ESPN "Critical Mistakes" article from Business Insider

[TerryD]

What effect, if any, will ESPN's current troubles have on future TV rights fees and conference realignment?

From the article:

"ESPN is losing subscribers.
ESPN is paying an obscene amount of money for sports.
ESPN is losing subscribers because of a critical mistake it made in 2012 when it was negotiating carriage deals with cable companies like Comcast, Cablevision, and Cox.

According to Ourand, ESPN was negotiating for a $6-per-subscriber fee from the cable companies. To secure that high of a fee, ESPN had to be flexible on its "penetration benchmark levels," or the number of homes that cable companies guarantee ESPN will be in.

At the time, ESPN was guaranteed to be in 90% of cable subscribers' homes. To get $6 per subscriber, ESPN lowered that threshold to 80%.

When ESPN lowered the standard, it allowed cable companies to start introducing new cable packages that excluded ESPN. People are signing up for those cable packages, leading to ESPN's losing 8.5 million subscribers over the past four and half years, according to Ourand citing Nielsen estimates.

This falls in line with the numbers we collected recently. After three decades of growth, ESPN's place in the American home is slipping.

At the same time ESPN started losing subscribers, it started paying massive fees for sports.
ESPN is paying $1.9 billion annually to air "Monday Night Football." That's $800 million more than the next closest competitor. Ourand says people are skeptical there was even another bidder within $500 million of that number.

After overpaying for the NFL, ESPN overpaid for the NBA, tripling its rate. It also doubled its rate for MLB rights.

A former employee said, "It’s been a total mismanagement of rights fees, starting with the NFL renewal ... We overpaid significantly when it did not need to be that way, and it set the template to overpay for MLB and the NBA."

That's why ESPN is cutting "to the bone."




"http://www.businessinsider.com/espn-mistakes-led-to-layoffs-2015-10

 

[Seaa Blue]

From 2013:

http://www.businessinsider.com/espn-nightmare-scenario-2013-5

The nightmare scenario for ESPN is that it gets locked in an escalating arms race with competitors that are willing to out-spend them for broadcasting rights. It will be forced to prioritize, sports TV will become more fragmented, and eventually the hegemony that ESPN has enjoyed for years will disappear.

 

[whaler11]

There was an article on CUSA yesterday that mentioned they were hopefully for the same deal they have today going forward because of ESPN's issues. Like I've been saying - I wouldn't want to be selling in this market.

 

[noeynox]

I heard yesterday that 32 million people logged in to watch the Buffalo/Jacksonville game on Yahoo sports. I know its the NFL but 32 million people (in america i believe) logged on to watch that game???

There is a major shift coming in how people view content. It is already here with most cord cutters, sports is late to the game in that regard. So yeah you don't want to be selling to ESPN at this moment, but in a few years with an innovative person representing your interests, there may be another avenue that can be used to make more money. The netflix CEO went on record recently to state they are not going to overbid for sporting content, but to me that doesn't mean they wouldn't be interested in testing the waters if they deemed the price reasonable. Who knows it may not be a company like Netflix at all.

 

[CTMike]

I heard yesterday that 32 million people logged in to watch the Buffalo/Jacksonville game on Yahoo sports. I know its the NFL but 32 million people (in america i believe) logged on to watch that game???

There is a major shift coming in how people view content. It is already here with most cord cutters, sports is late to the game in that regard. So yeah you don't want to be selling to ESPN at this moment, but in a few years with an innovative person representing your interests, there may be another avenue that can be used to make more money. The netflix CEO went on record recently to state they are not going to overbid for sporting content, but to me that doesn't mean they wouldn't be interested in testing the waters if they deemed the price reasonable. Who knows it may not be a company like Netflix at all.

I think there was a Deadspin article debunking the numbers. It was 15 million unique viewers, which includes anyone that landed on yahoo.com Sunday morning - the stream started playing automatically, whether they intended to view or not.

 

[rbny1]

I don't know how Yahoo counted the numbers, but I logged on at the beginning of the game, turned it off and met a friend for a cup of coffee, turned it on again when I returned home, turned it off one more time and logged on again later. Did I count as three viewers or one? I don't know. It seems to me that determining the number of online viewers is subject to interpretation. But I do agree that more games will be telecast exclusively online. The trend is just beginning.

