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High Sports Prices Take Toll at ESPN
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May 31, 2013, 2:43:20 AM5/31/13
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http://adage.com/article/media/high-sports-prices-toll-espn/241699/
Scarcity of Major-Property Contracts Hikes Costs, Leads to Layoffs at
Disney-Owned Network
By: Michael McCarthy Published: May 26, 2013
ESPN shocked the media world last week when it announced substantial
layoffs. That the move came on the heels of a couple of eye-popping
deals only underscored the cutthroat battle between networks
scrabbling for live-sports rights.
But even as Fox Sports 1 and NBC Sports Network enter the ring, one
fact remains: There aren't many more deals to be had. With the
exception of the NBA, most sports-rights contracts for the major
properties are locked down until after the start of the next decade.
Which may explain why ESPN spent so big recently. The Walt Disney Co.
network just inked a $825 million, 11-year deal to put the U.S. Open
tennis tourney entirely on cable, ending CBS's 46-year relationship
with the Open. Two years ago, ESPN snatched Wimbledon from NBC after
43 years with a 12-year deal worth $500 million.
ESPN also opened its wallet to launch the SEC Network, a 24-7 channel
devoted to the premier conference in increasingly-hot college football
(it didn't disclose terms). Only two years ago, it announced a $300
million, 20-year deal to create the Longhorn Network with the
University of Texas. Then there's the $470 million-a-year deal struck
in late 2012 for the long-demanded college-football playoffs.
There's a flipside to such spending. ESPN's decision to lay off 300 to
400 staffers, the network's first mass cutbacks since 2009, was driven
by an urgent need to slash costs. Compared with other sports-media
companies, which run much leaner, ESPN has plenty of employees—over
6,000 worldwide, said James Andrew Miller, co-author of the book
“Those Guys Have All the Fun: Inside the World of ESPN.”
The big prize on the horizon is the NBA. The league's national TV
deals with ESPN and Turner Sports' TNT expire after the 2015-2016
season.
Fox Sports founder David Hill has made no bones about wanting the NBA.
“Will we be in a position to bid on the NBA TV rights beginning with
the 2016 season? Absolutely,” Mr. Hill told Broadcasting & Cable in
April. “As TV rights come up for bid from different college and
professional leagues, we will be opportunistic and we will bid on
them.”
But save the NBA, there are just not that many national sports
packages left to buy—which ultimately drives up prices for local
sports.
Scarcity of Major-Property Contracts Hikes Costs, Leads to Layoffs at
Disney-Owned Network
By: Michael McCarthy Published: May 26, 2013
ESPN shocked the media world last week when it announced substantial
layoffs. That the move came on the heels of a couple of eye-popping
deals only underscored the cutthroat battle between networks
scrabbling for live-sports rights.
But even as Fox Sports 1 and NBC Sports Network enter the ring, one
fact remains: There aren't many more deals to be had. With the
exception of the NBA, most sports-rights contracts for the major
properties are locked down until after the start of the next decade.
Which may explain why ESPN spent so big recently. The Walt Disney Co.
network just inked a $825 million, 11-year deal to put the U.S. Open
tennis tourney entirely on cable, ending CBS's 46-year relationship
with the Open. Two years ago, ESPN snatched Wimbledon from NBC after
43 years with a 12-year deal worth $500 million.
ESPN also opened its wallet to launch the SEC Network, a 24-7 channel
devoted to the premier conference in increasingly-hot college football
(it didn't disclose terms). Only two years ago, it announced a $300
million, 20-year deal to create the Longhorn Network with the
University of Texas. Then there's the $470 million-a-year deal struck
in late 2012 for the long-demanded college-football playoffs.
There's a flipside to such spending. ESPN's decision to lay off 300 to
400 staffers, the network's first mass cutbacks since 2009, was driven
by an urgent need to slash costs. Compared with other sports-media
companies, which run much leaner, ESPN has plenty of employees—over
6,000 worldwide, said James Andrew Miller, co-author of the book
“Those Guys Have All the Fun: Inside the World of ESPN.”
The big prize on the horizon is the NBA. The league's national TV
deals with ESPN and Turner Sports' TNT expire after the 2015-2016
season.
Fox Sports founder David Hill has made no bones about wanting the NBA.
“Will we be in a position to bid on the NBA TV rights beginning with
the 2016 season? Absolutely,” Mr. Hill told Broadcasting & Cable in
April. “As TV rights come up for bid from different college and
professional leagues, we will be opportunistic and we will bid on
them.”
But save the NBA, there are just not that many national sports
packages left to buy—which ultimately drives up prices for local
sports.
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