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The Cablization of Television Sports Properties - Part II

Thursday, November 20, 2008 , Posted by Christopher Byrne at 8:26 AM, under , , , , , ,

Athens, GA (Nov 20, 2008) - "It's our ball an if you don't like our rules, too bad!" That seemed to be the underlying message on Tuesday's ESPN media call announcing the acquisition of the Bowl Championship Series (BCS) contract for 2011 through 2014. Not matter how the question was asked, there seemed to be a general disdain for the feelings of fans who do not have access to ESPN. And make no mistake about it, the acquisition of this property by ESPN has absolutely nothing to with their love for the game of college football, or their desire to help the game grow. It is about increasing their profits, no matter who gets left at the door. In a business environment where the over-the-air broadcast networks cannot compete on even footing, Disney, through its broadcast arms, has created a true monopoly. This monopoly draws criticism and should draw the attention of the folks on Capitol Hill. Fortunately for Disney, lawmakers are up to their eyeballs in more important economic issues right now.

"Why Is the Media So Critical of Us?"

My jaw dropped earlier this year when someone from ESPN asked me, with a straight face, "Why is the media so critical of us? After all, we are part of the media." It should be obvious to this person, and others, that the answer is quite simple. ESPN is the 10,000 pound Gorilla in the room, and they can and will do what they want and who is going to stop them?



Is the company "media" as in the fourth estate, or is it purely entertainment. Last fall, when ESPN College GameDay was in town for the Alabama-Georgia game, I asked Senior Coordinating Producer Michael Fountain if he saw GameDay as news or entertainment. His answer was simple: "It is both." Of course this makes sense, because doing news alone will not bring in the ratings and the dollars. There has to be entertainment value thrown into the mix. For this reason alone, ESPN sets itself up to be the target of the sports media. When they did not give any coverage to the Brett Favre briefing the Detroit Lions about the Green Bay Packers audience, the reaction in the media and the blogosphere was fast and too the point: ESPN was protecting a favorite son wh brings them eyeballs and ratings. It is not for this writer to say whether this is an accurate portrayal or not. It does not have to be accurate, because it is the perception many people have of ESPN. And in a world of sound bites and shock journalism, perception is and will always be king.

Where Is the Corporate Governance?

When you are king of the hill, any and every misstep taken will be pounced on like white on rice. For this reason, it is essential that you have a strong corporate governance structure in place, a structure that protects the company, the employees, and the viewers. It appears that the rapid growth of ESPN and the acquisition of major sports properties from over-the-air networks has left the notion of corporate governance in the dust. Last year, Colin Cowherd made statements on the air that led to a spontaneous denial of service attack against a major sports blog. Was he punished for this? No, because ESPN had no policies in place to address this kind of on-air behavior. A policy was put in place afterward, but he did not get punished.

Another ESPN personality got extremely, shall we say, light in her feet at a roast of Mike and Mike, and brought embarrassment to the company. Again, being the 10,000 pound gorilla, it is going to bring attention. It may not be the attention ESPN wanted, but it was out there in plain sight for everyone to see, read, and hear. Such behavior from an employee of a Disney company? To address this deficiency, ESPN has made a couple of strategic executive hires this past year to help address these problems. However, the wild, wild west perception of the company still exists. With the acquisition of the BCS, the target on their back just keeps getting bigger.

The Stifling of Dissenting Voices

When a company gets into an unnatural monopoly position, essential elements are lost. There is little or no incentive to innovate. Diversity of opinion is lost. Voices get stifled or shut down. In a column yesterday, Chicago Sun Times writer Rick Telander wrote


ESPN became what it is by never resting, by working harder than other media companies, by offering money for what it wanted and buying up possible critics willy-nilly.

Now ESPN has so many sportswriters on its staff or contributors list that there's scarcely anyone outside of the renegade bloggers who might come after the company.

The genius moment occurred six years ago with ''Around the Horn,'' the TV show that features studios built in the sports departments of major newspapers, the Chicago Sun-Times included. The one thing ESPN didn't have was the integrity of journalism's inner sanctum. Now, it had it stolen.

When panelist T.J. Simers of the Los Angeles Times bad-mouthed the show, he quickly was given the boot. Then-ESPN program genius Mark Shapiro told me, when I asked him why this would happen on a show where sports guys were supposed to argue and be outspoken, he replied, ''If somebody doesn't like the show, they're not going to be on it.''

Again, understandable. But who will be the critics of ESPN, then?

As company-appointed ombudsman Le Anne Schreiber even noted in a recent ESPN.com posting, ''When everything on ESPN points us toward something else on ESPN, as it so often and relentlessly does, viewers ... start feeling trapped in the sports equivalent of 'The Truman Show,' a claustrophobic bubble world that substitutes its limited contours for the whole of external reality.''

And he is so right. I know of one web site that was told to take down material critical of ESPN or they would lose their place as an ESPN web affiliate. The web site owner was and is afraid to speak publicly about lest he experience further wrath from Bristol, whether it is real or perceived.

So What If Golf Goes Exclusively Cable?

Golf, particularly The Open Championship, going to cable only? How can that be? What about the loyal over-the-air viewers? Time for a little reality check here. It will be zero impact on the viewers because the demographic make-up of golf viewers is such that probably 200% of them have cable or satellite access. And their audience is so small, especially when Tiger Woods is not playing. How small? It is pretty darn close to NHL numbers.

