Not too long ago I met with an individual who was the founder and CEO for a startup who a couple years back sold his company to a larger internet company for a good chunk of change (vague and discrete at his bequest.) When discussing some of the various strategies Bloguin would pursue going forward (Awful Announcing’s parent company), he uttered something to the effect of “That’s the million dollar question. Do you want a lot of a little, or a little of a lot.”
His response was in regards to the equity of a company and if it was better to dole out stock to a larger group of people in hopes of making something very big with the added feet on the ground (but leaving yourself with a smaller slice) or to be more prudent in diluting the stock by not adding people who may not really add much to the equation.
With that in mind, I think the saying can also apply to the pro leagues and conferences and their efforts to maximize revenue from television rights in this new era in which the value of live sports programming has exploded.
The runaway train of ESPN has been the most ahead of the curve, shrewdly acquiring and retaining the vast majority of the crème de la crème to the tune of a nearly $5 carriage fee for every household that has the channel. For comparison, the next highest national channel is not much over a dollar (TNT) and that’s largely because of the NBA programming they show.
With additional ESPN channels pulling in solid carriage fees and advertising revenue to go along with their other lines of business (radio, magazine, web, mobile), you can see why the likes of Fox, CBS, NBC, and Turner are trying to figure out how to emerge from an Anchorman like battle royal to become a true competitor to ESPN…
ESPN shrewdly has been locking down broadcast rights for unprecedented lengths in their latest contract negotiations. To their credit, the leagues and some conferences have been equally wise to get their own networks off the ground. In that respect, they enjoy both worlds in which they have a lot of a little (their own networks) and a relationship with ESPN where they share promotion, ratings, and scheduling (a little of a lot).
The NHL to this point is the only major sport or conference to opt for no relationship with ESPN and it’s been compelling of late to see their marriage with NBC and NBC Sports Network grow stronger through the Comcast acquisition of NBC. Every playoff game is televised nationally, ratings are up, and ad sales are booming. Additionally, with less overlap conflict with the NBA playoffs due to their elongated labor strife and a large dose of ratings grabbing fights and overtime endings, the NHL is looking as vibrant as ever. Considering The Worldwide Leader ignores the sport like the prom queen ducking a magic card collecting mathlete eyeing her for a dance, it’s quite the feat. To a certain degree the UFC and Fox and FX are hoping to build the same type of relationship with each other. Spite for ESPN can be quite an aphrodisiac.
Despite the success of the NHL, NBC Sports Network is still struggling to to find its voice, although the upcoming Olympics will certainly help the cause. When a network pivots its idenity (think VH1 going from music first to reality garbage), a period of transition with demographics and ratings is to be expected. The big question at this point is if and when NBC Sports Network can lure another major property away from ESPN in hopes someone else will take a flyer on the “lot of a little” strategy that could cement them as ESPN’s closest competition.
In the years to come MLB, the Big East, NBA, BCS, and Big Ten will have their crack at choosing their sports media fates with expiring contracts on the horizon. The other sexy media properties have all been locked up. Essentially married, bought a house in the country, started a family, and are sending Holiday cards with matching outfits bragging about their perfect lives with ESPN. That’s what ESPN dangles in front of the leagues in their talks. Security with them, a leap of faith into an uncertain world without them.
As the leagues and conferences bunker down in negotiations and lean on media consultants and power brokers to usher in the best possible deal going forward, the truth of the matter is that it really does boil down to a “lot of a little” vs. a “little of a lot.”
The thing that is intriguing is that the addition of any of these properties away from ESPN could be significant enough to jump-start a more competitive sports media world. In particular MLB, who has had some ratings and demographic issues, offer the opportunity for any media company to potentially tower over ESPN in the summer if ESPN could be muscled out of television rights for America’s pastime. Fox and FX has been trumpeting their younger audience which has been dragged down a bit by MLB’s aging audience. And let’s be honest, Dick Stockton, Joe Buck, and Tim McCarver torment my soul are not exactly resonating with younger fans either. In addition, the average MLB fan is probably in the dark that TBS has limited MLB rights. Basically, MLB might just be in play for a new media partner.
From the outside looking in, MLB rights and NBC are the most natural fit. The NBA is probably sexier but it’s hard to see TNT and/or ESPN backing down on that front. MLB is probably just as big of a stretch but you would think NBC would be more motivated as MLB’s season has the least amount of overlap with the NHL whereas the network would have a hell of time juggling both the NHL and NBA.
You do nothing for me
From a fan’s perspective, I think the NBA staying where it is and MLB leaving Fox and potentially Turner in favor of NBC would be ideal. That said, if Fox and TBS (a bit more stabilized with Conan in the fold now) could relent their grip on MLB, what’s not to say that MLB would push for a divided television rights agreement between ESPN and NBC?
This would be the best of both worlds and the optimal outcome for any league looking to get a “lot of a little” AND “little of a lot.” Will any major league or conference follow the NHL’s lead and can anyone bring NBC and ESPN together so they have their cake and eat it too? With a nice case study in the NHL to point to, I would imagine there is a bit validation for disgruntled and feisty league and conference officials to make the case internally that the option of leaving ESPN is now in play where a couple years back it was the worst possible outcome imaginable.
MLB, NBA, and to a lesser extent the Big Ten may have the leverage and fanbases to successfully ween themselves off ESPN dependence, but it remains to be seen if the juice is worth the squeeze to be independent… and if they potentially have the leverage to be featured by a true competitor.