Satellite’s exclusive sports deals are piling up like Tiger Woods’ wins, while cable seemingly sits on the side. And what about cable’s digital sports tiers, which seem stagnant? Or sports networks without significant carriage? Are MSOs’ heads in the game?

At the same time, Comcast chairman and CEO Brian Roberts has called for an open debate about how cable distributes the spiraling cost of sports programming. In Washington, D.C., last fall, Roberts warned that the industry is reaching "a tipping point" in the number of sports networks being launched. He noted customers in the New York area pay close to $100 yearly for sports programming whether they watch it or not. "That’s getting to be a lot of money," he said.

And speaking of money, how about DirecTV ponying up big bucks (see sidebar, "DirecTV Exclusive Sports Content") for out-of-market deals first with the NFL, then the NCAA and now Major League Baseball? Why is cable letting that happen? Truth be told, DirecTV is unlikely to recoup the $700 million it reportedly will lay down for the MLB Extra Innings deal, many say, and cable is wise to focus on offerings like voice that serve a wider audience.

(At press time on Apr. 2, MLB and the In Demand consortium owned by Comcast, Time Warner and Cox were still locked in negotiations to keep the Extra Innings out-of-market package on cable).

As one MSO executive deadpans, although satellite’s cache of exclusives may not be great news for cable, "Life still goes on." The deals are short term (most are three to seven years) and possibly shortsighted, the executive adds.

Some see DirecTV’s spending spree as a desperate reaction to satellite’s slowdown in growth. "They’re investing too much in what is only one segment of the entire TV audience," says JupiterResearch analyst Todd Chanko.

One segment, yes, but a lucrative one. Roughly 2 million of DirecTV’s 16 million subscribers take its NFL Sunday Ticket package, according to estimates by The Carmel Group. Obviously DirecTV is betting on exclusive sports content to lure subscribers away from the competition, Carmel chairman and senior analyst Jimmy Schaeffler says.

A League Of Their Own

But sports fans, already a segmented audience, are becoming even more fragmented as professional leagues and college associations spawn networks of their own. The Big Ten Conference will splinter off a channel in August (with Fox Cable Networks) to focus on its sports (DirecTV is the only affiliate, so far). The U.S. Olympic Committee is pondering starting a network, and there’s speculation that Tiger Woods might start his own tour with the world’s best golfers. A TV deal for Tiger’s Tour or perhaps a new network attached to such a tour don’t seem to be far-fetched notions.

Then there are the line-in-the-sand situations, like NFL Network’s wrestling match with operators last season that left some football fans out in the cold. Again, the main issue was money. It was alleged on a Time Warner Cable website that between 2005 and 2006 NFL Net tripled the per-subscriber rate it sought to charge the cable operator, translating to roughly $137 million.

While there’s no crying in baseball, there’s plenty of tiering in sports. Heavyweights like ESPN are situated on expanded basic, while more specialized channels like CSTV and The Tennis Channel tend to be relegated to digital tiers, if they’re carried at all; others wind up online (see sidebar, "Lining Up for Online Sports"). CSTV scored a satellite coup in January, persuading DirecTV to upgrade it from a sports tier to expanded basic, giving it an additional 8 million subscribers.

But sports on cable is not a lost cause — far from it. Sports and cable can point to more than a few wins. Take ESPN’s Monday Night Football last season. The network’s Oct. 23 telecast of the Giants vs. Cowboys drew 16 million viewers, cable’s largest audience ever, according to Nielsen data. ESPN worked "hand in glove" with affiliates to make MNF a success in its cable debut season, says David Preschlack, ESPN SVP of affiliate sales and marketing. "We were able to create unmatched coverage for this property, and from an affiliate standpoint we reached out with lots of local ad sales promotions around our games and provided tremendous value in the affiliate community."

And nearly lost in the deluge of DBS sports deals is Turner Sports’ new, seven-year MLB pact that includes postseason coverage, a first for TBS. Plans call for TBS to begin carrying all first-round playoff games and one league championship series each season. The deal also includes an exclusive Sunday game each week beginning next season. "This exclusive was important to our cable operators, especially the postseason games," says Turner Sports president David Levy. "We’re giving them programming events to rally around, and we’ll work with them on promotions."

But carriage on basic exacts a high cost not only to MSOs but a large portion of subscribers. Last summer Comcast took heat when it launched the Mid-Atlantic Sports Network (home of Washington Nationals baseball) on expanded basic and then raised rates by a reported $2 per month for its 1.6 million customers in DC area.

Which returns us to Roberts’ conundrum: Should subscribers who aren’t die-hard fans foot the bill for the most expensive content in the industry?

Cox SVP of programming Bob Wilson frames the question this way: What’s the value of the content to the consumer? "More and more we’re finding the incremental value is not worth the incremental cost," Wilson says.

