(05-03-2017 08:23 AM)Carolina_Low_Country Wrote:  Has nothing to do with tv ratings. Has everything to do with people watching tv now when they want to via DVR, Hulu, Netflix, etc. with these there is no ability for advertisement, which makes live content like sports more valuable since the person cannot fast forward through the commercial breaks. Since there a less ways to advertise on TVs and live events gives you the best bang for the buck for an advertiser they are able to charge more for advertising spots and in return pay more for tv contracts.

I agree with this statement but how does this contradict ratings? At the end of the day the money comes from eyeballs seeing commercials....

Those eyeballs start with ratings. then you factor in what must be seen live and what can be recorded and skipped. People can't skip commercials for something they aren't watching.

(05-03-2017 09:38 AM)billybobby777 Wrote:  

(05-03-2017 09:02 AM)quo vadis Wrote:  

(05-03-2017 08:37 AM)ohio1317 Wrote:  Multiple factors at play
1. Inflation
2. Live sports are more important for advertisers because less dvr and recording. That was far less relevent in 1998.
3. The above goes doubly for young adults advertisers are trying to reach who are watching less TV in addition to doing even more DVR.
4. SEC was probably undervalued somewhat at that point.
5. ESPN pays some extra to get on ESPN rather than a network (where ratings would be a little higher but being on ESPN means both commercial revenue and revenue from cable fees).

So in other words, the link between media deals and TV ratings isn't that strong?

The link is very strong. You have a loaded question-- based on the big east contract. The ratings are what determines the prices if said property has ratings. 25-54 is the age group. For sports it was Males, 25-54. I sold ads for Univision in Houston and sports radio in Vegas and Pheonix.

Actually I am not sure the questions is even loaded based on the Big East. When Fox paid for the rights the history of the Big East was drawing 2.5-3.5m for the Big East conference game. Plus God knows what for other games. What Fox paid was cheap if you think they will draw anywhere close to that amount.

(05-03-2017 11:09 AM)MU88 Wrote:  Number one factor, can the programming maintain or even generate subscribers? Subscriptions account for 70%+ of revenue at ESPN and growing.

Ratings are huge factor as to the cost of advertising. But, the revenue generated from advertising is minimal compared to the subscriber revenue. Why did the BE get a big contract? FS1 debuted in 90 million homes. Doubtful FS1 would be on basic cable in many major BE cities unless they were carrying the BE games.

So, do ratings matter? Sure, but with respect to the major conferences and must see major sporting events, only a second tier consideration. Its nice to get tens of millions extra if your programming draws big ratings. But, at ESPN, maintaining 10 million subscribers, corresponds to over $1 billion in revenue per year. Hence, the loss of 12 million subscribers in the past few years is the real cause of the belt tightening. Why is the SEC worth boatloads of cash? How many cable systems would drop ESPN off their basic tier if the SEC moved to NBCSports? Now ask yourself, how many cable systems would drop ESPN if the AAC, CUSA or MAC left ESPN? For these conferences that don't move the subscriber needle, they are getting paid based on advertising dollars. Hence, the paydays for them are much much lower.

Interesting insight. Thanks for posting.

Doesn't ratings give you a sense of potential subscriptions? Granted some of the that is whose watching and some else is how passionate they are. So again using the Big East. They have a small core but are very passionate. So what you get isn't a lot but what is there might change their subscription if needed.

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

(05-03-2017 05:50 PM)quo vadis Wrote:  

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

you are not accounting for inflation and competition in your numbers. The NFL becomes more valuable because I have fewer options where people won't skip commercials.

But at the end of the day it is all eyeball watching except for the subscription factor which I wonder if it applies to Broadcast also? I assume yes but I have alternatives there.

(05-03-2017 06:29 PM)Sactowndog Wrote:  

(05-03-2017 05:50 PM)quo vadis Wrote:  

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

you are not accounting for inflation and competition in your numbers. The NFL becomes more valuable because I have fewer options where people won't skip commercials.

But at the end of the day it is all eyeball watching except for the subscription factor which I wonder if it applies to Broadcast also? I assume yes but I have alternatives there.

