Chapter 12- Commercializing Media Rights

Media Rights

-Media rights are one of the key financial drivers of sport businesses (often referred to as sport properties).

Professional Sport Media Rights

-National Basketball Association Combines aspects of football's and baseball's broadcasting policies. It has a national presence with regular season and playoff games on ABC, ESPN, and Tuner, but much of each team's broadcast revenues come from local television and radio packages. -Pioneer in mixing over-the-air and cable television coverage NBA games remain a major selling point for many regional sport channels.

Sports Media Distribution Channels

-National Broadcast and Cable Networks -Regional Sports Networks -Digital Media Broadband, Wireless and Tablets -Syndicators -Radio Broadcasting

Commercializing Media Rights

-Ratings and Market Shares -The Concept of Total Returns -Sports Media Distribution Channels -Negotiating and Managing Media Rights -Major Sport Property Media Contracts -Changes in Sports Media Consumption

Media Contracts

-National Football League -Major League Baseball -National Basketball Association -National Hockey League -NASCAR -National College Athletic Association -The Olympic Games -Golf and Tennis -Boxing & Mixed Martial Arts -Soccer & International Sports

Ratings and Market Shares

-A program's rating represents the percentage of television households within the survey universe tuned to the program. Example: A nationwide rating of 10 means 10% of the nation's 116 million households with televisions watched. -A program's share represents the percentage of television households with sets in use that are tuned in to the program, recognizing that not every home is watching television all the time. Example: If 60 million households used television, a program with 16 million viewers would get a 26.6 share (26.6% of 60 million).

Ratings and Market Shares

-Avidity and exclusivity have enabled live sport programming to maintain its ratings while the ratings for other program categories has decayed. Avidity- Fans who watch live sports events exhibit a higher level of interest and passion than any other program category. Exclusivity- Sports are shown on one exclusive network. -Ratings and shares tell only part of the story- but ratings and shares measure only households. They calculate the number of impressions (i.e., the number of people who will see or hear their message) and compare that number with the price of the advertisement. The calculation yields the cost per thousand, or CPM.

Media Rights

-Broadcast, cable, and satellite television remain the most valuable revenue streams for the sports industry, and they continue to grow. -Demand for sports media has increased due to subscription television and digital media platforms. Both utilize games, events and related programming to drive ratings, subscription, retention and advertising. -Cable networks are "niche broadcasters" that target their programming to specific segments of the public. Sports cable networks are able to tap into two revenue streams- advertising sales and subscriber fees- and attract more and better programming and generate impressive financial results.

Changes in Sport Consumption

-Changes in sports media consumption patterns Declining demand for pay-television subscriptions in favor of internet-based options Over the top (OTT) distribution options provide virtual bundles of dozens of sports, news, entertainment channels and programming from a range of sources, from telecom (Verizon & AT&T) to startups Technology driven businesses offering programming can be volatile -Broadcasting piracy -Broadcast regulations

Golf, Tennis, & Boxing Media Rights

-Golf and tennis are regularly seen on television, but rarely draw large audiences. The audience for these sports, however, tends to include upper-income men who are difficult for advertisers to reach and are considered a highly desirable target market. -Although boxing still boasts a loyal core of fans, primarily older men, mixed martial arts properties such as UFC are rapidly gaining fans and media revenues from an audience of younger viewers.

Changes in Sport Consumption

-Growing International Audience The international television audience is growing rapidly, and sport remains a preferred programming option. ESPN now has more viewers overseas than in the United States, and channels like EUROSPORT provide 24-hour sports coverage across Europe.

Amateur and Collegiate Sport Media Rights

-National Collegiate Athletic Association Name-brand college sports content is increasing in value, particularly football. Led to a substantial upswing in rights fees for major conferences, schools, and the NCAA Men's Basketball Tournament. -The Olympics Unique in that they attract a predominantly female audience, are a major international event, and are televised for two weeks. Networks will pay huge sums for media rights, which are now being utilized across broadcast and subscription television, broadband, and wireless.

Professional Sport Media Rights

-National Football League All regular and postseason television rights rest with the league, and revenues are divided equally among all franchises. -Major League Baseball Teams control the regional television rights to the majority of their regular season games, leading to wide disparities in media revenues across large and small markets.

Professional Sport Media Rights

-National Hockey League Although clubs in major markets with established hockey traditions flourish, the league's national television agreement is the weakest among major team sports. Television deal with NBC expires in 2020-2021 -NASCAR Was acknowledged leader in sports marketing and promotion. In 2013, NASCAR signed a deal with NBC Sports ($4.4 billion, 10 years) and extension with Fox (original- $2.4 billion, 8 years; extension- additional $1.4)

The Concept of Total Return

-Networks consider total return, not just the bottom line, from a partnership, including: Non-cash benefits accruing from exposure, such as fan base and increasing brand value Promotion of special events, selling team merchandise, cultivating public image, charitable activities, public service announcements -Total return is reciprocal between sport properties and networks

Negotiating & Managing Broadcast Rights

-Sport properties and media distributors are partners; both parties must be satisfied to prosper. Direct Sale of Rights -Networks will be eager to bid for rights if proven commodity. -Sport organizations attempt to maintain as much control over their product as possible to protect the sport property's brand and image. -In-House Productions Example: World Wrestling Entertainment (WWE) -Revenue Sharing Protects media outlets like radio and second-tier networks from downturns in advertising sales or lack of on-field success.

Regional Sports Networks (RSNs)

-The evolution of RSNs demonstrates how the sports media industry has adapted to the marketplace: Expanding the size of their audience Realizing greater affiliate and ad sales revenues Attracting the attention of teams, leagues and conferences who increasingly have established their own networks