One logical choice is bumping sports networks to sports tiers. But it’s no secret that without ESPN, cable sports tiers aren’t exactly big man on the digital campus. "I don’t think cable operators who are experiencing 0-10% penetration of their sports tier view it as a successful experiment. I certainly expect you’re going to see some changes," says Brian Bedol, president/CEO of CSTV.

"Sports tiers were created as a vessel for very high-priced sports networks. That never panned out," Bedol adds. "So now the sports properties that are least expensive and have the least leverage are what’s ended up on these tiers."

It warrants mention that Cox’s sports tier, packaged with "information" networks like CNNfn and the Biography Channel for an additional $5.95 per month to digital subs, is among the industry’s highest penetrated. More than half the MSO’s digital subscribers take the package, according to the company.

Cox’s approach differs from the industry norm of offering less-expensive digital tiers that house solely sports networks. But the landscape may be changing. Comcast is expected to launch a sports and entertainment package for an additional $5-$6. Details are sketchy, but it’s clear the value proposition will depend on which extracurricular networks the MSO teams with sports. With the right programming, the tier could begin paying forward by attracting valued sports and non-sports channels.

"For the industry, it’s important for MSOs to build their sports tiers and create an attractive content package for what they’re charging," Cox’s Wilson says. Better, he adds, is a business model "that encourages sports content providers to accept placement there."

Sports Fans: I Want My HDTV!

50% of people who own HD sets bought them to watch specific sporting events, according to the Consumer Electronics Assn.

the top HD Set DRIVERS:

Source: CEA, December 2006
The Super Bowl 13%
The Daytona 500 7%
The NBA Finals 6%
College Bowl games 5%

DirecTV Exclusive Sports Content

PACKAGE: NFL SUNDAY TICKET
Terms: DirecTV pays the NFL $700 million a year from 2006-2010
Content: Package includes up to 14 out-of-market games each week.

PACKAGE: NCAA MEGA MARCH MADNESS
Terms: DirecTV re-upped its deal with NCAA tournment rights holder CBS in February. The cost to the DBS provider was not released, but DirecTV agreed to bump CSTV from its sports tier to expanded basic.
Content: Package includes up to 37 live out-of-region games produced in standard- and hi-def by CBS during the first three rounds of the NCAA championship.

PACKAGE: MLB EXTRA INNINGS
Terms: DirecTV would pay a reported $700 million over seven years to Major League Baseball; the proposed exclusive deal has come under scrutiny from the FCC and the Senate. MLB says that cable and Dish Network could get Extra Innings as long as each agrees to the terms of the DirecTV deal; the matter was still being negotiated at press-time.
Content: Package would include up to 60 out-of-market games per week from the American and National Leagues. The deal also includes the yet-to-launch Baseball Channel. DirecTV has committed to carry the channel, when it launches in 2009, on its basic package in return for a 20% stake in the network.

Sports Programming Roundup

From professional league coverage to ultra-niche events, there’s no shortage of sports programming available on linear television and broadband. The trick for cable operators is making sure they’re in on the games.

CSTV
Launch date: June 2002
Ownership: CBS
Management: Brian Bedol, CEO; Chris Bevilacqua, president; Stephen Greenberg, chairman
Distribution: 20 million homes
March Madness is prime viewing time for CSTV, which is stepping up its network and broadband coverage around the competition. CSTV is also expanding its general coverage of women’s basketball, volleyball, hockey and softball, and aims to add to its original programming lineup, which includes One2One Presented by TIAA-CREF and Generation NEXT.

ESPN
Launch date: September 1979
Ownership: Walt Disney Co.
Management: George Bodenheimer, president, ESPN Inc.; Edward Erhardt, president, ESPN; Sean Bratches, Disney and ESPN networks affiliate sales & marketing; Chris Driessen, EVP/CFO
Distribution: 92 million
ESPN has its foot on the gas as it moves into NASCAR coverage with plans for in-car HD cameras and more. The network is ramping up HD production not only for its full schedule of NASCAR events but also for NBA games, Major League Soccer, MLB games, National Hot Rod Assn. races, college football and NFL Monday Night Football games across ESPN and ESPN2.

ESPN2
Launch date: October 1993
Ownership: Walt Disney Co.
Management: George Bodenheimer, president, ESPN Inc.; Edward Erhardt, president, ESPN; Sean Bratches, Disney and ESPN networks affiliate sales & marketing; Chris Driessen, EVP/CFO
Distribution: 90 million

THE GOLF CHANNEL
Launch date: January 1995
Ownership: Comcast
Management: David Manougian, president; Keith Allo, VP, business development; Wayne Becker, VP, programming & international; Jeff Dilley, CFO
Distribution: 90 million
2007 marks the beginning of a 15-year partnership through which Golf Channel will exclusively air PGA Tour official money events. Nick Faldo recently joined the network to provide analysis of the Tour and other events.

