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Potential Fox-Disney Deal & ESPN impact
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Frank the Tank Offline
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Post: #31
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 02:54 PM)JRsec Wrote:  
(12-06-2017 02:30 PM)MissouriStateBears Wrote:  
(12-06-2017 02:21 PM)JRsec Wrote:  
(12-06-2017 12:06 PM)lance99 Wrote:  
(12-06-2017 08:24 AM)BadgerMJ Wrote:  This sounds to me like a recipe for disaster if you're college sports.

If Fox is getting out of the regional sports game (combined with the up to know unknown status of their ownership in BTN) that would leave almost everything in the hands of ESPN. Makes me wonder if Fox will continue to be a player in college sports, ESPECIALLY college football.

How could ESPN having a stranglehold on the conference networks PLUS owning most of the rights to games be a good thing? If you think there's bias in coverage and reporting now, just wait until they're the only show in town.


IMHO, I do not see that happening. It would never make it through Anti-Trust. I know that Fox is willing to unload Channels, but the Mouse would have to give up something also. Now it makes sense why ESPN has been getting rid of people. That might be the Channel on the chopping block just to make this deal.....

I think FOX and ESPN both realized that they overpaid for the last Big 10 contract.

5 of the top 10 college football games were Big Ten games. They didn't overpay for it.

6 of the top 10 were SEC games, but that has nothing to do with whether or not they overpaid for those games. The ROI determines that. And as long as more entities bid for primary rights they will pay more. It doesn't destroy the motivation to broker rights or the motivation for interested parties who don't make college sports their primary business to prefer to buy their content from a provider like ESPN at rates where they have more flexibility and better content than if they bid.

Now, now. This has nothing to do with whether there was an "overpayment" for the Big Ten rights. If anything, if ESPN is buying the Fox RSNs, that means that they're doubling or even tripling down on justifying rights fees. In just a single example, Fox is under a $3 billion 20-year contract for *only* the Angels in *only* the Los Angeles market. Think about that: this is $150 million per year until the 2030s for a team that isn't even the top MLB franchise in its own market and whose TV viewership averages 62,000 households per game:

https://www.forbes.com/sites/maurybrown/...533b94204d

These local TV deals are actually quite huge across the board and every bit on par or even more than their national TV contract counterparts. They are almost all universally very long-term contracts (which, to be sure, is what those RSNs want because their existence is completely tied to having local team rights). Who knows what ESPN's long-term strategy will be with these RSNs, but rest assured that it's not to get away from rights fees. The rights fees for the Big Ten and SEC are actually rounding errors by comparison with the outstanding obligations that these RSNs have in all of their local contracts.
(This post was last modified: 12-06-2017 03:17 PM by Frank the Tank.)
12-06-2017 03:14 PM
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JRsec Offline
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Post: #32
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 03:14 PM)Frank the Tank Wrote:  
(12-06-2017 02:54 PM)JRsec Wrote:  
(12-06-2017 02:30 PM)MissouriStateBears Wrote:  
(12-06-2017 02:21 PM)JRsec Wrote:  
(12-06-2017 12:06 PM)lance99 Wrote:  IMHO, I do not see that happening. It would never make it through Anti-Trust. I know that Fox is willing to unload Channels, but the Mouse would have to give up something also. Now it makes sense why ESPN has been getting rid of people. That might be the Channel on the chopping block just to make this deal.....

I think FOX and ESPN both realized that they overpaid for the last Big 10 contract.

5 of the top 10 college football games were Big Ten games. They didn't overpay for it.

6 of the top 10 were SEC games, but that has nothing to do with whether or not they overpaid for those games. The ROI determines that. And as long as more entities bid for primary rights they will pay more. It doesn't destroy the motivation to broker rights or the motivation for interested parties who don't make college sports their primary business to prefer to buy their content from a provider like ESPN at rates where they have more flexibility and better content than if they bid.

Now, now. This has nothing to do with whether there was an "overpayment" for the Big Ten rights. If anything, if ESPN is buying the Fox RSNs, that means that they're doubling or even tripling down on justifying rights fees. In just a single example, Fox is under a $3 billion 20-year contract for *only* the Angels in *only* the Los Angeles market. Think about that: this is $150 million per year until the 2030s for a team that isn't even the top MLB franchise in its own market and whose TV viewership averages 62,000 households per game:

https://www.forbes.com/sites/maurybrown/...533b94204d

These local TV deals are actually quite huge across the board and every bit on par or even more than their national TV contract counterparts. They are almost all universally very long-term contracts (which, to be sure, is what those RSNs want because their existence is completely tied to having local team rights). Who knows what ESPN's long-term strategy will be with these RSNs, but rest assured that it's not to get away from rights fees. The rights fees for the Big Ten and SEC are actually rounding errors by comparison with the outstanding obligations that these RSNs have in all of their local contracts.

