John Kosner on The Athletic & the NY Times with Sportico’s John Wall Street
Original Article: Sportico, by JohnWallStreet, May 28th, 2021
Earlier this week, Axios reported that The New York Times (NYT) was “looking into a potential acquisition of The Athletic.” The story followed a Wall Street Journal piece that declared merger talks between the subscription sports site and Axios to be over and also pegged the NYT as the subsequent ‘leading contender’ for the digital sports media property. Vox is also said to be kicking the tires on The Athletic.
The New York Times Company would seemingly be an ideal landing spot for the once high-flying startup. “[They are] already in the subscription business and [from a prestige standpoint], they are one of the world’s preeminent media companies,” said John Kosner (president, Kosner Media).
It is less clear why the NYT would be interested in making a big bet on a growth business that has seemingly stalled, is losing money and competing in an extremely competitive digital media environment. The New York Times Company declined to comment, saying, “As a general matter of policy, we do not comment on rumors about potential acquisitions or divestitures.” The Athletic did the same, stating it “does not comment on rumors or speculation in the market.” But conversations with Kosner (former EVP, digital and print media at ESPN) and The New Consumer founder Dan Frommer indicated that corporate objectives, portfolio fit and a successful track record of launching subscription-based products are likely behind the company’s investment thesis.
““[They are] already in the subscription business and [from a prestige standpoint], they are one of the world’s preeminent media companies.””
President, Kosner Media
Our Take: New York Times CEO Meredith Kopit Levien publicly set a goal to reach 10 million digital subscribers by 2025. At last count (Q1 ’21 earnings), the NYT reported 6.9 million digital subs (includes: cooking and crossword products). “If you’re the New York Times and you set that goal for 2025, it’s hard to imagine you’re going to get there organically,” Kosner said, noting that new digital news subs are expected to decelerate now that former president Donald Trump is out of office. Rolling up The Athletic and their 1.2 million subs would push the NYT closer to its target.
It’s logical that the New York Times Company would look to add another complementary subscription product to the portfolio, as non-news subscribers are making up a greater portion of new subs than ever before. As Kosner explained, “Getting closer to the customer and serving them in different ways is a bigger business opportunity [than trying to sell news subs exclusively].” Frommer noted that with more subscription products the Times may be able to offer a broader consumer bundle.
An acquisition of The Athletic could in theory also strengthen The New York Times’ news product and support their international ambitions. “The Times has sort of abandoned sports, especially New York sports, and The Athletic has fairly comprehensive coverage of sports, both in this country and football abroad,” Kosner noted. A purchase of the digital outlet “would add a brand known to sports fans, fill a niche and fit into their plans to grow international subscriptions,” he explained.
For all of the positives The Athletic would bring, concerns about the business exist. User growth has slowed (granted, the pandemic likely had something to do with that) and despite bringing in around $80 million in 2020 revenue, the company is still not profitable. There are also questions about the size of the staff—600 full-time employees, including 400 editorial staffers—and how valuable its subscribers are, considering a significant portion remain on discounted plans. It is not clear the company will ever make money.
If there is a reason to believe The Athletic would become profitable under the NYT tent, it would be because the legacy media company has “a very impressive, robust technology and product division and is ahead of the curve [relative to the competition] at productizing and building businesses around different consumer products,” Frommer said. “They also have a huge breadth of experience, and depth of experience, developing and selling subscription products to consumers.”
One could argue that with more than 100 million people in the U.S. identifying as sports fans, The Athletic has barely made a dent in its total addressable market. But Kosner reminds: “The Athletic doesn’t just compete with other sports media subscription services. All of these subscription products co-exist together” (think: Netflix, Amazon Prime, Spotify, Audible, Hulu, The New York Times). It’s not clear there are enough people willing to choose The Athletic over those other digital products.
That said, Frommer can see how acquiring The Athletic could make sense to the NYT, even without a short-term path to profitability. “A company like The New York Times probably plans to be in business for hundreds more years, so they’re in a position to make 20-, 30-year bets,” he said. “If the bet is Americans will continue to love sports in 30 or 40 years, and [they] can own the dominant digital sports media brand, perhaps that’s a worthwhile [wager]–especially if they can buy [the company] with stock.” $NYT shares are trading at their highest level in more than 15 years.
The Athletic raised a $55 million Series D in January 2020 at a $475 million valuation (according to PitchBook). If one were to assume that any deal would ensure that those investors would not lose any money, the purchase of the sports site would be the second most expensive acquisition in Times history (behind only the $1.1 billion it paid for The Boston Globe in 1993). Of course, the company’s track record with mergers and acquisitions isn’t great. It ended up dumping the Globe for just $70 million, lost $110 million on the sale of About.com and saw two marketing companies it bought go under. In fairness, Levien represents new leadership; she was not in charge when those failures occurred.
For the record, Axios wrote that The Athletic has yet to hire bankers, meaning it is unlikely there is a deal in place with the New York Times Company.
John Kosner spoke with Bloomberg's Lucas Shaw about the Deshaun Watson case
Original Article: Bloomberg, by Lucas Shaw, April 25th, 2021
In the five weeks since more than a dozen women accused Houston Texans quarterback Deshaun Watson of sexual assault, sports media has been tongue-tied.
ESPN's “First Take” and “Pardon the Interruption” have spent more time on the NCAA Tournament and the NBA playoff race. Talk radio has gone long on the NFL trade market and the Masters. It's not just sports media. While coverage of the allegations picked up after two women came forward with their stories -- prompting Nike to drop Watson -- the story has yet to appear outside the sports section of national newspapers.
Several senior media executives have expressed surprise at how little coverage the case has gotten thus far. Watson is one of the best players in the most popular sport in the U.S. His demands for a trade received wall-to-wall coverage at most of the major sports media outlets. But allegations of sexual abuse, not so much.
“It’s not been nearly as big a story as the merits of it warrant,” says Pablo Torre, host of the ESPN Daily podcast.
Torre’s podcast has been a notable exception, having now devoted two full episodes to the story. In the first episode, he interviewed investigative reporter John Barr about the case, and then spoke with Texans beat reporter Sarah Barshop. In the second episode, Barr returned to talk about the “conflicting narratives” now that some women have come to Watson’s defense.
The muted coverage contrasts with that of recent entertainment scandals. National newspapers like the New York Times and Los Angeles Times have run a series of front-page stories about toxic cultures at institutions like the Magic Castle and the Friars Club. Both the Hollywood Reporter and New York Times just this month published long investigations into producer Scott Rudin for being an abusive boss. (The Rudin story ran on the front page of the paper.)
Media executives cite many factors for the subdued coverage of the case thus far, including the relative anonymity of football stars, a long history of false accusations against Black men and the profession of the accusers. Watson is accused of sexual assaulting his massage therapists. While they are trained professionals, it has led some to dismiss the case as “tabloid fodder.”
“If you go to the NFL page for ESPN, it’s there. But I haven’t really seen coverage in leading newspapers I look at,” says John Kosner, a longtime sports media executive who used to work at ESPN and the NBA. “I suspect at the moment they are going on the information available to them.”
The story has received more coverage in the Houston market, though the tenor of that coverage has missed the mark, according to Texas Monthly's Dan Solomon.
One reason this story is still relegated to the B block is the evolution of sports media, which now prioritizes “the take” above all. A take is an interesting opinion, an angle on a story that no one else has discovered. It is the foundation of all the biggest sports media personalities on TV.
Stephen A. Smith is the maestro of the outrageous, if not always correct, opinion. Skip Bayless, his former partner-in-banter, built his entire career on takes. Bill Simmons, Colin Cowherd and Mike Francesa all have loyal followings because their listeners want to hear their take on a given topic.
It’s hard to have a good take on the Watson case. If you make it about the football impact, you may dismiss the allegations themselves. If you believe the women, you risk being the latest bigot guilty of falsely accusing a Black man. If you don’t believe the women, you have even bigger problems. Top sports hosts have often resorted to say things like, “This doesn’t look good for Deshaun Watson.”
None of these concerns have ever stopped cable news pundits from speculating or commenting on ongoing legal matters, but sports media treads more carefully. ESPN has a policy distinguishing between a civil trail and a criminal trial. Criminal trials merit closer coverage.
The investigations into Watson are still ongoing. The Houston police department and the NFL are looking into the allegations. The Texans haven’t punished him either.
“When there is active litigation, civilly -- and you don’t have obvious conclusions to draw about what’s true and false -- it would be irresponsible to do so. I don’t fault the shows that are run on takes for not diving into this through their lens,” says Torre, who is also a frequent guest on “Around the Horn” and co-host on “Pardon the Interruption."
And yet, ESPN showed no such reluctance to cover the outcome in the case of Derek Chauvin. The network, which just a couple years ago vowed to stick to sports, spent more than an hour of “First Take” on the trial’s verdict, and made it the biggest story on its website’s homepage.
Most members of the media cheered this coverage as a sign of how the activism of professional athletes has forced ESPN to adapt. That story has little to do with sports. But professional athletes cared about it, and spoke out about it, which means their teams had to pay attention, which meant the leagues and their media partners had to pay attention.
But in the case of Watson, his teammates, the Texans and the NFL would prefer this story just go away. -- Lucas Shaw
John Kosner & Ed Desser connect with David Halberstam of Sports Broadcast Journal
Original Article: Sports Broadcast Journal, by David J. Halberstam, April 22nd, 2021
Ed Desser and John Kosner worked together at the NBA for a significant number of years under the tutelage of the late commissioner, David Stern. It was a precious way to learn the business. Stern built the NBA from a drug infested league that failed to get its championship playoff round on live television to a multi-billion dollar entity with huge global footprints. Anyone who worked for the driven Stern knows that he was hands-on and a taskmaster. But many will also tell you how much they learned interacting with him regularly.
For 23 years, Desser served as the senior media executive in Stern’s NBA office and ultimately as President of NBA Television and New Media Ventures. He now has more than 40 years of experience in sports media, performing valuations, determining strategy, and negotiating major media deals in the local, national and international TV marketplaces, and serving as an expert witness.
At the NBA, Kosner was in charge of U.S. broadcasting during the Dream Team era. He then spent 21 years at ESPN where he helped build the world’s leading digital sports destination, a powerhouse in short- and long-form editorial content, streaming, social media, podcasting and fantasy sports. In 2018, John and Stern created Micromanagement Ventures, a portfolio of sports technology start-ups focused on media, betting and player health. Stern passed on New Year’s Day 2020 after a brief illness.
