Sports Media Realignment Is Here: Who are the Winners and Losers?
For a long time ESPN ruled as a cable sports monopoly. Sure, there were challengers to the ESPN throne, but they did dumb things like hire Tom Arnold and try to mix sports and other programming -- Turner Sports. For much of the last 15 years ESPN has been the unrivaled king of the cable sports marketplace. That's what happens when you bring in six billion dollars a year in cable subscription fees. Remember, every one of us that has cable or satellite is paying around $5 a month just for ESPN. That makes ESPN the single most expensive channel on cable today.
With additional monthly fees for ESPN 2, ESPN U, ESPN News, and ESPN Classic, we're shelling out around $10 a month, $120 a year, for ESPN programming. ESPN then uses our monthly subscriber fees to pay big money for television rights fees which allows ESPN to demand more money from cable companies. Witness ESPN's massive $1.9 billion dollar a year Monday Night Football deal. It's a neverending circle of cable sports dominance that most cable subscribers don't even recognize because cable bills aren't broken down by individual station cost.
At least so far.
The best part of ESPN's business model?
Non-sports fans are paying as much for ESPN as sports fans.
That means your grandmother, aunt, and non-sports infatuated brother, are all paying the same amount for ESPN as you are. That's right, non-sports fans who don't watch a single game all year subsidize the cost of ESPN programming for those of us who are sports fans. If you're thinking to yourself, wait a minute, why doesn't a la carte cable programming exist, you're asking a question that makes ESPN really, really nervous. A la carte cable programming is the greatest threat to ESPN out there today.
For decades ESPN has been competing with legacy sports carriers, the CBS's and NBC's of the world that you receive on free television. (Pre-merger it also competed with ABC, which ESPN effectively swallowed post-merger). The problem there? Unlike the legacy carriers ESPN's business model doesn't rely on advertising sales. Meaning, you guessed it, thanks to your cable bill ESPN is the most profitable sports entity out there. Every year ESPN's strangehold continued to grow.
Until...
Enter Comcast. Remember when Comcast tried to buy Disney? One of the driving forces behind that attempted move was ESPN, the single most expensive channel in Comcast's cable line-up. Each time ESPN has increased the monthly payments it demands from companies like Comcast, the more and more the cable companies are being squeezed on price.
Disney rebuffed that bid, but Comcast eventually bought 51% of NBC/Universal.
And Comcast immediately poured resources into NBC's cable sports network, the channel you used to know as Versus. Right now NBC is putting lots of Olympic programming on the newly rebranded NBC Sports Network, and in addition to that move NBC snatched up the NHL, put on the MLS, and barring a shared bid from Fox and ESPN would have snagged the Pac 12 media rights. Why is NBC gunning for ESPN? Because not only is cable sports a great business, NBC's success undermines ESPN's bargaining power with Comcast.
The same holds true to a lesser extent with CBS Sports and their newly rebranded CBS Sports Network on cable and for Fox, which is stepping up its competition as well and rumored to be contemplating the launch of an all sports network.
So, at long last, other cable networks are stepping up their game, challenging ESPN's reigning hegemony in cable sports.
How so?
By bidding for top sports programming, the single best, albeit most expensive, way to drive viewers to your network. But top sports programming only comes up for bid every few months -- right now the competition comes most frequently in the bidding for sports media talent.
So far fans haven't benefited much from the newfound cable competition -- ESPN continues to dominate in ratings and the overall roll out of new shows is just beginning at ESPN's competitors. But members of the sports media are benefiting in a large way. Indeed, with multiple bidders suddenly competing for their services members of the sports media are doing the exact same thing that conferences have done in the past couple of years -- following the money to a new pot of gold.
Since ESPN has the most prominent talent its network is going to be raided the most aggressively.
Raising an intriguing question, does talent matter in the network battles to come?
It's a good question. After all, ESPN believes its network is the ultimate farm system, as soon as someone leaves, it promotes from within and doesn't miss a ratings step. In terms of ratings there's no doubt this has been true so far. In fact, other than Dan Patrick can you think of someone who has left ESPN and done better after leaving the network? That list is short. When ESPN wants to argue it makes the stars not vice versa, thus far the evidence is on ESPN's side.
But will that continue to be true in a new, social media era when every sports media talent is effectively his or her own brand? That remains to be seen. And if you're an upstart network can you take a chance on unproven talent? Don't you have to spend some money on proven talent to establish your legitimate bona fides as an ESPN competitor? It's another good question. So far every network has decided to spend the money on talent. Which has led to sports media realignment.