Frank, I was pointing out that there is market for essentially wholesaling rights to games if ESPN wanted to pursue that. And in a market where there was a company willing to be the distributor they could still make their full mark up for product broadcast on their home channels, ESPN & ESPN2 for instance, and actually fill a niche for streamers and mainline channels whose primary business is not sports broadcasting by wholesaling (leasing them the rights on a game by game format) That would given the leasing entities more flexibility than buying the rights to just 1 conference. And it would lessen the overhead for the rights purchases if they weren't all bidding against one another.

My reference was that without FOX and ESPN bidding against each other for portions of the Big 10 rights that they could have put less into it. So if FOX wanted out of the college sports rights investments they could probably lease better games from ESPN to go out over FS1 and FS2 than they currently purchase.

ESPN has divested itself of personalities and some production personnel, but stands to gain more rights. I'm postulating that they may well be contemplating being the go to broker for games to streamers and mainline networks and possibly even to FOX.

What they gain ancillary in the process they can monetize as well. Now in this case the primary reason for the deal (movie rights for their own original content) is fairly obvious, but the sports if handled properly could also solidify their position within the industry by contracting for, and then brokering those rights. Their clients would enjoy flexibility in scheduling and ESPN a lowering of the overhead in the process by encouraging fewer bidders.

I did say the same was true of the SEC's last rights deal.
(This post was last modified: 12-06-2017 03:48 PM by JRsec.)
12-06-2017 03:41 PM
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Wolfman Offline
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Post: #33
RE: Potential Fox-Disney Deal & ESPN impact
ESPN is in the entertainment business. Their only obligation is to show the events that make the most money. That's business not bias. Nobody complains about CBS not showing WAC games or NBC not showing CUSA games. Why is ESPN being held to a different standard?

ESPN isn't losing viewers. Cable operators are losing subscribers and, yes that is a loss of revenue for ESPN. However, more people are watching sports so ad revenue goes up. I have no idea if the ad revenue increase offsets the subscriber losses.
12-06-2017 03:46 PM
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Post: #34
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 02:12 PM)Frank the Tank Wrote:  
(12-06-2017 12:06 PM)lance99 Wrote:  
(12-06-2017 08:24 AM)BadgerMJ Wrote:  
(12-05-2017 11:31 PM)CarlSmithCenter Wrote:  story here

If ESPN takes over the regional Fox Sports stations could it add inventory to both the SEC and ACC Networks and perhaps lead to a merger of several of the Big 12-State channels into some sort of Big 12 network? Seems like it would be easier to work out some sort of co-branding/sister station affiliation with the LHN if the lesser tier Big 12 rights come under the purview of the House of Mouse...

This sounds to me like a recipe for disaster if you're college sports.

If Fox is getting out of the regional sports game (combined with the up to know unknown status of their ownership in BTN) that would leave almost everything in the hands of ESPN. Makes me wonder if Fox will continue to be a player in college sports, ESPECIALLY college football.

How could ESPN having a stranglehold on the conference networks PLUS owning most of the rights to games be a good thing? If you think there's bias in coverage and reporting now, just wait until they're the only show in town.


IMHO, I do not see that happening. It would never make it through Anti-Trust. I know that Fox is willing to unload Channels, but the Mouse would have to give up something also. Now it makes sense why ESPN has been getting rid of people. That might be the Channel on the chopping block just to make this deal.....

I'd disagree in this case. There really isn't an antitrust case here - it's arguably just taking one combination of national cable channels with RSNs under the Fox umbrella and transferring those RSNs to a different combination of national cable channels under the Disney umbrella. Plus, let's be realistic here: Fox is going to get treated in this deal quite a bit better by the current powers that be in Washington compared to Time Warner/AT&T (with CNN involved).

And there are a number of independent competitors in the field, depending on how you count them there are like 32.
Out of the NBA, NHL, MLB, and MLS non-Fox RSNs have 30+ teams signed up.

With the inventory that ESPN holds and throws on to ESPN3, I suspect the mouse's lawyers are going to be able to show that consumers will benefit from more variety in live programming than is currently available.
12-06-2017 04:01 PM
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Post: #35
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 02:21 PM)JRsec Wrote:  
(12-06-2017 12:06 PM)lance99 Wrote:  
(12-06-2017 08:24 AM)BadgerMJ Wrote:  
(12-05-2017 11:31 PM)CarlSmithCenter Wrote:  story here

If ESPN takes over the regional Fox Sports stations could it add inventory to both the SEC and ACC Networks and perhaps lead to a merger of several of the Big 12-State channels into some sort of Big 12 network? Seems like it would be easier to work out some sort of co-branding/sister station affiliation with the LHN if the lesser tier Big 12 rights come under the purview of the House of Mouse...

