ESPN is a leader. “Marketers say
they want to follow the consumer from screen to screen,
and the content they’re watching is sports,” he says.

Whether or not it takes a bite out of ESPN, SNL Kagan
sees success ahead for Fox Sports 1. Analyst Derek Baine
forecasts that ad revenue will jump from Speed’s $100
million in 2012 to $122 million in 2013, then skyrocket
to $244 million in 2014 and $423 million in 2015. With
subscribers and license fees rising as well, Baine expects
Fox Sports 1 to generate $431 million in cash flow in
2015, up from Speed’s $100 million in 2010.

Fox will use the sports assets it has to help convince
advertisers to put money on Fox Sports 1. As the new
network rolls out, Fox Sports will also be selling spots on
the biggest TV event of the year, the Super Bowl. In the
past two years, CBS and NBC said they had moved a large
percentage of Super Bowl inventory early in the year. This
year, Fox has been quiet. Sports business sources expect
that Fox Sports will try to leverage the Super Bowl to push
Fox Sports 1 with both advertisers and viewers.

How will having cable channels affect the way Fox,
CBS and NBC approach the sports advertising market?
Can there be too much sports on TV?

“The sports fan’s appetite is pretty strong and people
seem to be consuming a lot of sports,” says John Bogusz,
executive VP for sales at CBS Sports. “They’re engaged
and you watch it live, so we’ve got a lot of good things
going for us.”

“It doesn’t change our approach,” adds Seth Winter,
executive VP for sales for the NBC Sports Group. “We
are constantly trying to create the best intersection of
our inventory with the needs of advertisers and marketers.
Our assets—broadcast, cable, regional, digital
and radio—are unique in the marketplace, and we have
more platforms and properties than ever before.”

“Will it continue to get more competitive? I think
so,” adds Bogusz. “Right now, in terms of the properties
we have on our air at CBS, our revenue has been very
healthy. And CBS Sports Network continues to grow.
We’re trying to grow distribution. And in terms of advertising,
it’s double-digit revenue growth right now.”

More channels mean more opportunities. “Marketers
who are interested in extending their brands embrace
and value shoulder programming that surrounds live
events,” Winter says. “Our assets allow us to offer packages
that provide this deep level of integration.”

CBS’ Bogusz says right now the market for most
sports is strong. The second-quarter golf market is
moving, and it’s up from last year, he says. By the time
the broadcast upfront rolls around, CBS will be selling
college football and the NFL again. “We are fortunate
enough to sell the SEC [conference] here. They’ve won
the national championship the last seven years in a row.
That market continues to be very healthy.”

And even though ratings were down in the last regular
season and the playoffs, Bogusz says the NFL is rock
solid. “Demand has never been greater,” he says.

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