Indeed, there have been more prominent members of the sports media change teams this past year than in any string of years over the past decade.
So who are the winners and who are the losers of sports media realignment so far?
Let's dive in and find out.
ESPN
Additions:
Darren Rovell
Brett McMurphy
Losses:
Erin Andrews
Michelle Beadle
Bruce Feldman
Pat Forde
Doug Gottlieb
Jim Rome
Analysis: Rather than break down each of these names, just look at them in totality. That's a massive collection of talent that ESPN has let walk in the last year. But will the network suffer? OKTC has previously reported that Jim Rome lost 90% of his television audience when he moved to CBS. Feldman and Forde are talented writers, but Rome and Erin Andrews are bona fide stars, Gottlieb is young and really good at radio and Michell Beadle has a large social media following and connects well with younger audiences.
For other networks this would be a massive brain drain.
But it's ESPN.
Ratings haven't suffered, the network has already announced that Samantha Steele will be sliding in to Andrews role, ESPN radio will find a solid replacement for Gottlieb, and have SportsNation's ratings changed much with Beadle gone?
Toss in the fact that ESPN nabbed two guys, Darren Rovell and Brett McMurphy, and I think the talent loss impact to ESPN will be minimal. McMurphy, in particular, is a big addition to ESPN. One of ESPN's real blind spots was in breaking conference realignment news. Assuming that they don't muzzle him, McMurphy should be on top of realignment for the network. Rovell, who may be the only person in America more in love with Twitter than me, is a solid, solid addition to ESPN as well.
It's hard to believe, but thanks to judicious additions and solid replacements I think ESPN will be able to lose all of this talent without missing a step.
Status: Neutral.
NBC
Additions:
Michelle Beadle
Losses:
Darren Rovell
Analysis: Based on programming and the number of homes its network is in, NBC is clearly the top cable competitor with ESPN. In terms of talent the network waged a spirited campaign to hire away Scott Van Pelt, whose decision to stay at ESPN was a big victory for the network. Beadle is a big addition for NBC Sports because the network can build a cable show around her that will connect well with younger audiences. The loss of Rovell is not ideal, but it impacts CNBC as much, if not more, than it does NBC Sports.
With the Olympics bounce and the coming roll out of new programming for the fall, NBC Sports is primed to make some big moves.
Status: Rising
CBS
Additions:
Jim Rome
Doug Gottlieb
Bruce Feldman
Jeff Goodman, CBS basketball writer
Losses:
Brett McMurphy
Gus Johnson
Analysis: CBS got a lot of buzz for bringing Jim Rome aboard, but the tangible results have been minimal. In terms of writers, CBSSports.com has made its goal clear -- to own college sports. With that goal in mind, CBS has the best collection of college sports writers in the country -- Gary Parrish, Jeff Goodman, Bruce Feldman, Tony Barnhart, and Dennis Dodd -- all produce consistently good content. But the loss of McMurphy -- who inexplicably was never signed to a contract -- is big. So too is the loss of Gus Johnson to Fox.
Gottlieb is the wild card here. The CBS Sports Network's new radio show promises to be well-distributed and powerful. Toss in Gottlieb's potential role on CBS Sports Network -- where he'll do really, really well, and you're talking about a solid programming move.
Status: Rising
Fox
Additions:
Erin Andrews
Gus Johnson
Losses:
Jeff Goodman, Fox Sports writer
Analysis: Fox's Saturday night football package is going to be a big deal. Andrews is hosting that pregame show alongside Eddie George and Joey Harrington. Toss in Gus Johnson and Charles Davis as your play-by-play guys and you've got a real game-changer in primetime to compete with ABC's Brent Musbuger and Kirk Herbstreit tandem. But what is Fox doing online and in cable television? Does anyone really have a clue? The regional Fox Sports networks are very profitable, but they lack cohesion or national scale, making true competition with ESPN impossible.
One reason why Fox hasn't really lost anybody other than Jeff Goodman is this, who would you take that isn't directly tied to a league?
There have been rumors that Fox will also be launching its own truly national cable competitor, but until that happens Fox is left holding a regional cable bag and competing with an admittedly strong national sports network.
Status: Neutral
So where is ESPN's competition coming from? It looks like NBC and CBS are the only real networks making a run at the champs. Will either make a dent in ESPN's monopoly? Starting this fall, we'll find out. In the meantime, the winners are clear -- the sports media, their checks aren't bouncing.