Right. Its not just that it maintained its numbers while the others dropped. Its that the sports audience is still watching the commercial where as that's not necessarily so of the other programming. PLUS---there is a sizable audience that will flee your cable carrier if you do not offer "X" sports (that "X" could be the NFL, NBA, MLB, SEC. Big10-, etc). So the sports that hold their audience, are watched with commercials, and drive subscriber numbers have exploded in value.

The question is---Without the current subscriber model---will sports become less or more valuable. If sports really does drive subscribers---then it may be that whatever model comes next will value sports even more since it brings loyal eyeballs.

I'd say there IS a relationship between TV contract $$$ and TV ratings, but it's not linear. Doubling the ratings might well result in quadrupling the contract value... or merely a small increase, depending on a lot of other variables.

(05-03-2017 01:35 PM)YNot Wrote:  

(05-03-2017 01:21 PM)mturn017 Wrote:  The AAC has decent audiences in the grand scheme and no real Marquee programs. It's great filler content but not the content you build your CFB presence around. ESPN will have a few competitors for the AAC, none of them will want to go too high in the bidding. We'll see.

Navy will make a difference. Not marquee program difference, but marquee game difference. Won't Army-Navy and Navy-Notre Dame be part of the AAC's package every other year? Or is Army-Navy its own deal?

On a side note - I wonder if the AAC could be an eventual home for Texas Olympic sports (with football independent) if Oklahoma and Kansas were to leave the Big 12...

Texas playing ECU in hoops every year? A man can dream. A conference with both Texas and Connecticut? Hahahaha...oh wait.

(05-03-2017 06:29 PM)Sactowndog Wrote:  

(05-03-2017 05:50 PM)quo vadis Wrote:  

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

you are not accounting for inflation and competition in your numbers. The NFL becomes more valuable because I have fewer options where people won't skip commercials.

Inflation applies to all things so cancels out. Frank said:

"With overall revenue still going up during that time period (with higher ad rates and cable subscriber fees), a much higher portion of that revenue is getting dedicated to sports today."

... which implies that the big reason that sports fees have gone way up is that advertisers dedicate the same basic pool to TV advertising over time, such that if your ratings stay the same while others drop, you will get a larger share of that pool.

But that just doesn't make sense. What makes sense is that the pool will shrink and the dollars you get will stay the same, adjusted for inflation. FWIW, $10m in 1997 is worth $15m today, but that's not much of an increase compared to what we've seen.

Bottom line: correlation between ratings and payments doesn't seem strong at all. Football ratings have been flat over time while fees have surged.

(05-04-2017 04:48 PM)quo vadis Wrote:  

(05-03-2017 06:29 PM)Sactowndog Wrote:  

(05-03-2017 05:50 PM)quo vadis Wrote:  

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

you are not accounting for inflation and competition in your numbers. The NFL becomes more valuable because I have fewer options where people won't skip commercials.

Inflation applies to all things so cancels out. Frank said:

"With overall revenue still going up during that time period (with higher ad rates and cable subscriber fees), a much higher portion of that revenue is getting dedicated to sports today."

... which implies that the big reason that sports fees have gone way up is that advertisers dedicate the same basic pool to TV advertising over time, such that if your ratings stay the same while others drop, you will get a larger share of that pool.

But that just doesn't make sense. What makes sense is that the pool will shrink and the dollars you get will stay the same, adjusted for inflation. FWIW, $10m in 1997 is worth $15m today, but that's not much of an increase compared to what we've seen.

Bottom line: correlation between ratings and payments doesn't seem strong at all. Football ratings have been flat over time while fees have surged.

But the reality is that the pool hasn't shrunk since 1997. In fact, the overall ad revenue pool is larger plus sports are proportionally more valuable as an ad buy compared to other types of programming, so that accounts for the valuation of sports programming going up so quickly. There are other factors that go even further - ad buyers pay more for male audiences (not on the basis of sexism, but simply statistically men watch less TV and are harder to reach) and younger demographics, both of which sports deliver. Essentially, sports are the most consistent way to get a viewer to actually watch an ad live (instead of skipping it with a DVR) and the demographic that sports deliver also happens to be the most valuable (young males). Put all of those factors together and it makes sense why sports rights have gone up so much (and the ratings for each of the sports leagues are very strongly correlated with ratings compared to other sports leagues).

(05-04-2017 04:48 PM)quo vadis Wrote:  

(05-03-2017 06:29 PM)Sactowndog Wrote:  

(05-03-2017 05:50 PM)quo vadis Wrote:  

(05-03-2017 10:00 AM)Frank the Tank Wrote:  As others have stated, the rights fees from 20 years ago are basically irrelevant compared to now. There are much broader overarching factors that apply to sports rights in general (e.g. increases in cable subscriber fees where sports networks received disproportionate benefits, the relative value of sports programs and other live events rising due to DVRs and on-demand streaming, etc.). So, the *relative* value of sports rights has increased drastically compared to virtually all other forms of TV programming over the past 20 years.

But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

you are not accounting for inflation and competition in your numbers. The NFL becomes more valuable because I have fewer options where people won't skip commercials.

Inflation applies to all things so cancels out. Frank said:

"With overall revenue still going up during that time period (with higher ad rates and cable subscriber fees), a much higher portion of that revenue is getting dedicated to sports today."

... which implies that the big reason that sports fees have gone way up is that advertisers dedicate the same basic pool to TV advertising over time, such that if your ratings stay the same while others drop, you will get a larger share of that pool.

But that just doesn't make sense. What makes sense is that the pool will shrink and the dollars you get will stay the same, adjusted for inflation. FWIW, $10m in 1997 is worth $15m today, but that's not much of an increase compared to what we've seen.

Bottom line: correlation between ratings and payments doesn't seem strong at all. Football ratings have been flat over time while fees have surged.

This assumes that the value of viewers is constant. However, it isn't.

Advertisers of products targeted a difficult to reach audiences will pay a lot more to reach those audiences than advertisers of products targeted at easier to reach audiences. It's a function of supply and demand. The rise of video games as a popular entertainment and other factors have made it much more difficult for advertisers to reach males 18-34 and 18-49 than it was twenty years ago. As a result, the price of advertising on programming that reaches this audience is much more expensive than that targeted at women or older males. Sports, particularly basketball, football and soccer, do very well at reaching this demographic. So, even with a constant audience as compared to twenty years ago, advertising rates for programming that reaches this hard to obtain audience have gone up on a real basis (i.e., ignoring inflation).

(05-03-2017 05:50 PM)quo vadis Wrote:  But why should that matter? Made up numbers:

In both 1997 and 2007, a show is worth $1 per viewer.

1997: NFL draws 10m viewers and is paid $10m by advertisers. The #1 OTA scripted show, Friends, draws 30m viewers so is paid $30m.

2017: NFL still draws 10m viewers, but the #1 OTA scripted show draws only 12m viewers.

If in 1997 it was worth $10m to me as an advertiser to advertise on the NFL to reach 10 million viewers, and $30m to advertise on #1 scripted OTA show Friends because that reached 30 million viewers, why would my payment to the NFL rise to $28m in 2017 to reach those same 10 million viewers just because the #1 OTA show today draws only 12 million viewers not 30 million as in 1997?

All that implies is that my payments for the current 2017 #1 OTA show should now be $12m not $30m, it doesn't mean that extra money should go to the NFL, the NFL is still reaching 10 million.

It means I should take the difference, that $18m that used to go to the #1 OTA show, and spend it on wherever those 18 million people went, so to speak, where their eyeballs are instead of either the NFL or the #1 OTA show.

1. Those 18 million are unreachable, at least as a mass audience. The ad budget for Toyota, Ford, Budweiser, Sprite, Taco Bell, Levis and Apple phones is pretty much the same. If you're an ad buying exec at Ford or Apple, you don't get fired because your ads reach X fewer people compared to 1997, you're fired if you lose market share to Toyota or Droid. So live sports wins, as the last audience standing. (Insert "Shut Up And Take My Money" meme from Futurama.)