But the impact is huge for the over-the-air networks who need that demographic group to sell advertising. The advertising needs to be sold to keep the networks afloat. Even though the numbers are small, the advertising revenue is lucrative because of the target demographic.

"The Fans Will Not Be Impacted"

College Football is another story. The demographic base is much more diverse and less national in appeal. It is a game about fierce school ties and loyalty to region. So when ESPN's George Bodenheimer says the deal will have minimal impact because 95% of last year's BCS Championship Game viewers watched on cable or satellite, and that the February conversion from analog to digital across the country will shrink the gap between cable and non-cable, these numbers have to e taken with a grain of salt. Currently, ESPN is available in 98,000,000 of the 112,000,000 or so television homes in the United States, about 87.5%.

But these numbers are national in scope and do not reflect what happens in specific markets who love their teams. After the ESPN news conference, I had an email exchange with Barry Horn of the Dallas Morning News. On the call, he had made a statement about the lack of ESPN coverage to over 20% of TV viewers in the Dallas metroplex and Texas. I asked him if he had more numbers from national metro areas. At that time he did not, but he did dig them up for a blog post. What he did not do was list how some of these markets are tied into teams in BCS game positions right now:

Television Market %age 2008 BCS Bowl Contenders
Fairbanks, Alaska 36.8
Harlingen-Brownsville-McAllen 34.1 Texas, Texas Tech
El Paso 32.1 Texas, Texas Tech
Boise 26.7 Utah
Yuma 24.1
Laredo 24 Texas, Texas Tech
Salt Lake City 23.1 Utah
Fresno 23
Duluth 22.5
Houston 22.5 Texas
Bangor 21.8
Fort Wayne 21.5
Green Bay 21.2
Joplin 21
Twin Falls 21
Springfield, Mo 20.9
Wausau, Wisc 20.9
Milwaukee 20.7
Missoula, Mont 20.6
Dallas-Fort Worth 20.6 Texas, Texas Tech
Lubbock 20.5 Texas Tech


The numbers tell it all. While casual viewers with no interest in seeing the games may be cable or satellite, a great many fans with love for their local teams may not have access.

But there is a flip-side to this. ESPN actually owns a number of bowl games:

  • Sheraton Hawai'i Bowl
  • Papajohns.com Bowl
  • Pioneer Las Vegas Bowl
  • New Mexico Bowl
  • Bell Helicopter Armed Forces Bowl
  • St. Petersburg Bowl

Why has nobody squawked about this? Probably because their teams got into bowl games that have no reason to exist except for ESPN, and those schools/makkets don't have a large voice in the dialogue. It is only when there are national implications do people cry foul.

"There Will Be No Surcharge for Fans"

There was one genuine laugh-out-loud moment during the media call, but no one was laughing. ESPN executives said that there will be no surcharge levied to watch these games. Of course not, because cable and satellite viewers are already subsidizing ESPN's market leading subscriber fees. While there may be no "surcharge" per se, fans and non-fans viewers will pay. The acquisition of the rights to broadcast games is all smoke and mirrors, as various network and media types have told me over the past few days. It is about gaining leverage to jack up the subscription fees from operators when they expire in two years. And guess who those fees will be passed on to? Grandma and Grandpa who have cable so they can watch HGTV, EWTN and other niche networks.

Next Up: Are Broadcast Rules and Regulations Up To The Times?

In the next and final part of this series on the cablization of TV sports, we will discuss if the FCC-managed system is broken, and what could/should be done about it.

Related Link(s)

The Cablization of Television Sports Properties - Part I
ESPN BCS Conference Call - Live


Currently have 2 comments:

  1. Chris - Good stuff. When I discuss media rights, cable, vertical integration, monopolies, etc. in class, we talk about why ESPN/Disney paid so much for MNF when ABC was not making money. The obvious reason is that ESPN makes money two ways - ads and subscriber fees - and in order to keep subscriber fees high, ESPN needed the NFL. Another reason, not as frequently stated, is that it blocks competition. If Comcast truly has aspirations to take Versus into a nationwide sports network, it needs marquee programming. By bidding $125 million/year for the BCS, ESPN is blocking a competitor. It is clear that Roone Arledge's biography from a few years ago has been read by more than a few execs at ESPN. His stories about negotiating Olympic rights are nothing if not entertaining.

  1. Kenn Fong says:

    Nice piece of reporting and analysis.

    I've always taken the position that no one is given the Constitutional right to see or attend a sports event for free. For that matter, it's not free, even if it is available over the air because it is laden with commercials and the viewer had to make the initial investment in the receiver.

    That said, it's a horrible thing to cut off poor people who would get some pleasure out of the games. In the big picture, those people don't bring anything to the table for the advertisers or the network itself which uses the event to promote other programming. I think those viewers are called "tonnage" because even though you get them, they have no value.

    I remember having this discussion with a friend who was one of the so-called "working poor," an honest, decent guy who just never had a break. He was bitterly disappointed when baseball moved some of the playoffs to ESPN.

    I wonder if the professional sports should have some "nobless oblige" to make sure that a good portion of their schedule is available via broadcast so that this demographic served? After all very nearly every professional sport receives financial assistance from the state and local municipalities in the form of subsidies, tax incentives, or outright financing of their venues. Shouldn't they choose to serve all of the citizens of their area?

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