Kosner and Desser negotiate sports media agreements for rightsholders. They’re both ahead of the curve and clearly project conceptual frameworks that will dictate future television deals. The average fan might not know their names. Yet they’re well known and greatly respected in the suites of top television and network executives.
In light of the whopping $113 billion NFL deal, I checked in with them to get their takes on how the deal breaks out, what viewers can expect, the entities that they think could be big TV players down the road and how in a changing world we’re likely to consume sports down the road.
Q& A – Ed Desser and John Kosner
Both of you worked for the late David Stern at the NBA. He had a reputation of being somewhat of a taskmaster. What are each of your memories of David? Any fun recollections?
Kosner: I got to work with David twice – the first time after Ed hired me from CBS Sports, 1987-1994, and then after I left ESPN, David and I worked together in 2018 and 2019. My first go round, I got very accustomed to screwing things up and then hearing about it in high volume and frequency from David – leading to multiple “firings.” When we reconnected in 2018, David was a more content, relaxed person and my work experience with him was great fun. But he never lost his competitive edge. David kept his phone number private so when you saw the “no caller ID” show up on your phone you knew who it was. One time, I was working with David on an investment/advisory deal with a startup and the startup rejected one of our key terms. I sent David an email late on a Friday night, stating that success was unlikely because the startup “can’t do the deal we want.” As soon as I sent it, I felt this familiar shudder – No!!! David’s going to call me right back and say: “Listen, you ____, it’s not that they can’t, it’s that they won’t. You’re fired!” Two minutes later the “no caller ID” popped up on my phone. The difference this time was that after David read me the riot act, he had a good laugh when I told him that I got exactly what I deserved.
Desser: I too was “fired” multiple times by David…sometimes more than once in a day, sometime deserved and other times just for dramatic effect! Perhaps that was the reason he had both John and me working there at the same time! There are so many stories I could share about my 23 years at the NBA (plus another 5 before that locally, and 16 since working on NBA-related deals), but I think it’s best to just say there has never been a smarter, harder-working, more gifted, and more transcendent sports executive. David understood how every aspect of the business worked, and what needed to happen to advance the state of the NBA: “everything is a priority.” He recognized the power of new technology to supercharge opportunities, which was especially valuable for me. He never took himself too seriously, but made sure that we understood that “no one was going to care about the NBA more than we did.” He made my career possible, and I will forever be grateful for all the opportunities he provided, the support he gave, the lessons he taught, and his friendship.
Kosner: Can’t say any of that better. I would just add that David was also self-taught. He reinvented the industry but only after he learned each part of it (broadcasting, marketing, basketball operations, community service, next-gen technology, etc.).
Desser: I was one of his early teachers, before he mastered the subject and taught me a thing or two about sports broadcasting!
Did the enormity of the $113 billion NFL TV deal surprise you in any way? Other than a few tweaks here and there, be they ABC joining the Super Bowl rotation and Amazon getting Thursday nights, the distribution of rights mirrors what the league and networks have now.
Desser: The NFL deals collectively are the most outrageous, audacious, overpriced, but completely worth it media deals in sports history. The power of the NFL as a property, a brand, and a perfected form of entertainment, is something that can launch series, networks, businesses, and technologies in the USA. It is simply unmatched. It defines the high-water mark that all others seek to attain. While the deals are innovative (e.g., carving out gambling rights, making Amazon exclusive on Thursday nights), they largely continue the NFL’s long practiced approach, staying with established incumbent partnerships, while continuing the practice of “slicing the salami,” as David would say, just a bit thinner each cycle. No one gets all they want, but everyone is happy to be inside the tent.
Kosner: I was pleasantly surprised that Amazon paid $1 billion annually to get exclusive rights to the Thursday night games. Amazon’s purchase of these rights is the most significant deal in our industry since Fox took the NFC package away from CBS in 1993. What Amazon does with these rights – innovative production, multiple feeds, heavy stats, Twitch, shopping, X-ray – is going to be the most fascinating part for me. I’m also very curious about the streaming plans for other broadcast partners. They are each approaching the challenge differently.
The huge dollar amounts required of the networks for the NFL might very well diminish what the networks have left in the till for other sports broadcast rights. As such, it’s been reported that the NBA is seeking an early renewal of its rights deal with Turner and ESPN. The league is hoping to triple its rights fee from $24 billion to $75 billion. The current deal ends in 2024-25. From an overall revenue picture, other than the NFL, which of the sports will fare best in a landscape that can be financially tighter?
Kosner: I believe the strong will get stronger. The NBA is uniquely popular among young fans and basketball continues to grow globally. If the NBA does not re-up early with ESPN and WarnerMedia, it could become the first league to strike a truly global media agreement with one or more tech companies when its current deal expires mid-decade.
Desser: The upward trajectory of major sports rights is unabated. There is still nothing else quite like sports to gather a huge, reliable audience. The pool of available funding is growing from streamers and potential gambling opportunities, while the pay television market continues to slowly shrink. Caught in the middle will be the sports properties that don’t command sub fee allocations, and which can’t bring large amounts of content and subscribers to streaming platforms. They will have to adjust to the new normal, but will find a host of alternative options available as streamers look to build sub-bases in the current phase, creating new leverage for previously marginalized properties, provided that they have devoted, well-heeled audiences. Combining out-of-market rights with national rights is also a key “new” opportunity for MLB, NBA, and NHL.
NBC had the whole kit and caboodle in an exclusive NHL deal. ESPN recently bought a chunk of the rights beginning next season. NBC would like to cut a deal for the half that remains but has drawn a line in the sand. It will pay just so much. Thoughts?
Kosner: The NHL’s deal is indicative of what’s coming. The traditional rights buyers are all launching streaming services (except for Fox) and that is where they are investing. The NHL gets the ESPN and ABC platforms for its biggest events but the real news here is that the NHL’s outer-market package and its vast number of games is moving to ESPN+. Did ESPN backstop the deal to pick up the other half of the NHL if it doesn’t find a buyer between incumbent NBC, Fox and CBS?
Desser: The news here is that after 20 years of being a secondary national sports product in the US (primary in Canada), the NHL has become sought-after by multiple networks. This will be transformational to the NHL’s national revenue picture, which has lagged for some time since ESPN abandoned it in the early 2000s. Gary Bettman and David Proper have done a great job building the league into a true major league media property.
The sponsorship market seems hot. No issues there. Is it sponsorship revenue alone that is fueling these eye-popping deals?
Kosner: The ad market is hot now, but with ratings down across the board, will there be enough sports GRPs (gross rating points) to buy? Part of the energy here is coming from betting companies looking to build brand as legalized sports betting accelerates state by state – and to use sports to sign up more first-time depositors.
Desser: Sponsorship helps but the main driver of revenue is pay TV subscriber fees and current + future subscription revenue from SVOD (Subscription Video on Demand). The future revenue adds leverage to the valuation as they (like entertainment companies and Wall street) consider the lifetime value of a sub, and right now, valuations on new streaming services are very high for that reason.
Amazon struck hard and is putting lots of dough behind Thursday nights. Can other major digital retailers like e-Bay for instance take an interest. E-Bay engages with 35% of American consumers?
Kosner: I doubt it but it wouldn’t surprise me to see telecom giants like AT&T, Verizon and T-Mobile jump in, using sports to supplement their Netflix, Disney+, Discovery+ offers. They’re the real bundle now.
Desser: I’d also consider competitors of Amazon as potential players…Walmart, Costco, Target are unlikely to completely leave entertainment content + retail to Amazon alone (Amazon Prime is a subscription service which packages together free shipping, entertainment programming, music, photo storage, and many other items to create subscriber value). That could also pave the way for 3-way tie-ups with Apple, Netflix, and Google.
Kosner: I have to admit, David, that Ed seconded your point so maybe I need to reconsider …
How will Amazon measure the results of its investment? Where does it expect to generate its revenue beyond advertising? Can the NFL be a profitable package?
Kosner: Amazon is an eCommerce company – so, gaining new Amazon Prime members (lift), better retention of those Prime members (less churn), targeting TV advertising to those members, presenting them with new commerce opportunities, perhaps a new Black Friday initiative … In general, Amazon can use its superior personalization to grow affinity with NFL fans and take a chunk of ad sales in NFL broadcasts. Most media companies have some sort of black box analysis to tell them whether or not a particular sports or entertainment package is profitable. Amazon is perhaps the most analytic of all sports TV rights buyers. I expect them to make the point internally and externally that their NFL investment is profitable for them.
Desser: Amazon is unique with ads, promotional value and subscription like traditional networks, plus the data analytics, commerce and future options like ticket sales, travel packages, merchandise and even prescriptions. Figure Amazon to also play in the gambling space as a data-based operation. Thus, Amazon can make money via content in many unique ways giving them a competitive advantage. And added sports content provides justification for Prime price increases as well, which they have proven is highly inelastic. The formula is working very well, as Prime now boasts more US subscribers than all pay TV operators combined, next only to traditional OTA (over the air) broadcasters.
Is the very threat of social media and Direct to Consumer (DTC streaming) marketing forcing the Regional Sports Networks (RSNs) to dig deeper into their pockets so that they’re not marginalized?
Kosner: Yes and RSNs have to embrace both to survive and re-invent themselves.
Desser: RSNs have valuable, exclusive content that fans want. The marketplace is changing, but content is still king. RSNs are the incumbents, so they start out with established revenues and credibility that newcomers don’t have. Teams are very cautious about how they approach the platform (media). That is the primary way most fans experience their products. That isn’t something easily entrusted to newcomers. Change will happen, but RSNs still represent value in a changing ecosystem.
What’s the next piece of intrusive technology that will affect the way fans consume games?
Kosner: Sub-second video latency to enable in-play betting, instant highlights, watch party tech and other features.
Desser: The NFL carved out an opportunity in this space in the new deals. Look for others to follow. I also think the idea of live cut-ins as a new product is intriguing.
There is the issue of Sunday Ticket. We know that DirecTV won’t bid again. Where is it headed and how can it differ from a distribution perspective? Any last minute, surprise bidders?
Kosner: Sunday Ticket could go non-exclusive. it’s an appealing product for streaming platforms.