This sounds to me like a recipe for disaster if you're college sports.

If Fox is getting out of the regional sports game (combined with the up to know unknown status of their ownership in BTN) that would leave almost everything in the hands of ESPN. Makes me wonder if Fox will continue to be a player in college sports, ESPECIALLY college football.

How could ESPN having a stranglehold on the conference networks PLUS owning most of the rights to games be a good thing? If you think there's bias in coverage and reporting now, just wait until they're the only show in town.


IMHO, I do not see that happening. It would never make it through Anti-Trust. I know that Fox is willing to unload Channels, but the Mouse would have to give up something also. Now it makes sense why ESPN has been getting rid of people. That might be the Channel on the chopping block just to make this deal.....

I suspect other. What is it that ESPN has cut? Unneeded production staff and expensive talking heads. What is it that they are buying? Rights. Why would both of these things be happening simultaneously? Because they are going to change the nature of who they are.

Sure they'll keep ESPN1 & ESPN2 and maybe one other channel for content broadcasts. But what they've set themselves up to be (if they follow the direction they are headed to its conclusion) is a broker. The can provide product to streaming services, conference networks, their own stations, and perhaps even to some mainline networks too.

I think ESPN has looked at the changes coming in sports broadcasting and has decided to be what is essentially a wholesaler of the inventory. They keep their place in the mix, but they buy the rights and for a wide array of games they sell them based on their projected drawing capacity.

Let's say they did this with NBC, ABC, and CBS. All of the sudden the three mainline networks aren't limited to just one conference from which to select the best games of the week. Let's say that the Irish have a lousy year, NBC might rather show PAC or Big 10 games instead and let the slumping Irish find their way into a streaming slot where their fans pay for the right to watch a lesser game. Or if Alabama slumps and the SEC has a bad year CBS isn't stuck with just SEC content.

It would be cheaper on the mainline networks, and probably more productive to simply purchase content a week or two out and hedge their bets on their investment and let ESPN handle the contracts and rights and then sit back and collect the ad revenue.

ESPN1 and ESPN2 become like an outlet store where ESPN can monetize fully their own product, but since they are making money on what they distribute to the others too then those games are just gravy.

The customers would be satisfied because even more games will be available and in many formats.

Now this will be bad for the conferences if the networks aren't in bidding wars for their product. So consequently larger coalitions (not necessarily conferences) will be formed for collective bargaining and therein lies the balance.

I think FOX and ESPN both realized that they overpaid for the last Big 10 contract and that 6 years was chosen as the duration so that they could figure out what to do about it. Well, it may be happening now. We'll see.

Most people aren't surprised to learn Amazon is the nation's 7th largest retailer. What they generally don't know is that a lot of the product sitting in Amazon warehouses isn't owned by Amazon. It's owned by Bob's Kitchenware and Betty's Gifts and a few hundred others.

The seller buys to have the product shipped to Amazon's facilities and when an order comes in Amazon takes the money, pulls the product of the shelf and ships it and remits the money to the seller minus Amazon's fees for handling the transaction.

That's how Amazon can afford to have odd items in stock that are hard to find, some niche retailer is selling via Amazon.

Now something that is a good seller? Amazon will cut its own deal with the maker and sell direct.

ESPN is going the way of Amazon. They are going to pay to stock the inventory they know they can sell at a premium and in volume and the low ROI stuff? They'll sell it but they aren't going to pay the production costs. The seller can handle that and ESPN will give them a commission based on how many watch.

Doing that will free up capital for ESPN to make sure they keep the high return inventory in stock.

Your 100 watt TV station wants football? We can sell you package. CBSSN needs content? We can sell you that. ABC? We got a deal for you. ATT Sportsnet Rocky Mountains? Hey we've got Pac-12 and MWC football you can license.

You get TV via cable/sat/internet bundler? Got a deal for you. You are cord-cutter? Got one for you too.
12-06-2017 04:17 PM
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Post: #36
RE: Potential Fox-Disney Deal & ESPN impact
It is well worth remembering the approach ESPN took with the AAC and MAC.
They bought the whole banana and then sliced and diced it out.

A friend who should know said that ESPN was expensing the rights fees across all telecasts (including ESPN3) and because of that, they were selling CBSSN some AAC games for less than what CBSSN was paying per game for CUSA under the contract prior to the most current one.

Anyone ESPN is willing to do business with can likely buy content direct from ESPN for less than what they have to pay in a bidding environment.
12-06-2017 04:23 PM
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Post: #37
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 04:23 PM)arkstfan Wrote:  It is well worth remembering the approach ESPN took with the AAC and MAC.
They bought the whole banana and then sliced and diced it out.

A friend who should know said that ESPN was expensing the rights fees across all telecasts (including ESPN3) and because of that, they were selling CBSSN some AAC games for less than what CBSSN was paying per game for CUSA under the contract prior to the most current one.

Anyone ESPN is willing to do business with can likely buy content direct from ESPN for less than what they have to pay in a bidding environment.

We will have to see, but Im pretty sure the AAC now realizes that was a mistake. I dont think you'll see that same deal next time up unless ESPN offers a really lucrative early renewal that offers increased money well before 2020. Otherwise, there isn't much reason to make a deal that clearly prevents you from maximizing your inventory value. There is simply little (if any) upside to selling any broadcaster more inventory than they are willing to guarantee windows for. That said, I could see ESPN becoming the buyer/reseller for low value third tier stuff. That might make some sense for both the conferences and ESPN.
(This post was last modified: 12-06-2017 05:23 PM by Attackcoog.)
12-06-2017 05:19 PM
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Post: #38
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 05:19 PM)Attackcoog Wrote:  
(12-06-2017 04:23 PM)arkstfan Wrote:  It is well worth remembering the approach ESPN took with the AAC and MAC.
They bought the whole banana and then sliced and diced it out.

A friend who should know said that ESPN was expensing the rights fees across all telecasts (including ESPN3) and because of that, they were selling CBSSN some AAC games for less than what CBSSN was paying per game for CUSA under the contract prior to the most current one.

Anyone ESPN is willing to do business with can likely buy content direct from ESPN for less than what they have to pay in a bidding environment.

We will have to see, but Im pretty sure the AAC now realizes that was a mistake. I dont think you'll see that same deal next time up unless ESPN offers a really lucrative early renewal that offers increased money well before 2020. Otherwise, there isn't much reason to make a deal that clearly prevents you from maximizing your inventory value. There is simply little (if any) upside to selling any broadcaster more inventory than they are willing to guarantee windows for. That said, I could see ESPN becoming the buyer/reseller for low value third tier stuff. That might make some sense for both the conferences and ESPN.

But who will be bidding?
Fox Sports is obviously scaling back. CBS is relying more on sublicensing. NBC is still out there but by history they are bargain hunters who only pay big for really big things (like SNF and Olympics).
12-06-2017 05:29 PM
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Post: #39
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 05:29 PM)arkstfan Wrote:  
(12-06-2017 05:19 PM)Attackcoog Wrote:  
(12-06-2017 04:23 PM)arkstfan Wrote:  It is well worth remembering the approach ESPN took with the AAC and MAC.
They bought the whole banana and then sliced and diced it out.

A friend who should know said that ESPN was expensing the rights fees across all telecasts (including ESPN3) and because of that, they were selling CBSSN some AAC games for less than what CBSSN was paying per game for CUSA under the contract prior to the most current one.

Anyone ESPN is willing to do business with can likely buy content direct from ESPN for less than what they have to pay in a bidding environment.

We will have to see, but Im pretty sure the AAC now realizes that was a mistake. I dont think you'll see that same deal next time up unless ESPN offers a really lucrative early renewal that offers increased money well before 2020. Otherwise, there isn't much reason to make a deal that clearly prevents you from maximizing your inventory value. There is simply little (if any) upside to selling any broadcaster more inventory than they are willing to guarantee windows for. That said, I could see ESPN becoming the buyer/reseller for low value third tier stuff. That might make some sense for both the conferences and ESPN.

But who will be bidding?
Fox Sports is obviously scaling back. CBS is relying more on sublicensing. NBC is still out there but by history they are bargain hunters who only pay big for really big things (like SNF and Olympics).

There could be a whole host of new online competitors. Or not.
If the AAC keeps it up, CBS may want to buy content for CBSSN and to complement their SEC game.
12-06-2017 06:37 PM
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Post: #40
RE: Potential Fox-Disney Deal & ESPN impact
(12-06-2017 08:32 AM)bearcatlawjd2 Wrote:  I could see the RSN becoming the landing spot for games currently on ESPN3 or licensed to CBSSN.

I agree. This really helps all the G5 get games on the linear networks. The ACC Network is pulling RSN and Raycom games in 2019 the same way the SEC left RSN for their network. Seeing why ESPN has gotten most of the G5 contracts negotiating at the same time. I see CUSA, MAC and MW doing a combine agreement. The AAC will want there own contract. Should be interesting to watch in the future.
12-06-2017 09:22 PM
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