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.

E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette