Guest Commentary: Securing the Future of Sports on Television

Sep 15, 2003  •  Post A Comment

In the past few years, television as we know it has gone through some pretty radical changes.
We’ve seen the rise of reality television and the expansion of digital platforms that have helped boost cable television. The link between television and the Internet has grown, and programs constructed around an integrated advertising campaign have emerged.
And with this evolution we have heard skeptics question whether televised sporting events, the original “reality television,” would still be able to compete in this new age.
While televised sports must evolve, sports will continue to be a significant part of program offerings as well as one of the first places advertisers look to target key demographic audiences. According to “PricewaterhouseCoopers Entertainment and Media Outlook,” the U.S. sports market will grow to a $19.8 billion industry by 2007, with national, local and Olympic rights fees accounting for some $7 billion.
But what initiatives need to be accepted by broadcasters and multiple system operators to ensure the growth of sports in terms of viewership? Here are a few suggestions:
* Networks must expand programming to include exciting nonmajor sports.
* New business models need to be aimed at revitalizing consumers’ interest in established sports and creating awareness of new ones while cutting costs in the process.
* More license holders need to harness the power of the Internet to bring sporting events to an online audience and to those unable to make it to the television.
NBC has been at the forefront of bringing nonmajor sports to viewers, as evidenced by its 2003 broadcast deal with the Arena Football League. NBC, realizing the AFL’s need to reach a national audience to become a more established sport, was able to obtain a quality programming product without having to invest huge license fees. In fact, the AFL accepted a deal in which NBC paid no rights fees. Instead NBC receives the first $10 million in ad revenues to cover production, with the league getting the next $3 million in advertising revenue. After that, revenues are divided the old-fashioned way, 50/50.
Another must for the industry is a return to packaged sporting events, especially for such sports as skiing, skating and horse racing. Broadcasters can limit their financial risks by partnering with third-party program packagers who acquire rights to events or even create them out of whole cloth. This allows many events that typically would not be picked up for broadcast to be aired and enjoyed by viewers.
Finally, sports content providers, television networks and sports leagues need to invest greater efforts into using the Internet as a tool to drive viewership while supplementing traditional revenue streams.
Initially, poor video quality on the Internet limited fan appeal. But now, with the wide availability of high-speed Internet connections at lower fees, it is projected that by 2007, 17.8 million U.S. households will have broadband cable modem connectivity and another 17 million will be DSL subscribers. As a result, the time is right for the Web to fully realize its potential and become another outlet to watch or hear sports broadcasts, especially for those too busy working on their PCs to see the entire game.
Already, some major sports are capitalizing on the Internet, drawing additional fans to the television or the stadiums. They are also gaining new Net-driven revenue streams. NASCAR fans are currently paying $6.95 to $9.95 a month for TrackPass, which provides live online racing updates and actual pit crew conversations. The NHL and NBA sell video streams of highlights, classic games and behind-the-scenes action, while the NFL streams its radio broadcasts online.
Sports has the ability to create champions, heroes and martyrs. So while some claim sports on television or sports in general isn’t what it used to be, I guarantee they can all tell you where they were when Mark McGwire broke the single season home run record, or when Lance Armstrong won his fifth straight Tour de France. But the key is innovation, not complacence.
With a world full of various forms of media and entertainment, it becomes increasingly difficult to keep an eyeball situated for any length of time. This is why broadcast and cable networks need to further diversify their sports programming offerings by bringing additional new, exciting and nontraditional sports to the viewing public. By working with third-party program producers and by using the Internet, the networks can make viewership grow. As always with sports, seeing is believing.
David Tomatis is the executive VP of Sportel Organization, which will hold the Sportel Monaco convention Sept. 16 to 19 in Monte Carlo.