Desser: Yes, unlike the other NFL packages, Sunday Ticket has always been an à la carte subscription offering, that requires a buy-through, meaning that you had to first buy a DirecTV subscription in order to get Sunday Ticket. This means that it has both direct and indirect revenue opportunities for a licensee. Amazon, ESPN+ or YouTube tv could offer Sunday Ticket as a way to get new prime, ESPN+ or YouTube TV subscribers, and then still charge for Sunday Ticket subscriptions on top. And, like HBO, this need not be exclusive. DirecTV could even keep non-exclusive rights at a lower cost as a retention tool. While it might drive fewer new sign-ups, a non-exclusive deal with multiple players could maximize total NFL à la carte subscription sales.
Will the NBA, MLB and NHL ever go an NFL model and sell all their rights to one network that would also get local distribution rights?
Kosner: if the RSN business unravels it’s likely that some sort of hybrid arrangement will emerge.
Desser: Historically, there was only so much shelf space for NBA, NHL, and MLB on a national basis. This drove the current national/local bifurcation approach. While any change will impact teams in different ways, depending on market size and attractiveness, something more like the NFL model could very well emerge in places from the changing dynamics of the regional business.
What do these leagues and networks do about recapturing young viewers?
Kosner: Most need a new playbook and will have to re-examine their current rights agreements and philosophies around exclusivity, distributing live games and highlights. You have to be where your audience is – and that is going to be increasingly fragmented.
Desser: This is something that sports has never had to deal with before. The built-in father/son bonding and things like Little League created automatic affinity for young fans. Sports has taken this automatic fan development for granted historically. Now under 30s don’t have pay TV, and prefer Esports rather than playing catch with Dad. Teams and leagues will have to find new ways to get where future fans are in order to indoctrinate them and power the business for future generations.
Betting has been embraced by the leagues. DraftKings recently announced that it’s purchasing VSiN for $100 million. How will it change the way we watch games in the next ten years or so?
Kosner: We are likely to see separate streaming feeds that feature in-play betting. However, most betting activity will probably take place on your phone than on your TV set. The movement of betting companies to get into content (such as DraftKings purchasing VSiN) will probably be hit and miss. I favor connections to live games, influencers versus establishing your own sports media company.
Are you surprised by the continued growth in franchise values – despite the deep losses suffered by the scourge of Covid?
Desser: Covid is mostly (though not entirely) a transitory event. While it has long term implications, humans continue to be hard-wired to gather. Sports, concerts, weddings, and even business dinners are all things we enjoy. However, never before have we needed to question the wisdom of getting into a room with 20,000 others. This will pose a long- term hang-over, but there is also pent-up demand to eat, play, watch, travel, gather and cheer. The growing number of the world’s billionaires, with little left to spend on after buying a few homes, a jet, and saving humanity, are left with sports franchises as a real life play toy and the ultimate status symbol.
Kosner: The rich “franchise team” will continue to get richer. There is plenty of wealth out there and very few beachfront properties. Values of the 32 NFL teams will benefit from the new TV and betting data deals. Smaller market teams with less certain local TV rights potential may not be as successful.
Desser: It is the most exclusive of all “clubs,” with “initiation” starting in the multiple billions of dollars.
What are the two of you focusing on and what kind of questions are you being asked?
Kosner: I am fascinated by the explosive growth of the video games business and believe it provides a roadmap of sorts for sports.
Desser: I am constantly focused on how the old world of pay TV sports will evolve as a practical matter. The underlying dynamics of changing taste, availability of broadband, expectation of on-demand products of all sorts must co-exist with a historical business model based on nearly everyone paying a small amount for nearly every kind of programming they could want in a huge package. Like when cable evolved from broadcast, and again when digital/DBS (Direct Broadcast Satellite) provided an alternative to cable, the new world of SVOD (Subscription Video on Demand), DTC (Direct to Consumer), and AVOD (Advertising supported Video on Demand) superimposed upon an installed pay TV base provides financial and practical exposure challenges for the sports industry. Trying to be ahead of that curve provides a fascinating, dynamic puzzle to solve.
***
For more information on our guests visit:
Ed Desser www.desser.tv
John Kosner www.kosnermedia.com
John Kosner on “Hot Mic” issues with Sportico’s John Wall Street
Original Article: Sportico, by JohnWallStreet, April 13th, 2021
Back in late March, NHL referee Tim Peel was fired after admitting on a “hot mic” that a penalty called in a game between the Nashville Predators and Detroit Red Wings was predetermined. That slip-up came two months after Golf Channel microphones caught PGA Tour star Justin Thomas uttering an anti-gay slur following a missed putt. (It’s believed he was fined; the PGA does not publicly disclose disciplinary actions toward its members.) That followed just weeks after Meyers Leonard was banished from the Miami Heat indefinitely for using a derogatory term during a live video game stream (Kyle Larson was fired by Chip Ganassi Racing for a similar offense in 2020). But despite the series of costly microphone missteps, a pair of media industry insiders—Mark Gross (senior vice president, production and remote events, ESPN) and Dan Cohen (SVP, Octagon)—expect that leagues will only be providing their media partners with more access moving forward (think: MLB Spring Training on ESPN). “Collectively, the top priority [for leagues and networks] is serving the sports fan, and access is at the very top of the list of what they want,” Gross said.
Our Take: Sports leagues looking to gain younger fans and/or keep them engaged will provide more and more access to their media partners because that is what sports fans have come to expect. “This is an established element of broadcast at this point,” Cohen said. “[The leagues] opened up the opportunity for fans to be this close to the action. [They] can’t close that lid now. Sports leagues are punching into the wind if they think they can [now] turn the ship away from providing consumers a better viewing experience.” Gross agreed, saying, “Access has been increasing for a long time now across sports, so the cat is out of the bag in that regard.”
Research studies done by ESPN during the 2020 season have confirmed that point. When given a choice of alternative production elements, most fans advocated for ones that brought them deeper into the telecast. The element fans were most passionate about was the utilization of player microphones to provide the natural sounds and conversations during a game.
John Kosner was on board with that line of thinking until the recent succession of hot mic incidents. The former NBA and ESPN executive-turned-startup investor now views “the combination of hot mic risk, social media’s instant global distribution and the current unforgiving culture that we all live in” as too great a liability for the big four leagues, and thinks a change in approach is on the horizon. The potential for “players, coaches and executives [to blow] themselves up instantaneously by saying the wrong thing at the wrong time is so palpable that you’re going to have people retreating here. When you have incidents that come up, and the punishment is that the person who makes the mistake is gone forever, there is just too much risk,” he reasoned. Remember, there was already a lot of pushback before the recent series of mic slips.
Kosner suspects it won’t just be the players’ and coaches’ unions, worried about one of their members landing in hot water, that will oppose the increased use of hot mics on the field. “If [a team] has a star player, who is caught saying something offensive, and there is public pressure for the team to sever their relationship with that player, then the owner feels [the burden], the team feels it, and the league feels it,” Kosner said.
Putting on-field/behind-the-scenes audio content on a short delay is a logical enough solution to the problem. Kosner reasoned leagues could “achieve 85% of the value and take out most of the risk” by doing so. But while a delay is fine for the purpose of short audio vignettes or an alternative feed, the approach would seemingly run counter to the leagues’ desire to capitalize on sports betting. “You need a real-time audio/visual feed to make in-game prop bets,” Cohen reminded. In-game sports betting is expected to explode in the U.S. within the next three to five years. For perspective, Bet365 has estimated roughly 80% of sports betting revenues in the U.K. come from in-play bets.
It’s fair to point out, as Kosner did, that “access is just one part of modernizing the game experience to get more [young] people interested.” Providing those fans with “watch party” functionality (commonplace in the gaming world) or any number of other innovations could potentially serve the same purpose. But Cohen says, “While a block party is great and creating multiple feeds with alternative broadcasters is great and tokenizing a match like the NWSL has on Twitch is awesome, none of these different engagement enhancements or innovations replace feeling like you’re a part of [the game] as miking up some of these athletes.”
To be clear, Cohen didn’t deny that “mic slips” can be problematic. But he said leagues concerned about them should focus their attention on accountability and education rather than trying to put the toothpaste (i.e. access) back in the tube. “It’s incumbent upon these leagues to remind people when you’re in public, you’re in public,” he said. “Everyone on the court or field [including the coaches and referees] needs to be aware that [on-court/field mics] are now a normal operating procedure for sports that are broadcast.” Those on or near the field of play simply need to be responsible for the language they use in the workplace—no different than employees in any other field of work.
John Kosner spoke to Digiday about the NFL's latest rights deals
Original Article: Digiday, by Tim Peterson, March 23rd, 2021
For the past several years, the National Football League’s next round of broadcast rights deals were seen as the likely tipping point for streaming to overtake TV.
But now that those deals have been announced, they underscore an oxymoronic moment: streaming is overtaking TV, but also that TV is overtaking streaming. “It’s less a revolution than an evolution,” said Patrick Crakes, a former Fox Sports executive and principal of Crakes Media Consulting
The major TV network groups, including Disney, Fox, NBCUniversal and ViacomCBS, retained their rights to air NFL games on their TV networks on March 18. But the 11-year deals also enable the companies to distribute more games on their streaming services to people who do not have traditional TV. And whereas the potential loomed for a tech giant to swoop in and steal rights away from the traditional media companies, in the end only the NFL’s Thursday Night Football package went to Amazon, albeit on an exclusive basis aside from the local TV broadcasts.
As a result, the NFL’s latest rights deals do not appear to represent a watershed moment for the convergence of traditional TV and streaming. But they are — or, at the least, they have the potential be. “To me when all of these games are available to stream and you don’t need a pay-television subscription, that’s when things change tremendously,” said John Kosner, a former ESPN executive and president of Kosner Media.
That moment may not be much farther off. Starting this year, NBCUniversal and ViacomCBS will have the rights to stream their NFL games on Peacock and Paramount+, respectively. Additionally, Disney will air one game exclusively on ESPN+ in 2022 and has the rights to air all of its NFL games on the subscription-based streamer starting in 2023. Fox appears to be the only one of the TV networks not to acquire rights to make games available to streaming-only audiences, though it will air condensed games on its free, ad-supported streamer Tubi. That the networks have acquired these streaming rights puts them in position to retain their positions in the broader TV market as it shifts to streaming.
“It’s very hard to see that the future of any digital distribution won’t be owned by the same established media companies that owned the old” distribution model, Crakes said.