 

[noeynox]

I think there was a Deadspin article debunking the numbers. It was 15 million unique viewers, which includes anyone that landed on yahoo.com Sunday morning - the stream started playing automatically, whether they intended to view or not.

Good info. I was only reporting what I heard on the radio. 15 million still seems absurdly high for those 2 lightweights, but its the NFL.

 

[upstater]

Good info. I was only reporting what I heard on the radio. 15 million still seems absurdly high for those 2 lightweights, but its the NFL.

Especially since 1.3m in the Buffalo area, 5m in Southern Ontario, 1.2m in Rochester, got to watch it on TV, not to mention all the people in the Southern Tier of NY.

 

[Tenspro2002]

So every other sports entity ripped off ESPN, but the AAC gave them its broadcast rights for pennies?

 

[noeynox]

So every other sports entity ripped off ESPN, but the AAC gave them its broadcast rights for pennies?

I'd call that the perfect sheet storm.

 

[UCHuskies08]

Good info. I was only reporting what I heard on the radio. 15 million still seems absurdly high for those 2 lightweights, but its the NFL.

http://profootballtalk.nbcsports.com/2015/10/27/nfl-exaggerated-sundays-bills-jags-internet-numbers/

For TV, the key metric has become average viewers per minute. When, for example, a show has an announced audience of 15.2 million, it means that 15.2 million people, on average, were watching the game at any one time. There may have been a lot less, or a lot more, during specific moments of the show, but the show averaged 15 million for its full duration.

The Bills-Jaguars game on Yahoo averaged, according to SportsBusiness Journal, 1.64 million viewers. In contrast (and as noted by Peter King of TheMMQB.com), the Jets-Dolphins game from London, broadcast on CBS in the 9:30 a.m. ET window, had an average audience of 9.86 million. Of course, it’s unclear how Bills-Jaguars would have performed in comparison, especially since the home markets of the Jets-Dolphins game were much larger.

Regardless, the 15.2 million number that was pushed by the NFL doesn’t equate to the numbers publicized by the networks that televise NFL games. The real apples-to-apples comparison is that 1.64 million viewers tuned in for the game.

 

[ZooCougar]

Death of a thousand cuts.

 

[kyleslamb]

http://profootballtalk.nbcsports.com/2015/10/27/nfl-exaggerated-sundays-bills-jags-internet-numbers/

For TV, the key metric has become average viewers per minute. When, for example, a show has an announced audience of 15.2 million, it means that 15.2 million people, on average, were watching the game at any one time. There may have been a lot less, or a lot more, during specific moments of the show, but the show averaged 15 million for its full duration.

The Bills-Jaguars game on Yahoo averaged, according to SportsBusiness Journal, 1.64 million viewers. In contrast (and as noted by Peter King of TheMMQB.com), the Jets-Dolphins game from London, broadcast on CBS in the 9:30 a.m. ET window, had an average audience of 9.86 million. Of course, it’s unclear how Bills-Jaguars would have performed in comparison, especially since the home markets of the Jets-Dolphins game were much larger.

Regardless, the 15.2 million number that was pushed by the NFL doesn’t equate to the numbers publicized by the networks that televise NFL games. The real apples-to-apples comparison is that 1.64 million viewers tuned in for the game.

One clarification though RE: those ratings is that average viewership is reported by Nielsen by the quarter hour rather than by minute. Some networks may publicize their minute-by-minute reports (though I can't say I've ever seen that), but all the data released publicly through Nielsen is based on the quarter hour averages during that game's block.

 

[Husky25]

So every other sports entity ripped off ESPN, but the AAC gave them its broadcast rights for pennies?

ESPN held matching rights to any offer the Big East could garner in open negotiation. When the Big East was falling apart and looked like it would fall out of favor with the other power conferences (particularly in football), it lost tremendous value. Fox made an offer, ESPN matched it.

 

[Slasher]

ESPN held matching rights to any offer the Big East could garner in open negotiation. When the Big East was falling apart and looked like it would fall out of favor with the other power conferences (particularly in football), it lost tremendous value. Fox made an offer, ESPN matched it.

It was actually NBC but the point stands.