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There's hardly a sport that doesn't have its niche net 8/03/2003 08:00:00 PM Eastern

Outdoor Life Network President Roger Williams is glowing over what he calls "the Lance effect" on his cable channel. That's Lance Armstrong, the superstar cyclist who raced to his dramatic fifth Tour de France victory last month. As Armstrong surged, so did Outdoor Life, which covered the whole race. Of course, a broadcast network or big cable players wouldn't crow about a 0.5 rating in prime, but, for a niche sports net like OLN, it was a huge win.

Contracts at a Glance
A sampling of TV sports
Network Years Avg. Annual Cost ($million) Total Cost ($million)
*NBC/CNBC/MSNBC/Bravo/Telemundo
NA: Not available
Sources: Sports Business Journal, Morgan Stanley Research and networks
NFL
ABC (Monday night) '98-'05 $550 $4,400
Fox (NFC) '98-'05 $550 $4,400
CBS (AFC) '98-'05 $550 $4,400
ESPN (Sunday night) '98-'05 $600 $4,800
NBA
ABC/ESPN '02-'08 $400 $2,400
TNT '02-'08 $366 $2,200
MLB
Fox '01-'06 $417 $2,500
ESPN '00-'05 $142 $851
NHL
ESPN/ESPN2 '99-'03 $350 NA
ABC '99-'03 $250 NA
NCAA Men's Basketball
CBS '02-'14 $565 $6,200
PGA Senior Tour
CNBC '01-'04 $3 $12
Ryder Cup
NBC '99-'05 $13 $52
U.S. Open (Tennis)
CBS '01-'04 $38 $152
USA '03-'08 $21 $125
Wimbledon
NBC '03-'06 $13 $52
ESPN '03-'06 $8 $24
Triple Crown
NBC '01-'05 $10 $51
NCAA College Bowl Series
NBC (Notre Dame) '98-'04 $6 $45
ABC (Rose, Sugar, Fiesta, Orange) '99-'05 $71 $500
NCAA Collegiate Championship Games (men's and women's)
ESPN '02-'13 $18 $200
NASCAR
Fox/FX/Fox Sports Net '01-'08 $200 $1,600
NBC/TBS '01-'06 $200 $1,200
IRL
ABC '99-'04 $13 $65
U.S. Figure Skating Championships
ABC '99-'06 $12 $96
Olympics (Summer)
NBC* 2004 $793
NBC* 2008 $894
NBC* 2012 $1,180
Olympics (Winter)
NBC* 2006 $613
NBC* 2010 $820

"You have to give people a reason to come to your network," Williams said.

From football to fishing, there's hardly a sport that doesn't have at least one dedicated cable channel. With 53 million subscribers, Outdoor Life is one of the more established. Some—like fledgling services Tennis Channel, NBA TV and CSTV: College Sports Television—are clawing to reach 5 million homes. Another batch—like the figure skating Ice Channel, the Sportsman Channel and The Football Network—are waiting in the wings.

"Most will fail, but a few will strike enough of a chord to break through," said sports business analyst David Carter, principal of Los Angles-based Sports Business Group. One that didn't: Turner Broadcasting's CNNSI, even though it had reached 20 million subscribers.

Of course, it helps to have an established parent company, particularly an MSO, to lean on. OLN and Golf Channel are Comcast-owned; Fox has Speed Channel and extreme-sports startup Fuel. But other new nets, from Tennis to The Football Network, go it alone, without leverage like retransmission consent or established cable channels to help them squeeze on to cable systems. "At least this way, we know we're the only priority," quipped TFN chief Jerry Solomon.

"Certainly, we benefit from the affiliation," said Fuel General Manager David Sternberg, "but it isn't enough to guarantee financial success."

Whoever the owners, these nets are fighting for increasingly scarce channel space. Only more established nets like the Golf Channel, the Speed Channel and OLN have a shot at coveted analog carriage, reaching virtually all of a system's basic subscribers. Most will have to get by on digital carriage or on digital sports tiers, reaching only 20%-30%.

"Some of these nets have such a narrow potential audience it would be difficult for them to stand on their own," said Time Warner Cable Executive Vice President of Programming Fred Dressler.

Time Warner offers a digital sports tier on 24 of its 31 systems. That's where its newest sports additions, like Tennis Channel and Fuel, will most likely live. Dressler hopes that, someday, other sports nets, like Golf Channel, will want migrate to the tier.

Of course, the niche nets need to peddle the right deal. Where ESPN runs upwards of $2.50 and regional sports nets $1-$2 per subscriber, Speed Channel and Golf Channel are bargains at under 20 cents. New services, like Tennis and CSTV, could be free for the first few years. Instead of paying launch fees, some networks will give operators a period of free carriage in exchange for future license fees. Even then, the bill isn't likely more than a dime a subscriber. With $100 million needed to start up most nets, return on investment can be years out.

"They have tough business models," said ABC Sports/ESPN President George Bodenheimer. He acknowledges that ESPN has considered launching single-sports networks. "We have. Too narrow can be a difficult business proposition."

But what makes a viable sports niche? Between ESPN, Fox Sports Nets, and broadcast and general-entertainment networks, there's no shortage of sports on TV. What's missing, niche executives say, is dedicated services for hungry, underserved fans.

Sure, there's plenty of college basketball and football on television. But CSTV is betting that viewers will want volleyball, gymnastics and hockey. "This is an enormous category," said network chief Brian Bedol.

One debate raging among industry executives is how to program niche nets. Some say they need marquee events. Others take a "more-is-more" approach, eschewing pricier events for a vast lineup of second-string events.

Denver-based sports consultant Dean Bonham believes these nets need to carry known events "at least often enough to create that affinity" with viewers.

There's certainly known product on NBA TV. Under the league's new six-year deal, the net gets 96 regular-season games per year and a handful of playoff contests. Sure, TNT, ESPN and ABC also have games, but it's still star programming for an emerging net. Said Executive Vice President Greg Winik, "You need something to create some spark and some buzz around."

So far, NBA TV counts about 3 million subscribers on DirecTV and EchoStar Communications' Dish Network but has yet to sign up any cable operators (NBA Commissioner David Stern has said deals will be signed before the next season tips off in October.)

Not everyone agrees that major events are the key driver—or, rather, that they are worth the money.

Tennis Channel Chairman David Meister said spending millions for, say, early rounds of Wimbledon or the U.S. Open wouldn't necessarily grow his channel: Casual viewers stop in for the big event and then leave. He would rather have more events year round, like the Fed Cup and the Mercedes Benz Cup. The idea is that tennis buffs—not casual fans—know those events.

The NFL Network, which launches Nov. 4, won't have live regular- or post-season games but will air some preseason contests. The Football Network plans to air 250 games next year, anything from women's football to high school games.

Of course, elder statesmen the Golf Channel and Speed, both nearing 60 million homes, are themselves just beginning to chase big events. Golf has the men's Senior Tour; Speed Channel, NASCAR Winston Cup qualifiers and happy hours. As future rights deals come up, both say they plan to contend.

"What sells is the live coverage," said DirecTV's head of acquisition Michael Thornton. "People tune in for events." DirecTV's distribution deals require a sports net to carry a certain level of games.

 

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