“Live sports attract big broadcast audiences and that becomes more important every day in delivering ad dollars, in growing sub and fueling increases in retrans, reverse comp and virtual MVPDs, driving revenues for the entire corporation,” said CBS Sports chairman Sean McManus on the company’s earnings call with analysts Thursday.
McManus noted that CBS has relationships with its major rights holders that span decades.
CBS’s deal to televise SEC Football won’t expire until 2023, but McManus said “we expect to reach a long-term extension well before then, keeping the best games from the best conference here on CBS.”
CBS’s deal with the PGA Tour expires in 2021. ”We also plan to renew these rights well before the expiration of this agreement," he said.
But the most important sports rights CBS has now is with the NFL, and even though that deal has four more years to run, there is already much speculation about whether CBS can hold on to those rights amid competition from other larger media companies and new streaming and technology companies getting into the video and entertainment businesses.
“We fully expect to keep the NFL on CBS for many years to come,” McManus said. “As we prepare to renew our rights, it’s important to remember the absolute power of CBS and our full portfolio of broadcast and streaming assets. While the NFL has been very good for CBS, CBS has indeed been very good for the NFL.”
In terms of timing, McManus didn’t think any decisions on renewal would come until further into 2020 and beyond.
“I think the NFL probably wants to get their collective bargaining agreement done first before the talk about the television deals,” he said.
McManus noted that while times have changed in the TV business, the NFL continues to say it values and prioritizes the reach of broadcast television.
He said he thought CBS would be able to compete with other broadcasters and digital players.
In addition to the reach CBS provides, it will also compete financially. “We’ve always been competitive in that area when it comes to the NFL and I would think we would be competitive the next time around,” McManus said.
“I can’t predict who else is going to come after our package or how much competition there will be, but know the kind of support the corporation has give the NFL and knowing the kind of contribution the NFL makes to the overall company, I would think we would hopefully figure out a way to come to a deal with the NFL as we have so successfully in the last 20 years.”
CBS interim CEO Joe Ianniello added that the fact that Thursday Night Football went to Fox rather than exclusively to a streamer like Amazon illustrates the NFL’s thinking. “They certainly could have experimented and gone to a streaming platform exclusively,” Ianniello said. “I think they love the reach of broadcast. I don’t think you ever want to cut off your core audience.”
CBS also makes it a point to get rights for all platforms when CBS does a major sports deal.
“All our major properties, including the PGA Tour events, the NCAA Tournament, The Masters, The PGA Championship, SEC football and NFL football are currently available to stream live on CBS All Access,” McManus said. “This extends our reach to a wider audience and allows fans to view our content however they choose, benefiting CBS as well as all of our partners.”
CBS is also getting prepared to take advantage of the boost sports will get as legalized betting spreads.
“With our data-driven Sportsline property, our focus on expert picks and predictive analysis, along with our proprietary algorithms, we are well in the early days of capitalizing on the expansion of legal sports gambling,” McManus said.
Right now, sports gambling is legal in only eight states.
“The local advertising has been there and I think once it becomes more national, you’ll probably see more national advertising,” he said. "We’re looking at it really closely. We have not yet chosen a [gaming] partner. A lot of people want to partner with us. We haven’t chosen anybody yet. But we’re looking at it very carefully and I think both from an advertising standpoint and hopefully down the line from an engagement standpoint, it can increase the value of our live programming.”
Ianniello added that CBS has streaming service CBS Sports HQ and cable network CBS Sports Network that can run gambling-themed programming.
“So we certainly have platforms to really monetize this type of content as well as just selling it. I think our reach will be very valuable to the publishers as they want to expand that business,” Ianniello said.