However, while the networks have the rights to stream games to cord cutters, only NBCUniversal has been explicit about actually doing so. Disney and ViacomCBS said they have the opportunity to do so but not that they, in fact, will as soon as they have the option. That leaves open the possibility that the companies could choose to keep their NFL games limited to traditional TV viewers. That would be an odd move considering the networks are reportedly paying more than $2 billion per year — $2.7 billion in Disney’s case — for their NFL rights, per CNBC. But it’s because the networks are paying so much that they may be wary of making the games accessible to cord cutters and severely undercutting their linear TV businesses that effectively subsidize their streaming businesses.
Protecting their linear TV businesses appears to be why the TV network owners were reportedly willing to pay 75% to 80% more money for the right to air NFL games, according to The Wall Street Journal. “For these networks, they’re trying to give life and breath to their traditional channels,” said Eunice Shin, who has consulted for companies including Disney, Warner Bros. and NBCUniversal and is a partner at consulting firm Prophet.
If the TV network owners all were to make their NFL games available to streaming-only audiences, “it’s going to accelerate the decline of pay-TV subscriptions, which already largely subsidizes sports in this country at the moment. That’s going to be an earth-moving moment,” Kosner said.
The earth is moving, though. The pay-TV industry lost 6 million subscribers in 2021, according to research firm MoffettNathanson, and two of the companies that own NFL rights — Disney and NBCUniversal — each reorganized their companies around streaming last year. So, for as much as the latest NFL deals suggest the TV market isn’t changing all that much as streaming takes center stage, it is changing, but the companies involved are largely staying the same. “Ninety percent of [NFL games] are staying with established partners who built new streaming assets,” Crakes said.
The TV network owners’ primary motivation for paying up to retain their NFL rights may have been to protect their legacy linear businesses, but at least a contributing factor was likely that traditional TV’s most prized programming could prove just as valuable in building up their streaming businesses.
Offering NFL games could help the networks’ standalone streamers to contend with the likes of Netflix and WarnerMedia’s HBO Max in the war for people’s streaming subscription budgets. Not only may people be more likely to sign up for Peacock or Paramount+ because of the NFL’s availability, but they may be more likely to stay subscribed.
““Fewer people are going to drop subscriptions from September through February because of the power of NFL programming.””
That power was not lost on Amazon whose acquisition of NFL rights should not be overlooked. While last year Netflix had hits like “Tiger King” and “Queen’s Gambit,” Disney+ had “Hamilton” and “The Mandalorian” and HBO Max had “Wonder Woman 1984,” Amazon Prime Video “didn’t really have a moment. There was just no news about Amazon,” said Shin. That has now changed. Whether it amounts to much by way of drastically increasing Amazon Prime Video’s audience remains to be seen, but it will likely increase the competition among TV networks and streamers for live sports rights overall.
“Amazon’s aggressive move into sports will neither be their last nor are they likely to be the only digital entity to get into sports,” said Kosner. “This might have been the moment that broke the dam a little bit.”
John Kosner on the NHL in Lake Tahoe for Barrett Sports Media
Original Article: Barrett Sports Media, by Seth Everett, February 26th, 2021
Was the NHL’s great success also a great failure?
“You can’t have success if you don’t risk failure,” NHL commissioner Gary Bettman commented to Mike Tirico on Saturday as the sun made the league’s most picturesque outdoor game unplayable.
Instead of a 3 pm eastern time NBC telecast, the last two periods of the game between the Colorado Avalanche and Vegas Golden Knights was moved off NBC to the lame-duck NBC Sports Network at midnight EST. Sunday’s game between the Boston Bruins and Philadelphia Flyers moved from 3 pm to 2 pm to then 7 pm and back to NBCSN.
“I still think it was a big success given how unique it was once the ice situation was squared away,” NESN announcer Billy Jaffe told me. “How majestic it was, is what made it successful.”
The pictures alone were breathtaking. I found myself glued to the television. Unlike the 31 previous outdoor games, no fans could attend. They didn’t even build stands. Television was the only way to expose that scene to the masses.
Saturday’s first period averaged 1.398 million viewers on NBC. The final two periods on NBCSN averaged 394,000 viewers. That’s more than a million fewer viewers after the delay.
“The sunny weather and its impact on the weather was a bad break for the NHL in terms of lost windows and audience on NBC,” said John Kosner, President Kosner Media and former head of digital media at ESPN. “However, the weekend was a spectacle, it generated tons of attention and coverage and did produce very big audiences for NBCSN.”
“I thought it was spectacular,” NHL Network senior reporter EJ Hradek told me. “I think every time they go play an outdoor game there are always risks. I’ve covered almost all of them. I was not at this one, unfortunately, because nobody was really at this one. I’ve been in situations where games are moved and changed.”
Going into the weekend, the NHL’s decision to try to play at Lake Tahoe was one of the more innovative ones I’d seen. Certainly, during the year-long pandemic, it’s one of the most out-of-the-box ideas from any sport. Still, if a million people could not see the end of the game, what was it all done for?
“People will always talk about the sunny weather that delayed the NHL in Lake Tahoe,” said Kosner. “That’s not all bad in my book!”
“We’re in such a crazy unique environment right now that I think anything different is good. It’s worth risk-taking, but it’s also gonna have challenges presented. But I think when it was all said and done, especially the Flyers and Bruins showed itself beautifully.”
The Sunday night game between the Flyers and Bruins averaged 1 million viewers. The afternoon NBC replaced the game with a Washington Capitals-New Jersey Devils that only averaged 750,000 viewers. The debate rages how many more people would have watched a Lake Tahoe afternoon game on that Sunday.
The NHL was being bold in designing this unique event. Previous NHL outdoor games have been held in football or baseball stadiums with over 50,000 people.
“I still enjoyed the pageantry,” Jaffe added. “The whole ‘Mystery, Alaska’ type thing about it. But on the business side, which I’m not really qualified to speak about. I’m sure it wasn’t as much of a success as it could have been.”
One other issue with the event. The Colorado Avalanche uniforms received tons of praise for their version of the “Reverse Retro” jersey that every team has. The Avs wore the logo of their previous incarnation, the Quebec Nordiques. The Nordiques left Quebec in 1995 and became the Avalanche, winning the Stanley Cup in their first season in Denver.
I think the decision to use that logo, and for NBC to put that logo in their graphics is a direct insult to the fans in Quebec. Their team was taken from them. That does not celebrate their history. It rubs salt in the wound.
The Avalanche are not the only team that uses a previous incarnation of the franchise. The Carolina Hurricanes are wearing the Hartford Whalers logo as their Reverse Retro jersey. One Hartford fan told me it reminds him of the departure, a wound that is not fully healed.
I suggested that if the NBA’s Oklahoma City Thunder wore Seattle SuperSonics uniforms for some kind of retro night, there would be a legitimate mutiny in the Pacific Northwest. Relocation is a sad story in sports, and celebrating it, sends the wrong message.
“I mean, it is the same franchise,” Hradek said. “The franchise was sold and moved. I didn’t live in Hartford. I didn’t live in Quebec City. I could only tell you as a hockey fan. I mean, I enjoy seeing those jerseys because I don’t take offense to them, but again, I can’t speak for a fan in Hartford or a fan in Quebec City.”
The Avalanche could have used the old Colorado Rockies, hockey team. That franchise played in Denver but left to go to New Jersey in 1982. The difference is that Denver got a new team. The Wild honor the North Stars, but again nobody is left in the cold.
All in all, I applaud the NHL for trying the Lake Tahoe experience. Unfortunately, it had to hurt to lose a million viewers. If a picture is worth a thousand words then Lake Tahoe can write its own novel.
John Kosner on the Clubhouse App with Sportico’s John Wall Street
Original Article: Sportico, by John Wall Street, February 8th, 2021
Back in late January, Clubhouse—an audio-based social networking startup—confirmed it had closed on a $100 million Series B round (led by Andreesen Horowitz), reportedly at a $1 billion valuation. However, despite the company’s newly minted unicorn status, the invite-only iPhone app remained largely under the radar outside of Silicon Valley circles. That changed on Jan. 31, when an unexpected conversation between Tesla founder Elon Musk and Robinhood CEO Vlad Tenev brought Clubhouse into the mainstream lexicon, sparking a secondary market for invite codes in the process (each user receives a limited number of invitations to dole out during the pre-launch period). With the drop-in audio platform gaining momentum—roughly a third of the app’s 3.5 million-plus downloads came within the last week—it seemed like an opportune time to explore if/how Clubhouse is likely to affect the sports ecosystem (the company declined an opportunity to share its thoughts). Conversations with a tech-savvy venture capitalist and a sports media investor/adviser painted vastly differing views on the subject.
Our Take: Peter Rojas (partner, Betaworks Ventures) has long been a believer that social audio can play a prominent role within the existing media landscape. Back in 2015, he invested in a mobile voice-messaging app called Unmute that served a similar function (but was just a bit ahead of its time). He says the ease with which creators can produce audio-only content, and the ability for both the audience and creators to go in depth on topics, differentiates the platform from other creator-driven social networks in the marketplace. Of course, audio-only channels are well-suited for deep conversations because “it can be easier for audiences to listen in to longer, more nuanced conversations when they can do it in the background of something else they are doing, like driving or working out,” Rojas explained. By contrast, “You don’t necessarily want to sit and watch a two hour YouTube video of people discussing something,” he said.
Considering people love to talk about sports, one would think there is a use case for social audio. But John Kosner (founder, Kosner Media) remains skeptical that a drop-in audio app is the “best format” for fans to consume sports-talk programming:
““Podcasting is a more efficient way to find what you want to find out, when you want to find out, and there is virtually an unlimited supply of podcasts.””
Remember, Clubhouse conversations aren’t always going to be taking place at a convenient time, and you can’t fast-forward through them. Old-fashioned AM radio also still exists (the business remains healthier than one might think) and serves the older fans’ need for real-time, in-depth discussion. Kosner did acknowledge “Clubhouse is relatively new, so obviously it will add product features and capabilities.”
Rojas, on the other hand, doesn’t see Clubhouse as a competitor to existing media channels. He says podcasts, radio and social audio are not mutually exclusive, and each can serve a purpose. “Platforms that open [access] up to people who didn’t have the ability to participate before are expanding the media ecosystem. It’s a different audience and different dollars in a lot of cases; and I would never bet against people finding more time to consume the media content they love.”