NFL NETWORK
Launch date: November 2003
Ownership: National Football League
Management: Steve Bornstein, president/CEO; Steve Sabol, president, NFL Films; Howard Katz, COO, NFL Films; Judy Fearing, SVP, consumer marketing
Distribution: 41million
NFL Network’s dance with cable operators in the fall and winter left lingering questions — not to mention some disgruntled fans — about the weight those exclusive weekly games really carry. The network has been augmenting both its original NFL Films content and exclusive programs like the recent Scouting Combine from Indianapolis.

THE TENNIS CHANNEL
Launch date: 2003
Ownership: Private investor group including sports marketing firm IMG
Management: Ken Solomon, chairman/CEO; David Egdes, SVP, tennis industry relations; William Simon, CFO; Doug Martz, SVP, advertising sales; Randy Brown, SVP, distribution
Distribution: 10 million
The Tennis Channel offers international tournament coverage including April events the U.S. Men’s Clay Court Championship and Masters Series Monte Carlo, plus original programs like behind-the-scenes show Open Access and interview show Center Court.

TURNER BROADCAST SYSTEM (TBS)
Launch date: December 1976
Ownership: Time Warner Inc.
Management: David Levy, president, Turner Sports
Distribution: 92 million
It’s a new ballgame at TBS this year, the network’s last with Braves-centric MLB coverage. Beginning postseason, TBS will begin exclusive airing of MLB division and alternating league championship games. In 2008, TBS will air an exclusive MLB Sunday game of the week.

TURNER NETWORK TELEVISION (TNT)
Launch date: October 1988
Ownership: Time Warner Inc.
Management: David Levy, president, Turner Sports
Distribution: 92 million
TNT’s NBA coverage has been a consistent boon for the network, whose TNT NBA Thursday, NBA Playoffs and NBA Championship are its top-rated sports shows. TNT also covers select NASCAR events, the PGA Championship and the British Open.

VERSUS
Launch date: Launched as Outdoor Life Network in 1995, changed name to Versus in 2006
Ownership: Comcast
Management: Gavin Harvey, president
Distribution: 71 million
Versus has been stepping up coverage during the past year, first with the addition of NHL coverage, and now with coverage of the 32nd America’s Cup plus the America’s Cup Challenger Series, beginning in April.

WORLD CHAMPIONSHIP SPORTS NETWORKS
Launch date: digital cable network launched March 2007
Ownership: Privately owned
Management: Claude Ruibal, chairman/CEO; Carlos Silva, president/COO; Thomas Hipkins, EVP/general counsel; Bo LaMotte, SVP affiliate relations
Distribution: 10,000 Internet subscribers
WCSN’s coverage of Olympic and Olympic-style sports had been relegated to a broadband site and a weekly show on Comcast SportsNet stations. A deal with Granite Broadcast brings it to linear TV in select Comcast markets; the launch kicked off March 1 in San Francisco.

Keeping Score

The News: Satellite is shutting cable out of some major sports programming, and networks founded by sports leagues and teams are forcing cable to find new ways to stay in the game.

The Play: Some operators may rethink their sports tiers strategy. Without adding to the clutter — and cost — of expanded basic, Cox developed a sports and information tier, which is among the most highly penetrated in the industry.

The Payoff: More attractive sports tiers attract sports networks and sports fans without a heavy capital investment from the MSO.

Lining Up for Online Sports

The squeeze on linear distribution has pushed some sporting events to the Internet, where they are streamed directly to fans. World Championship Sports Network remains primarily a broadband play despite its new distribution deal with Granite Broadcast, and fans of figure skating feed their habit at the U.S. Figure Skating Association’s subscription-based Icenetwork.com.

No programmer has taken as hard a line as ESPN. It’s sticking with its charge-the-ISP plan for broadband site ESPN360. Yet ESPN maintains it’s MSO-friendly. "We’ve decided to be inclusive of distributors and use our brand to help enhance their business," says ESPN SVP David Preschlack.

Others are hoping for better luck cozying up to cable on the broadband couch. CBS’ CSTV will introduce a revenue-sharing option at NCTA for its nascent XXL premium broadband package, which includes coverage of more than 100 schools ($14.95 per month/$99.95 per year). "By having affiliates sharing in the revenue…it gives them another reason to do business with us," CSTV president/CEO Brian Bedol says.

Some networks are capitalizing on broadband when they lack linear television rights. Turner Sports just signed a multiyear Internet and mobile agreement with PGATour.com, even though Turner doesn’t carry a minute of PGA Tour coverage. "What we’ve realized here is that we don’t need to own the linear property to be somehow involved on digital side," says Turner Sports president David Levy. PGA rights are held by The Golf Channel, though Turner and Golf may be hamstrung if the rift between Tiger Woods and PGA chief Tim Finchem leads to Woods’ departure and creation of a Tiger Tour.

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