2. The bigger driver for sports rights is cable subscription fees. And there, having a massive, *LOYAL* audience is critical. What counts is having a sizable number of customers who will threaten to switch providers and actually switch providers if they lose access to Fox News, to Disney Channel for the kids, to their local MLB/NBA teams, to SEC football if it's not part of their cable package.

Notice that, even in quarters where CNN may get better ratings than Fox NEws, CNN can't charge the same subscription price. That's because, for Fox NEws' audience, there really isn't a substitute channel. If CNN went dark on your system because of a dispute, the audience could fill the gap with some combination of MSNBC, BBC World News, low cost local news channels, etc. (I remember when New York 1 used to have anchors read the New York Times, Daily News, Post on the air.) If Fox News gets dropped, that audience is angry enough to act.

Same with sports fans. When the NFC package went from CBS to Fox lo these many years ago, dozens of affiliates followed, 60 Minutes and CSI be damned. ESPN has been able to charge premium subscription fees because sports fans aren't paying for cable so they can NOT watch top NBA and college games.

Part of the reason that the G5 never got a taste of the last sports rights bubble was because there just wasn't the critical mass of fans who demanded that CBS SportsNet be added to their cable package so they could watch their beloved CUSA/MWC teams.

So, in response to your original question, focusing on the ratings is probably deceptive. It's about what programming moves thousands and millions to add and drop cable subscriptions. We're back to the dawn of cable, when MTV's ad tagline was "I WANT MY MTV"--a rallying cry to lure customers to sign up for cable.

At the risk of repeating myself, the trivial answer to quo's hypothetical scenario is: advertisers are much smarter than just using a single viewership number to determine the payout. It's way more complicated to that.

And perhaps that puts an end to the thread title question?

I think a lot of analysis on what a conference is worth relates to status and football attendance.

SEC & B1G draw the most in football and are the primary conferences in their regions. They are also P5 conferences.

The B12 is making what it is largely because it's a P5 conference which has a certain market value. Before the defections of Nebraska, Colorado, Missouri and TAMU it was comparable in football quality to the B1G or SEC.

ACC is a P5 with the best basketball and most TV markets plus a few valuable FB properties.

AAC is a G5. Football attendance is right around 30,000 a game conference with. Only sent 2 teams to the NCAA tournament last season. There are no grounds for a P5 contract here.

(05-06-2017 09:10 AM)MplsBison Wrote:  At the risk of repeating myself, the trivial answer to quo's hypothetical scenario is: advertisers are much smarter than just using a single viewership number to determine the payout. It's way more complicated to that.

And perhaps that puts an end to the thread title question?

"Way more complicated" = many factors impact on rights fees, which implies that ... there's a limited causal relationship between ratings and rights fees.

(05-07-2017 09:02 AM)quo vadis Wrote:  

(05-06-2017 09:10 AM)MplsBison Wrote:  At the risk of repeating myself, the trivial answer to quo's hypothetical scenario is: advertisers are much smarter than just using a single viewership number to determine the payout. It's way more complicated to that.

And perhaps that puts an end to the thread title question?

"Way more complicated" = many factors impact on rights fees, which implies that ... there's a limited causal relationship between ratings and rights fees.

I think what you heard was it's an impact of ratings and subscriptions with subscriptions being driven by numbers (ratings) + loyalty. So ratings has an impact but ratings coupled with a strong brand attachment that will cause people to switch is way more important.

(05-07-2017 09:02 AM)quo vadis Wrote:  "Way more complicated" = many factors impact on rights fees, which implies that ... there's a limited causal relationship between ratings and rights fees.

At the end of the day, what matters the most to advertisers? Selling their (clients') stuff.

What factors are likely to correlate with a higher chance of sales?

- increased viewership, obviously is one factor. On paper, it should make sense that if a larger audience observes your ad, then there's a higher chance someone will act

But what else?

- the demographic of the audience is a huge, huge factor


And I'm certain there are other factors that could be relevant. From time of day, to time of year, to etc etc