While it remains to be seen if sports fan will regularly make the time for social audio consumption on top of everything else, Clubhouse does appear to be chasing different dollars than those playing in the podcasting or radio space. Unlike those advertising reliant businesses, Clubhouse plans to drive much of its revenue via subscriptions (presumably to schedule shows hosted by engaging voices) and ticketed events (think: Musk-Tenev chat). The company will retain a percentage of the revenue generated by their creators, no different than Patreon or Substack. The company’s latest round of funding will in part be used to establish a “creators fund”—money to entice talent to participate on the platform.
Reaching critical mass (think: 100 million active monthly users) will help Clubhouse retain creators once they are on the platform. But Kosner said: “It’s not clear how [the platform] scales or gets to a level that really makes it an important part of the sports ecosystem”—even with plans to make invites more widely available and introduce an Android app. The former EVP of digital at ESPN sees the transition from “digital in-crowd” to average Joe as a difficult one to make (there are also moderation issues that need to be addressed). “It’s more likely [the app] serves just a certain small segment of sports fans and is not a big factor in sports anytime soon,” he said.
Rojas balked at the suggestion Clubhouse’s current exclusive nature would be a long-term headwind for the company. “A lot of these [social networks] started as sort of insider, Silicon Valley [apps],” he said. “Twitter started out that way too. The audience ends up expanding.”
In addition, Rojas said, “The sense of proximity and immediacy offered by Clubhouse is really, really powerful.” But considering the rise of the social audio platform has come in the midst of a global pandemic (launched in April ’20), it’s fair to wonder—as Kosner did—“how much of the popularity is because we’re stuck in our homes and have time on our hands. When people are going back out and [regularly interacting with others] will something like [Clubhouse] be as popular?” The answer may determine whether the app will end up playing a prominent role in sports.
Considering the buzz around Clubhouse (see: Clubhouse Media Group, a totally unrelated company, saw its stock price rise as much as 117% on Feb. 1), it is no surprise there are “fast followers” positioning themselves as “Clubhouse for sports.” Even if social audio catches on in sports, it remains to been seen if whether it’s best suited to be verticalized around specific communities (like LockerRoom) or constructed as a broader platform where users can seek out the specific type of content or community they’re interested in (like Clubhouse). It’s possible both platforms could find a dedicated following—though Clubhouse undeniably has more momentum right now.
And as Rojas said, “Momentum has a way of compounding itself.”
Netflix of Sports hasn’t arrived but…
Original Article: Sports Business Journal, by Ed Desser and John Kosner, January 18th, 2021
In the five years since Ed wrote “Handicapping the Netflix of sports” ( SBJ, 3/28/16 ), streaming has boomed: Disney+, HBO Max and Apple TV+ have joined Netflix and Amazon and “over-the-top” is now materially affecting traditional cable. As predicted for sports, BAM and Disney…
John Kosner Quoted in Sportico Regarding Dan Le Batard’s New Venture
Original Article: Sportico, by Eben Novy-Williams & Corey Leff, January 24th, 2021
The first priority for Dan Le Batard’s next media endeavor—a project he’s launching with his former boss, one-time ESPN president John Skipper—is to secure a distribution deal for his audio empire.
Those negotiations will likely be bolstered by something he took with him from ESPN. As part of his severance from the Disney unit, Le Batard negotiated for the RSS feed to his podcast, according to multiple people familiar with the talks. It’s allowed the talk show host to maintain continuity with his followers, without requiring them to re-subscribe to a new show.
Le Batard also negotiated the use of the oceanfront Miami Beach studio where he recorded for ESPN, the people said. A representative for ESPN declined to comment on the arrangement. Le Batard also declined to comment when reached by phone.
The RSS feed, in layman’s terms, is the podcast’s connection to its audience. When listeners subscribe to a podcast on iTunes or Spotify, they’re committing to have new shows delivered to their phones via the RSS feed. By retaining it, Le Batard was able to maintain his loyal—and sizeable—audience. He’s also kept the 23,000-plus reviews that give his podcast a valuable 4.8-star rating on iTunes.
While the specific terms of his negotiations with ESPN are unknown, having the pre-built audience and data associated with it should help as he begins talking to distribution partners. That said, it likely won’t make or break a deal, said John Kosner, a media consultant and former ESPN executive.
“Dan Le Batard is a very popular talent. He’s been on television and radio and podcasts for a long time,” Kosner said. “If he had no rights to anything, I still think he’d get a significant distribution deal. But this definitely strengthens his hand.”
ESPN theoretically could have kept the RSS feeds and used them to boost the following of another show. That would have run the risk of alienating Le Batard’s avid fans and potentially backfiring if listeners found themselves subscribed to a podcast they didn’t want.
Le Batard wasted little time putting the RSS feed to work. Just one day after his final ESPN show last week, he was posting new episodes of “The Dan Le Batard Show with Stugotz” to his existing subscribers. As of Thursday morning, the show was No. 1 on Apple’s sports podcast chart; a separate Le Batard offering is No. 10.
Skipper and Le Batard plan to build a new personality-driven media company that could cover a variety of topics, starting with sports, according to someone familiar with the plans. It’s unclear when exactly the venture will get off the ground, but Skipper will remain in his role as executive chairman of sports streaming service DAZN while working on the new venture.
A former Miami Herald columnist, Le Batard spent nearly a decade at ESPN, where he became one of the company’s most popular and visible personalities. He had a presence on ESPN’s TV, radio and podcast platforms, and at the time of his departure, he was making $3.5 million per year, according to Sportico sister publication Deadline.
Frequently outspoken, Le Batard clashed with his bosses toward the end of his tenure, first over the company’s policy not to directly address political matters, and later over the abrupt firing of his long-time radio producer. Both sides have described his departure as amicable.
Le Batard is the latest media personality to leave a major network and launch his own venture. Those hosts have more leverage now, Kosner said, because there are other ways for fans to interact with them.
“Modern talent negotiations are all skewed by the fact that powerful talent have their own independent social media following on places like Twitter and Instagram, and that’s their property not their employer’s,” Kosner said. “Whether you’re Stephen A. Smith, or Bill Simmons, or Dan Le Batard, that’s a valuable asset that you have going forward, and it weakens the positioning of your current employer.”
The Fourth Quarter of Sports Media, Part I
Original Article: John Wall Street, by Ed Desser and John Kosner, January 8th, 2021
The advent of electronic sports media’s “first quarter” started a century ago, first as radio game recreations from press reports in 1920, and then as live on-site play-by-play (boxing and Pirates-Phillies baseball) in 1921 on KDKA in Pittsburgh. In the second quarter, broadcast TV ascended, with live sports becoming national weekend daytime and local primetime TV staples in the 1960s and ’70s. The third quarter came via cable TV, adding huge programming volume and bringing to fruition in 1979 the previously unthinkable notion of a 24/7 sports network: ESPN.
Today, as platforms like Netflix, Disney+ and Amazon lead entertainment, and now have higher penetration of broadband than pay TV, we are entering the sports media’s “fourth quarter” and its impending inclusion into the new mainstream—emphasis on stream.
With the annual Consumer Electronics Show (CES) taking place virtually next week for the first time, we thought this would be the perfect opportunity to look out into the digital future and project what the next phase will look like. First, let’s recap the scores….
ESPN+ is the highest-profile sports streamer today. Amazon has invested in top brands like NFL and EPL rights. New streaming entrants FloSports and DAZN bought up niche sports and boxing, respectively, while fuboTV offers a streaming package of multiple linear sports and entertainment networks. However, none has yet become a true aggregator (think cable TV for the past 40 years), and we do not believe any single entity or platform will—at least for the next decade. Instead, we see a confluence of factors leading to a multiverse of sports viewing options for the remainder of the 2020s.
In entertainment, AT&T launched HBO Max, Comcast unfurled Peacock, and Disney has built the first true Netflix challenger with Disney+ (after consolidating Hulu and Star from Fox). CBS was early with All Access, but streaming remains a relatively small side business for CBS and Viacom, and essentially nonexistent at Fox. Meanwhile, Netflix expanded its domination during COVID and now claims 195 million non-sports global subscribers. Netflix has not only redefined the streaming viewer experience; critically, it has done so at price points that for now undercut the rest of the entertainment industry. Otherwise, it’s hard to imagine that Disney+ would price itself at $7.99 (as of this March), especially with first-run Disney movie content. Or that HBO Max would be bringing blockbuster Warner Bros. movies direct to subscribers in 2021 at no extra charge. Or that each of these services would be subsidized and magnified through wireless carrier bundles (T-Mobile, Verizon and AT&T, respectively). The super low (to zero) prices for high-end entertainment fare create a significant challenge for high-priced sports content purchases by streamers going forward.
In sports, ESPN/ABC, Fox/FS1, Warner/Turner, CBS/CBSSN, and NBC and its cable channels still remain the kings of live major U.S. properties, holding the pay TV bundle together.
However, that bundle is fraying:
Cord-cutting continues unabated. Another 5 million subs exited in 2020;
More than one-third (37%) of the 121 million U.S. TV homes have cumulatively eschewed or abandoned traditional pay TV;
Cord-shaving, or cutting back on service, has further eroded the penetration of expensive top sports networks, shrinking available audiences;
Virtual MVPDs (like YouTube TV, fuboTV and Hulu Live) no longer pick up the slack;
COVID-19 stopped sports cold last spring and posed formidable challenges upon their return—no crowds, scrambled schedules and huge additional expenses (though with some production-efficiency savings);
According to Roku’s 2020 study, 28% of cord-cutter households ranked the loss of live televised sports as their top reason for cutting the cord;
Entertainment streaming services filled the void with extended free trials and special events such as Hamilton on Disney+ on July 4;
Perhaps most important, a generation of younger viewers who have grown up with smartphones (an entertainment ecosystem in their pocket) has accelerated the bundle’s decline by being “nevers”—new households that have never had linear pay TV.
Sports media’s third quarter is ending with a level of uncertainty we’ve never seen before. Besides the NFL, there are no sure things. Perhaps that is why we expect essentially one last “traditional” rights acquisition cycle, where the “surviving” sports TV networks reach for still-richer NFL agreements to maintain relevance and boost their own asset value, with consolidation likely to follow.
