A whole new ballgame for ad revenue

Major sports leagues are controlling — and making money on — more of their content

With the announcement last month that CBS Sports' second-in-command, Tony Petitti, has been named CEO of the MLB Network — expected to debut Jan. 1 — another step was made toward greater control of the sport's content. Being touted by Major League Baseball as the largest cable launch in history, the net already has signed agreements to be seen in 50 million homes.

Baseball is hardly alone among U.S. sports leagues in seeking to have more control of its programming, thanks mostly to the ad revenue associated with new distribution channels. Major League Soccer, the NBA, the NFL and the NHL have committed to delivering content — including games, highlights and original programming — in ways that better suit the needs of fans and advertisers.

Consumer adoption of broadband and mobile video services allows the leagues "to crawl into crevices that weren't there before," said Andrew Zimbalist, sports economist and economics professor at Smith College. "They are creating an asset that hadn't existed in the predigital days."

In doing so, league execs said, they're creating deeper connections to their viewers, sponsors and advertisers. They're also generating additional revenue to complement the rights fees received from the broadcast and cable networks.

Said Rob Correa, senior vp programming at CBS Sports, "It's a long-term insurance policy for TV rights." He also said no one can predict what the business models for the mainstream networks will look like in five to 10 years.

MLS commissioner Don Garber added that leagues no longer are solely dependent "on their relationships with their broadcast partners for revenue generation."

The MLB Network, which is building its ad sales team, has not yet reached out to ad buyers, according to Tim Brosnan, executive vp business at MLB. But internal discussions are taking place with MLB Advanced Media, a stand-alone interactive media entity created in 2000, to see how the two MLB-owned companies will work with each other.

Over at the NBA, Turner Sports and the league in mid-January revealed plans to extend their 23-year partnership to jointly manage a portfolio of the NBA's digital businesses. Turner will run this out of its Atlanta production facility. Notably, the NBA was the first sports league to launch a cable network, in 1999.

As of October, to coincide with the 2008-09 season (and running through 2015-16), Turner assumed responsibility of NBA TV, the league's 24-hour digital network; hosting and operating the NBA.com network; operating NBA League Pass, the league's out-of-market game package; and running its broadband and wireless businesses. TNT provides talent from the TV shows "NBA on TNT" and "Inside the NBA."

Meanwhile, Garber emphasized that the pro soccer league is focusing on extending its Web site and mobile digital platforms. As the youngest league (it formed in 1996), he noted that it's not yet big enough to have its own cable channel. This extended digital play will include the creation of longform content.

MLS has taken steps toward entry in the entertainment business. Six months ago, it created the MLS Media Committee, which is populated with such talent as film producer-director Joe Roth, formerly chairman of Fox, Revolution Studios and Walt Disney Studios, and Andrew Hauptman, a film producer and chairman and CEO of Andell Holdings, an investment firm that works with entertainment companies. Garber said they will be integral in the decision- making process for producing original content for the platforms, including online and mobile.

In October, the NHL launched the NHL Network in the U.S., which offers fans content 24/7 and is modeled after the structure of its Canadian cable net (also called NHL Network). The creation of NHL Network prompted a redesign of the league's broadband player last month; formerly NHL TV, it has been rebranded as the NHL Network Online to more closely align the platforms, said Larry Gelfand, senior vp media sales.

"We specifically wanted to rebrand to synergize with on-air," Gelfand said.

In addition to game broadcasts, the NHL is delivering original content to the Web. This includes "The Hockey Show," a daily live-studio production that features, in between games, on-air hosts and lift-outs from the NHL Network program "On the Fly."

"Fans are more empowered with content on the Web, and that's spawning a greater interest in 24/7 access both online and on-air," Gelfand said.

The NHL also offers a mobile component delivered through Verizon Wireless. Offerings include mobile video alerts of game highlights.

Perhaps the most successful of the league-owned networks, according to some industry execs, is the NFL Network, created in 2003. While its intention was to provide unique access to its content on nongame days for fans and advertisers, in September the league placed digital center stage when it reclaimed the rights to NFL.com, which CBS SportsLine had been managing. Previously, there had been little interaction between the network and the Web site, but because of the change in media consumption patterns, NFL.com was moved in-house.

"Television and digital are absolutely connected to co-exist with our fan and advertising base," said Ron Furman, senior vp customer marketing and sales at the NFL.

Over time, what the leagues ultimately are trying to do, according to David Carter, executive director at the Sports Business Institute, is effectively become holding companies "so you can maybe look at a league as a parent company or conglomerate and look at their media distribution wing or subsidiary as another business enterprise."

Shahnaz Mahmud is a media reporter for Adweek.
comments powered by Disqus