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KPAY Sports News Items Archives for 2012-09

Consumers Could Face Higher Costs to Watch Baseball


By Tom Van Riper-Forbes

 

 

BIG FREE AGENT CONTRACTS ARE A BIG REASON WHY MLB IS DEMANDING MORE MONEY FOR

BROADCAST RIGHTS FEES.....WILL THEY ULTIMATELY BE PUSHED ON TO CONSUMER ?

 

For Major League Baseball,  the television money just keeps on coming. And coming.

Ratings, at least for national games that include marquee events like the World Series and All-Star Game, have been flat for years. Yet the money keeps coming. Wall Street media analysts warn that many households are near the end of their ropes when it comes to absorbing higher cable and satellite bills that invariably get passed down to them as networks paying out higher rights fees  look to recoup some of that money by charging local operators more per subscriber. Yet the money keeps coming.

A month ago, MLB signed a deal with ESPN to renew baseball coverage through 2021. The contract is worth roughly $700 million a year, almost double the $360 million the current deal pays, which has one more year to run. For additional perspective, the fee is also about five times what ESPN was paying baseball before 2006. ESPN does get a couple of goodies from the new agreement, including the right to air “live look-ins” of games in progress, a feature that baseball currently limits to its own MLB Network.

Once the 2014 baseball season arrives, look for ever more knock-down drag-out fights between networks and cable companies over subscription fees, the same kind that led to Fox pulling part of the 2010 World Series between the Rangers and Giants from Cablevision in New York.  With more and more money at stake, these battles are just going to get nastier.

Up next: Turner and Fox. Both are closing in on renewals that are expected to result in a doubling of rights fees as well, to a combined $1.3 billion for same eight-year period of 2014 to 2021. Again, for perspective: in the late 1990s, Fox and NBC were paying under $200 million a year combined to share the national baseball market.

The networks’ bet: that baseball and other premium sports programming will hold up as the glue that holds together the product bundle that cable companies push into homes. It’s a bundle, notes sports media consultant Chris Beviliaqua, that includes phone service, internet access and about 100 cable channels that the customers rarely watch. Sports, including baseball, “is the Trojan horse that gets you into the house,” he says. But as many of the bundle’s components become available elsewhere - T.V. programming at Hulu, phone service going strictly mobile, etc.  – they fall out of the pay TV ecosystem.  That would render sports a standalone asset, not a centerpiece for peddling additional services. Hence, less valuable.

“The networks deciced to lock in with these rights fees long term, and if the business model changes they end up stuck with them,” says Bevilacqua. 

In April, we chronicled the enormous rise in baseball’s local television revenue, as RSNs began doling out bigger fees and (in many cases) equity stakes to teams in order to secure anchor programming in their markets (local sports being the biggest factor consumers look at in determining whether to subscribe to a local cable or satellite service.

Hefty fees in local markets make some degree of sense – baseball fans are tribal creatures that tend to focus on their own clubs. But now the national money is shooting through the roof, too, even though ratings for the World Series and All-Star Game have been at or near historic lows during this decade (the last World Series to average more than 30 million viewers per game – the Braves-Indians matchup in 1995, a time when the World Wide Web was just becoming commonplace in most households and starting to take TV viewers. The public was also getting its first World Series taste in two years, after a players’ strike had wiped out the 1994 Series).

But “those historic lows are still pretty dependable in this fragmented market,” notes Adam Chase, says Adam Chase, an attorney with the Washington D.C. law firm Dow Lohnes who specializes in media and technology in the sports industry. In other words, Fox, ESPN and Turner are confident they’ll get a consistent audience with a favorable demographic for baseball, even if the lower, fragmented numbers are here to stay.

NHL Owners hold all the cards


 

GARY BETTMAN AND THE NHL'S OWNERS HAVE CHECKED THE PLAYERS INTO THE BOARDS

 

 

By Darren Rovell-ESPN.com

 

Nick Mancuso knows that what makes a hockey fan is what's going to kill the hockey fan this season.

"We're a unique community," said Mancuso, whose company, Kynetyk, makes hockey equipment. "They know we'll all come back. They're going to get away with it again."

It's no secret that hockey is a niche sport in America. Always has been, always will be.

Only 8.8 percent of Americans who are at least 12 years old call themselves avid hockey fans, according to an ESPN Sports Poll. That's compared to the 34.3 percent of Americans in that age bracket who call themselves NFL fans.

But those fans who are die-hard are seemingly more attached to the game than hard-core fans in other sports, and people who consider themselves casual fans seem more likely to show up to a baseball game or a basketball game than get behind the boards.

What does that mean? It means the league relies mostly on guys such as Nick Mancuso, and it knows where it stands.

In a Twitter poll I took, 76.5 percent of people who called themselves hockey fans said a season off wouldn't affect their interest. As for those who answered they'd walk away, I'm sure most of them wouldn't.

And that's why commissioner Gary Bettman had no problem recommending to the owners to lock out the players in 2004 and again this year.

The bottom line is that there will be virtually no consequences from losing a season, if that's what it takes to get the players to fold. Sure, hockey fans might take to watching other sports to keep them busy, but they'll be back.

Owners of teams that had great seasons won't lose much momentum. If they own their arenas, they can get aggressive booking acts to help pay off debt. And remember, they're still getting $200 million from NBC not to play. That's because union executive director Donald Fehr and his cohorts somehow haven't run to the courts to get an injunction against the owners taking that money despite the league not playing. Hint: The NFL union successfully got the league's money put aside.

When Bettman and the owners locked out the players and missed the entire season in 2004-05, people thought Bettman had made a horrible miscalculation. It turned out to be genius. The league got the concessions it wanted -- well, at least for the time -- and fans came back. Now, owners lockouts are par for the course after the NBA and NFL went through it last year. By the way, those leagues also came back stronger than ever.

Even if the players have the strongest union leader in the history of sports in Fehr, the rule is billionaires always beat millionaires.

But the owners aren't doing this because they know the players will fold. They're doing it because they know the fans won't leave them.

"They know who we all are," Mancuso said. "We know the game, we play the game, we coach the game. They know I'm still going to buy a Winter Classic jersey."

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