But in making bigger and bigger rights commitments, the leading networks will find themselves in a paradoxical trap. The digital platforms that command the most attention from young sports fans—YouTube, Instagram, Twitter, Snap and increasingly TikTok—pay practically nothing in rights fees. None carry live games, and all flaunt fairly comprehensive highlights on their platforms (both through league deals and user-generated content). Going forward, those paying the most (ESPN, Fox, Warners, NBC and CBS) will have the least financial flexibility to invest in new approaches necessary to attract young audiences, who are less likely to watch live three-hour game “marathons.”
For over three decades, the traditional pay-TV bundle powered non-gate revenue growth for pro and college teams on a scale never before experienced. But on Dec. 10, 2020, at a four-hour Investor Day presentation, the biggest beneficiary of traditional bundle economics, the Walt Disney Co., laid out an unequivocal path forward: streaming. Disney is effectively betting a world-renowned $325 billion company on it. We may look back at that date as the demarcation between the old and the new sports media worlds.
In Part II of this series, we will look at what we expect the fourth quarter of sports media to look like. How will the MVPD bundle morph? What moves are the linear stalwarts of the industry likely to take in their next acquisitions? Will a new bundle emerge, or will the business further disaggregate? How will sports fans navigate the new world’s options and alternatives? What benefits are in store for tomorrow’s fan in return? Look for those answers here next Friday.
Desser, a senior media executive at the NBA for 23 years, founded Desser Media, a sports media consultancy that provides valuation, negotiations and expert witness services. Kosner was the senior digital executive at ESPN for 20 years. In addition to managing Kosner Media, a digital and media consultancy, he is an investor and advisor in sports tech startups. Together, Desser and Kosner ran NBA Broadcasting in the 1980s and ’90s.
Marvel’s Avengers Lend Home to Kosner and Calemzuk for $250 Million SPAC Buildout
Original Article: Sportico, by Eben Novy-Williams, December 24th, 2020
Longtime media executives John Kosner and Emiliano Calemzuk are part of a group aiming to raise $250 million for a special purpose acquisition company.
The group’s filing says 890 5th Avenue Partners will look to invest in an area specific to the expertise of its management team, which includes veterans in media, technology and telecommunications. It specifically mentions sports media, sports betting, esports and fitness platforms as potential targets. The address is a reference to the fictional Avengers Mansion, where many of Stan Lee’s comic book characters lived.
“There are several market verticals we have identified which are undergoing unprecedented levels of disruption in an extraordinarily accelerated timeframe due to a variety of trends, making them attractive pools for business combination candidates,” the group said in a filing.
Those trends include the growing amount of time consumers spend on new platforms, the rush to create and distribute content at a faster rate and the myriad ways digital technology is upending social media, interactive entertainment, gaming and education. Earlier this month Kosner co-authored a Sportico op-ed that hit on some of these same themes.
The group’s filing says it is targeting companies with an enterprise value between $750 million and $2 billion. It says it doesn’t have a specific target, nor has it had any substantive discussion about any specific acquisitions.
This is the latest sports-adjacent SPAC to reveal its intentions to raise money and pursue an acquisition, a phenomenon that Sportico has tracked all year (click here for our SPAC Primer). There are at least 40 SPACs that are sports focused or led by sports executives, and collectively, they’ve raised or seek to raise over $16 billion in total capital.
The group’s executive chairman is Adam Rothstein, co-founder of Disruptive Technology Partners and Disruptive Growth, a pair of Israeli investment funds focused on technology. He is also a sponsor of Roth CH Acquisition I Co., a SPAC in the process of acquiring plastics recycling company PureCycle Technologies. Rothstein declined to comment.
Kosner led ESPN’s digital media from 2003 to 2017. After leaving ESPN he and NBA commissioner emeritus David Stern launched Micromanagement Ventures to invest in sports and technology start-ups. Kosner also runs his consultancy, Kosner Media.
Calemzuk, who will be the group’s CEO, spent 14 years at 21st Century Fox/News Corp, including leadership of the group’s scripted and non-scripted television shows and as president of the Fox Television Studios. Since leaving the company in 2012, he’s helped Time Inc. build its digital video strategy, participated in a $400 million SPAC led by Jeff Sagansky and Harry Sloan–the two investors who later took DraftKings public–and is currently an executive at ecommerce and payments platform MercadoLibre.
John Kosner on Sports Podcasts with Sportico’s John Wall Street
Original Article: Sportico, by John Wall Street, December 16th, 2020
SPORTS PODCASTING GENERATES INVESTOR INTEREST WHILE TURNING TO MONETIZATION QUESTIONS
Yesterday, Axios reported that Blue Wire, a sports podcasting network, had raised $5 million in Series A funding (the company did not respond to a request for insight on the valuation). The investment round, led by Dot Capital (Bettor Capital, Side Door Ventures and Forty5 Ventures also participated), comes just 10 months after Blue Wire announced it had closed on $1.2 million in seed money (that round was also led by Dot Capital).
Over the last twelve months, venture capital has been steadily flowing into the sports audio ecosystem (see: Spotify’s $196 million acquisition of The Ringer). But “there is much more attention [being paid by investors to the sports podcasting space] than there are revenues [being] generated against it,” cautioned Kosner Media president John Kosner, who wondered how investors plan to achieve a return on their investments. “There’s too much supply and too few buyers. [The space] feels overcrowded at the moment and other than Spotify, there aren’t any real confirmed [acquirers].” In addition to Blue Wire, Barstool Sports, The Ringer, ESPN, The Athletic and Sports Illustrated are all producing sports podcasts.
Our Take: Blue Wire is working to become the go-to platform for athletes (A Touch More with Megan Rapinoe & Sue Bird), teams (the Baltimore Ravens’ Black in the NFL) and sports media talent with a following (Haley O’Shaughnessy, formerly of The Ringer) to host and monetize their audio content. Its network currently includes 140 topical and regional podcasts designed for the next generation of sports fans. “We’re making a bet that the future is individual shows about individual teams a few times a week, not three hours [each day] of some 60-year old radio buffoon yelling about stuff they don’t even know about,” said Blue Wire CEO Kevin Jones.
As someone who started his career in sports radio—a notoriously underfunded business—it’s exciting to see so much investor enthusiasm for “sports radio 2.0” (as Jones called sports podcasting). But Kosner suggested the current boom is less about the demand for hyper-local sports programming and more about the greater technological shift occurring.
“You have this explosion of audio content [including podcasts, books, news articles, apps like Clubhouse] all being driven by the mass adoption of Apple’s AirPods and smart speakers from the likes of Amazon, Google and Apple,” he said.
For perspective: In 2019, Apple generated more revenue in AirPod sales than Twitter and Snapchat took in, combined.
While historically there hasn’t been much money within the sports radio business (at least relative to other media channels), Kosner believes that has more to do with the medium “never really being viewed as a premium buy compared to TV and the internet” than a lack of advertiser interest in the listener demographics. “There could be money made in sports podcasting if a new personalized, targeted advertising [market] were to take hold,” he said (think: what Facebook and Google do for mobile ads).
But Bettor Capital founder (and former Barstool Sports head of strategy & corporate development) David VanEgmond “fundamentally disagrees” an ad marketplace is needed for podcasting businesses to achieve meaningful revenues. “If you listen to [Barstool’s Pardon My Take, which is among Apple’s top podcasts], there is not one programmatic ad read,” he said. “It’s all organic. It’s all integrated. It’s all about execution. If [a podcast] can deliver for sponsors and make advertising feel a part of content as opposed to a break, then there is a strong ability to monetize.”
It should be noted that the average Blue Wire podcast listener listens for 45 minutes at a time. “The completion ratio for podcasting is really impressive,” Jones said, “and brands are starting to recognize it.”
VanEgmond acknowledged that the balance of Kosner’s concerns about the industry were valid, but he remains excited about the long-term opportunity sports audio presents.
““Podcasting as a medium is seeing significant growth in advertising dollars. I believe advertising in and around sports will continue to increase. [Blue Wire] has the infrastructure in place to go from 140 podcasts to thousands of podcasts. When you add up the collective scale, this is a business that can generate material advertising revenue. The backdrop of monetization here is very good.””
Kosner acknowledged that if the company develops a strong network of local market team podcasts it would be “a logical acquisition target for somebody—no question.”
Given its focus on local and regionalized content, VanEgmond called sports betting a “huge opportunity” for Blue Wire and the balance of the sports podcast business. “[Blue Wire has] two very strong Detroit Lions podcasts,” he said. “So when the Michigan market opens for sports betting, to think they would be very valuable assets for [sports betting operators within the state] is probably right.” Remember, sports-talk radio and sports podcasts have proven to be effective channels to market a sports betting product, and operators are only going to be spending more money. Added VanEgmond: “FanDuel and Draftkings spent [in the range] of $200 million each in the second half of this year, and fierce competition is beginning with BetMGM and other competitors beginning to grow their spend substantially as more states turn on.”
Monetizing the podcast network via advertising may be the lowest hanging fruit, even if podcast advertising remains in its nascent stages. But Jones sees the greatest upside for the business as developing original series—the plan is to do 8 to 10 a year—and the prospect of turning the storytelling into feature films, as Wondery has done: “Our bet is people are going to read less and listen to stories more over the next decade, and we’re going to build some of the best ones.”
John Kosner is quoted regarding the SEC’s decision to leave CBS for ESPN
Original Article: Alabama.com, by John Talty, December 10th, 2020
After being announced as the next Southeastern Conference commissioner in March 2015, Greg Sankey immediately started thinking about his conference’s next media rights deal.
ESPN had the majority of the SEC’s rights locked up through 2034, but the fate of the SEC on CBS package, considered the crown jewel of college football, had long been a source of intense speculation within the sports TV industry. For years, CBS benefited from one of the sweetest deals in sports TV, paying a mere $55 million annually to get the SEC’s weekly top game plus the SEC Championship.
After losing long-trusted TV advisor Chuck Gerber, who passed away that same year, Sankey opted to take his time and do his due diligence. In 2018, the SEC hired Evolution Media’s Alan Gold and CAA’s Nick Khan to guide the conference through the future media landscape. He consulted trusted deputies Charlie Hussey and Mark Womack as the senior SEC leadership weighed all of their options.
After years of consideration, Sankey and the SEC came to the conclusion it was time to go all-in with ESPN.
In a deal announced Thursday, though agreed to nearly a year ago, the premier package in college sports is leaving CBS for ESPN starting in 2024-25. Exact terms of the 10-year deal were not released though sources told AL.com the agreement is for upwards of $300 million annually, a massive increase from CBS’ price.
A key component of the deal will be a weekly SEC game on ABC, giving the league a much-desired broadcast platform once it leaves CBS. That will include a regular late afternoon kick like the SEC on CBS time slot but also the ability to feature the games in primetime for ABC’s Saturday Night Football. The strategy will be to “put the biggest games in the biggest places in front of the most people,” Burke Magnus, ESPN’s executive vice president of programming and scheduling, told AL.com in an interview.
RELATED: Winners and losers of SEC football leaving CBS
Magnus and his ESPN colleagues eyed the top SEC game package for years, waiting for their chance to pitch their plan to the SEC. Sources told AL.com last year landing the entire SEC inventory had long been a major priority for the company. Magnus had buy-in and support from his boss, ESPN president Jimmy Pitaro, and the big boss, former Disney CEO Bob Iger, to pursue a deal. When the conference indicated in 2019 it was ready to have that discussion, Magnus said, “We were ready when the phone call came.”
Beyond the massive cash component, a big selling point was the scheduling flexibility that would come with the SEC only having one scheduling partner. Magnus described it as a “one plus one equals three dynamic” where having every football game helped ESPN offer better distribution and exposure that no other entity could offer the SEC. One expected benefit is the league could schedule game times much further in advance without having to wait on CBS’ game of the week pick.
The opportunity to maintain a traditional broadcast spot plus the flexibility that comes with ESPN, the SEC Network and ESPN+ was too good for the SEC to pass up. Starting next year, ESPN+ can also air one non-conference game per school and up to two non-conference basketball games.
“All of those were important elements of this conversation and led us down the path to decide that the affiliation with the Disney brand, with ABC and ESPN, was going to be the right opportunity for our future,” Sankey told AL.com.
One of the looming questions over the deal will be if it will take until 2024 to go into effect. After ESPN closed in on acquiring the SEC rights last year, there was considerable industry speculation that it would also try to buy out CBS early from its contract with the SEC. According to sources, that desire hasn’t gone away, but no high-level discussions have taken place to this point. Magnus didn’t deny there was interest, though he pointed out it was “entirely outside of our control.”
“We’re not anticipating necessarily, but this partnership is so important to us that if there was an opportunity to discuss something in that regard, we’re open to that conversation,” Magnus said. “But only if it’s a positive development for all the parties.”
Sankey added, “CBS obviously continues to be an important relationship for the SEC and has been for many years, and even in this odd year of 2020, that remains. Our focus has been on the three years remaining in our agreements...and that’s really how we’ve looked at the situation, both at present and as we go forward.”
Once the deal goes into effect, it’ll be a significant financial boon for all 14 SEC schools. The SEC schools, which received more than $45 million last fiscal year, will receive at least an additional $15 million from this new deal alone. For ESPN, it will finally get the chance to televise every game it wants, from the Iron Bowl to Florida-Georgia, that CBS had picked for itself for the last two-plus decades.
“I think increasingly the media business is about must-have content,” John Kosner, president of Kosner Media and a former ESPN executive, told AL.com. “Not just having a lot of stuff, but having the stuff everyone wants to watch. The SEC games every week that CBS had are examples.”
John Talty is the sports editor and SEC Insider for Alabama Media Group. You can follow him on Twitter @JTalty.
John Kosner is quoted in SBJ profile of Bit Fry Founder & CEO Ben Freidlin
Original Article: Sports Business Journal, by Eric Prisbell, December 7th, 2020
The company’s first game brings athletes from multiple sports together on The Rink. Photo: Courtesy of Bit Fry Game Studios S even years ago, Ben Freidlin set about making an improbable vision a reality: trying to create an unlicensed baseball video game set in the 1920s…
John Kosner Quoted About Sports Betting Integration on TV Broadcasts
Original Article: Front Office Sports, by Michael McCarthy, October 19th, 2020
The NBA doesn’t know yet when it will tip off its next season. But one thing is certain: TV networks and media companies will increasingly experiment with more “alternate” game telecasts focused on sports betting.
During the 2019-20 season, the league teamed with TNT, Bleacher Report, The Action Network, and Yahoo Sports to experiment with live game telecasts or streams that featured expert gambling analysis, betting lines, and discussion of the odds.
During TNT’s coverage of the NBA Western Conference Finals, the network offered betting-minded viewers an alternate livestream feed called “TNT Bets.” It was hosted by B/R’s Cabbie Richards, Kelly Stewart, and Tim Doyle. The sports betting-focused feed was available to cable and satellite subscribers through the Watch TNT website.
Meanwhile, NBA Digital offered fans a dozen “NBA BetStream” telecasts this August via NBA TV and NBA League Pass. Presenting partner BetMGM provided real-time betting lines and stats. Even if consumers didn’t have access to NBA TV through their cable providers, they were able to buy BetStream through a direct-to-consumer subscription on NBA.com.
Chad Millman, the chief content officer at The Action Network, said these alternate telecasts are “exactly” what leagues and TV networks should be testing as sports TV audiences continue to fragment.
“They should be thinking about alternative broadcasts. They should be thinking about hyper-focusing on very engaged audiences,” said the former ESPN executive. “It’s only going to be more relevant — regardless of the pandemic situation.”
Scott Kaufman-Ross, the NBA’s head of fantasy and gaming, said he wants to create a more integrated experience for fans interested in live, in-game wagering.
“We view these telecasts as a great way to engage on a deeper level with our fans who are watching the game through a sports betting lens. This was a beta test. We wanted to learn from it,” said Kaufman-Ross about the BetStream games.
“We also worked with different influencers across Bleacher Report, The Action Network, and Yahoo Sports to experiment with different approaches and different expertise to learn what works best,” he added. “That will help our strategy as we go forward.”
Other networks have previously tested gambling-driven telecasts. NBC Sports Philadelphia experimented with a 10-game “BetCast” slate of Philadelphia 76ers games during the early stages of the 2019-20 season.
Even if they’re not doing it yet, most networks believe sports betting will be an important part of their future programming mix, according to John Kosner, president of Kosner Media.
“You will certainly see the acceleration of second screen and second channel integration with betting information because there’s a point of view that it’s coming — and that’s what fans want.”
“You will certainly see the acceleration of second screen and second channel integration with betting information because there’s a point of view that it’s coming — and that’s what fans want,” Kosner said.
The COVID-19 pandemic is not over. As more U.S. states legalize mobile betting, and the weather turns colder, sports betting is poised to “accelerate” among locked-down consumers this fall, predicted Kaufman-Ross.
Especially if the state of New York — which has over 19 million residents — finally legalizes mobile betting, instead of forcing gamblers to travel across the Hudson River to neighboring New Jersey.
“We feel a lot of our fans are consuming NBA content through the lens of sports betting. So we want to make sure to engage our fans where they are,” he said.
“We’ve often said we see sports betting as more of a pull than a push,” he added. “So if fans want sports betting content, we want to give it to them. If they don’t, it’s not necessarily something we’ll force on them. We think an alternate telecast is a great example of how we can accomplish that.”
The NBA’s alternate media partners are waiting to hear when the next season will tip-off, with recent comments pointing to a January-March 2021 start time. Once that decision is made, they’re ready to roll with more alternate sports betting telecasts.
The Action Network’s BetStream experience “went really well,” Millman said. He’s looking forward to serving some of the NBA’s most rabid fans next season.
“If you’re betting on the NBA, you are watching the NBA. You know every player. You’re betting not just on totals but on quarters and halves and player props,” he said.
“There are literally dozens of markets that the folks who are watching these games are betting on,” Millman added. “It just brings a different level of drama and insight.”
A spokesman for B/R confirmed the media outfit is interested in working on more TNT Bets projects next season. “It is definitely a path we are pursuing for the future,” he said.
John Kosner Appeared on Two Panels for SIGA Sport Integrity Week
Wednesday, September 9th: “ESPORTS: THE FUTURE, NOW!”
Thursday, September 10th: “SPORT INTEGRITY, TECHNOLOGY & INNOVATION: THE NEXT BIG THING”
For more information on the Sports Integrity Global Alliance, visit their website.
Kosner: “An Unforgiving Time” for Digital Sports Media Start-Ups
Original Article: Sportico, by John Wall Street, August 4th, 2020
Defector Media and the Local Media Consortium (think: an alliance of local media outlets) announced their respective plans to enter a crowded digital sports media landscape last week. Defector Media, a content co-op formed by 18 former Deadspin writers and editors, will launch a podcast later this month; their website will follow in September. The content and tone of the brand is expected to resemble that of the outlet the group collectively quit last year.
The Matchup, an effort by the Local Media Consortium to give sports fans access to more news about their favorite teams, will get started by making local publications available to all readers (their destination site will launch in ’21). A subscription to any one of the consortium’s individual publications will give the subscriber access to sports content from all of the outlets (without any additional cost).
The two companies intend to take vastly different approaches to the business (Defector will be subscription-based, while The Matchup will rely on advertising). But John Kosner (President, Kosner Media) says that “fundamentally, it’s an unforgiving time for either to enter the marketplace.” Existing competition aside, “the generation coming of age prefers video to print” (so any audience built threatens to age out over time), and much of the current generation of fans is pre-occupied with recovering from COVID-19, finding work or home-schooling their kids to allocate additional time and money to more sports content.
Our Take: The former CEO of a prominent sports media outlet said there is “enormous value”—from the fan perspective—in having access to the 2-5 articles/week that they might want to read but currently can’t because they reside behind a paywall (and it’s unrealistic to subscribe to each publication individually).
The former chief executive we spoke to called The Matchup “a death sentence” for The Athletic, another outlet operating on a ‘subscribe to one market, get the rest free’ model. That’s because despite having raised +/- $140 million in venture capital, it lacks the resources Google has (Google Media Initiative is funding The Matchup) and has significantly greater operating costs. While The Athletic has to fund its expansive network of writers, “the technology, the app, the marketing and the promotion [of all the content], all Google has to do [to put out a comparable product] is build the technology and the distribution opportunity, and they win. They’re building a publishing company without having to incur any of the costs.” If Google can get The Matchup to scale, it’s reasonable to assume sports won’t be the last digital media vertical the tech giant enters (think: news, business).
If there’s a reason to believe The Matchup is going to fail, Kosner says it’s because “there is no future in ad supported media”—not with a few outlets controlling the bulk of ad dollars (think: Facebook, Google, Amazon, YouTube, Snapchat). Brands have also stopped spending with newspapers over the last decade (see: advertising revenue is about 1/3 of what it was in 2008). But the former CEO we spoke to didn’t see that as a problem. They said advertisers wouldn’t look at The Matchup’s offering as “spending money on newspaper advertising. [Instead], they will look at it as spending ad dollars on a digital audience and trust that Google Adwords is able to funnel a certain amount of guaranteed money towards them.”
While the two c-level executives we spoke to didn’t necessarily see eye-to-eye on The Matchup, there was a consensus on Defector Media’s prospects: Neither believes the company is positioned to thrive in the current media environment. While Kosner readily acknowledged Deadspin did some fine reporting in its day and that several talented journalists have worked for the company, he isn’t convinced that the brand has a large enough following to operate on a subscription model. He pegged the entirety of their audience (i.e. those willing to read their free content) “probably in the hundreds of thousands of people—not in the millions.”
Defector had 10,000 subscribers (self-reported) sign-ups within the first few days. While that may sound like a lot, $960K in gross revenue ($8/mo.) obviously isn’t nearly enough to sustain a digital publishing company with 20 employees and real ambitions. The former CEO we spoke to isn’t expecting “that number to go up in any significant way from here, [either].” They said, “There’s a reluctance among consumers to sign up for paid products (only enhanced by the recession), and I just don’t see the former Deadspin crew—who lack relevance on an individual basis—[being another subscription most people would be willing to pay for]. If you told me that it was Bari Weiss, Andrew Sullivan and a bunch of big names were [pursuing this model, they would have a greater chance at success].”
It’s important to remember that “the media environment is also vastly different now [than when Deadspin was at its peak].” Kosner explained, “When Deadspin started in 2005 it was unique, and they had their own voice. Today, [that voice] is not particularly unique. In fact, a website with [the Deadspin] name still exists, trying to do some of the same things [this group wants to do].” The former CEO agreed, adding that the company no longer has a clear role in the sports media ecosystem. “They won’t be as high-minded journalistically as The Athletic,” They said. “They won’t be as deep and in the know as ESPN. They won’t be as much of a utility as Bleacher Report or as funny to enough people as Barstool. If someone really wants to read snark around sports, and they’re right wing they’ll read Outkick and if they’re left wing they’ll read Awful Announcing.”
Perhaps the biggest problem Defector Media faces is that some of its talent will inevitably bring more value to the outlet than others (think: revenue, attention)—a recipe for disaster when everyone is being compensated equally (or close to it). The former CEO explained, “The second somebody starts doing way better than the others, my guess is they fight, they split up and those who are doing great just make the move over to Substack.” Retaining top talent is always going to be a challenge.
Covid-19 Has the Power to Break the Sports World
Original Article: Covid-19 Has the Power to Break the Sports World, by Joe Nocera, July 22nd, 2020
“Staging sports right now is precarious and unprecedented,” said John Kosner, a sports business consultant and former ESPN executive. After decades of growth and prosperity, he added, “it is sports’ first existential crisis.”
Networks Fear NFL-Less fall
Original Article: AXIOS, by Mike Allen, July 8th, 2020
9. Networks fear NFL-Less fall
Inside an "NFL on Fox" production truck. Photo: Michael Abdella/Detroit Free Press via Reuters
While all major sports scramble to rescue their seasons, the networks are fixated on the NFL, which accounted for 41 of the 50 top-rated telecasts of any kind in 2019, the WashPost's Ben Strauss writes.
Why it matters: The NFL accounted for 39% of all ad revenue for Fox last year, 24% for CBS, 21% for NBC and 17% for ESPN (including ABC playoff simulcasts).
"It’s practically the only thing on the minds of the networks," John Kosner, a former ESPN executive who is an industry consultant, told the Post.
"If you lost an NFL season, you’re looking at a financial hemorrhage."
For TV networks, losing NFL season would be catastrophic
Original Article: The Washington Post, by Ben Strauss, July 2nd, 2020
Throughout the spring and into the summer — without the NBA playoffs and baseball’s opening weeks — the sports world has continued to feel the steady drumbeat of the NFL. The league opened free agency as usual, providing news-making moments such as Tom Brady signing with the Tampa Bay Buccaneers, and then its April draft went off without a hitch, delivering boffo ratings for ESPN.
For the TV networks and sports media outlets that cover the league, this has been most welcome. But as the calendar flips to July, with NFL training camps set to open at the end of the month, doubts have surfaced about the viability of football season. Novel coronavirus cases are spiking in states across the country. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, said football players may need to be in a bubble environment for the season to be played. Los Angeles Rams Coach Sean McVay wondered aloud how teams will be able to both play and take precautions.
“I mean, we’re going to social distance, but we play football?” McVay said during a recent media appearance. “It’s really hard for me to understand all this.”
While there remains plenty of optimism the NFL will play — somehow, someway — networks are fixated on the league’s fall schedule given its dominant position as America’s most valuable television property. They are invested, of course, in the planned returns of Major League Baseball, the NBA and other sports, but none carry the importance of the NFL, which accounted for 41 of the top 50 rated telecasts of any kind in 2019. The lack of certainty has led to uncomfortable conversations among executives.
“It’s practically the only thing on the minds of the networks,” said John Kosner, a former ESPN executive who is an industry consultant. “If you lost an NFL season, you’re looking at a financial hemorrhage.”
All four networks that broadcast the NFL — CBS, ESPN, Fox and NBC — declined to comment on contingency plans or how they are thinking about the 2020 season. But a senior ESPN employee recently lamented that there is no fallback plan even worth considering if the NFL cannot play, because nothing can replace the content or revenue that comes with it, according to a person with knowledge of the discussion. At Fox Sports, at least one executive has told an employee that no NFL season would mean trouble for the network, according to multiple people familiar with the discussion.
No network is more dependent on the NFL than Fox, which pays more than $1.5 billion each year for two NFL packages: one on Sunday afternoon and the other on Thursday night. The NFL, including pre- and postgame coverage, accounted for nearly 40 percent of the minutes spent viewing the network last year, according to research firm MoffettNathanson.
For the league’s other broadcast partners, the NFL’s share of minutes viewed was smaller but still a hefty 10 to 13 percent last year. ESPN pays roughly $2 billion for “Monday Night Football,” CBS pays roughly $1 billion for its Sunday package, and NBC pays $950 million for “Sunday Night Football.” All bring in massive amounts of advertising for their NFL games.
Data compiled by advertising measurement firm iSpot illustrates how valuable the league is in terms of ad dollars. Last football season, CBS raked in roughly $1.5 billion in NFL advertising, which represents nearly 25 percent of the network’s total advertising haul for 2019 (not including the Super Bowl). NBC collected shy of $1.5 billion, also more than 20 percent of the network’s ad dollars for last year.
Fox was the most reliant on the NFL, bringing in nearly $2 billion from the league’s games last season, not including the Super Bowl — an amount that would be 40 percent of the network’s overall ad revenue from 2019. Additionally, advertisers that buy into NFL games often also must buy packages for other programming across a network’s schedule.
The NFL numbers at ESPN were somewhat less significant — around $500 million and less than 20 percent of its advertising revenue — but they don’t come close to capturing the importance of NFL highlights and discussion segments to the 24-hour cable network’s studio programming. ESPN is also the network that is likely to be affected most by a canceled or shortened college football season, which is considered by health experts to be at greater risk than the NFL because of its lack of a central authority, varying testing policies and uncertainty over whether students will be able to return to campus this fall. ESPN and its Disney-owned broadcast partner, ABC, received more than $1 billion in advertising revenue from the sport last year.
The NBA and MLB are more important to regional sports networks. The entire MLB season and playoffs delivered less than $700 million to national broadcasters ESPN, Fox, Turner and MLB Network in 2019. The entire 2018-19 NBA season and postseason accounted for a total of roughly $1.5 billion for ESPN, ABC, Turner and NBA Network, according to iSpot.
Since the pandemic began, ESPN, Fox and NBC have asked top talent to take pay cuts as they treaded water waiting for sports to return. Current and former executives predicted far more draconian developments without an NFL season — from layoffs to severe cost savings to networks being forced to take out large loans. One former Fox executive predicted studio shows would be hit the hardest.
“As the recent COVID-19 data points turn more negative, we are growing increasingly worried that the scheduled return of all sports in the coming weeks and into the fall will be impacted in different ways, leading to more pain for our media companies,” read a MoffettNathanson report published in late June.
In the longer term, said David Hill, a former president of Fox Sports, missing an NFL season hurts the broadcast networks in their battle for relevance against streaming services such as Netflix. Their main advantage in that struggle, Hill said, remains the NFL, and sports continue to be one of the key drivers for consumers paying for cable packages. According to MoffettNathanson, traditional paid TV subscriptions fell by 1.8 million in the first quarter of this year as the pandemic hit and live sports were mostly canceled. It was the highest-ever rate of cord-cutting in a single quarter.
“The NFL is absolutely key because it plays into the essence of what the network is,” Hill said. “It’s becoming the only way that networks can talk to consumers. If families are sitting in their living rooms watching the streamers — and they’re not turning on the networks for the NFL — there’s going to be less awareness in anything they’re doing.”
Regardless of whether the NFL season goes ahead, the league’s broadcast agreements are set to expire in 2021 and 2022, meaning the same networks will have to pony up what many observers expect to be large increases in rights fees — potentially as much as double the current figures, some industry insiders believe — even as they are potentially scrambling to patch budget holes for the current year. This week, Fox ended its broadcast agreement with the U.S. Open golf tournament several years early, a move that indicates a further commitment to its core properties, the biggest of which is the NFL.
“If you miss the NFL season, I think it makes the networks even more desperate to sign it again,” Hill said.
Still, alongside the simmering concern about what a lost season might do to the networks is the hope for what a season could mean. Given the high ratings for the draft, plus the possibility that fans won’t be allowed to attend games and people could still be limited in what they can do outside, there remains the chance 2020 could be a banner year for NFL broadcasts.
Hill said that, for whatever uncertainty exists now and in the coming weeks, he believes the NFL will find a way to play its season.
“It’s one of the very rare, absolutely must-have items,” he said. “And I would imagine that everyone being locked inside would be good for them, too.”