New NCAA Tournament Licensing Deal Changing the face of Sports on Television

By Erik Gundersen

On April 22^nd, the NCAA announced a new licensing deal for its most profitable commodity, the Men’s NCAA Basketball Tournament, known to most as March Madness. CBS, which has aired the tournament since the early 80’s, was forced to team up with Turner (Time Warner) to be able to keep the tournament on its airwaves and keep it profitable, as CBS and March Madness have become synonymous with one another.

The fact that CBS had to team up with Turner is a sign of the times for networks. Events such as the Final Four will be shifting to cable stations because networks can no longer turn profits on these commodities, which have been so valuable in the past. It is showing that power is shifting from the networks that broke ground in television to newer cable networks, which show a change in the political economy of media.

In 2010, a tournament in which the “Cinderella,” Butler’s University, came inches from winning it all against perennial power Duke, CBS lost roughly $10 Million. All of this was despite a growth in online ad sales of 20%, just another sign that it is becoming harder for networks to turn profits on sporting events that used to bring in millions for them.

A Duke Player goes up for a shot in the National Championship Game against Butler

Also, at the time of this deal, many believed that CBS’ losses were just one of the many reasons that the NCAA decided to expand the tournament from 65 to 68 teams. The fact that CBS was losing money was a great concern for the NCAA, which gets 98% percent of their revenue from March Madness.  This is another example of big media’s influence on sports commodities because the NCAA did this not only to avoid more teams complaining about not making it in the tourney, but also to give CBS more games to try and gain more ad revenue.

The NCAA tournament, which will begin broadcasting on CBS and the Turner family of networks next year, will be breaking new ground for the tourney. Never before have two different corporations shared the licensing rights to show America’s most exciting sporting event. Not only will this change how we as consumers of this commodity watch the games but it is expected that, with the added value of the tourney, Turner may begin charging higher rates to cable providers to carry their family of networks. If this change does not come in the immediate future, rest assured that it will happen when the Final Four is broadcast on the Turner networks starting in 2016.

The new licensing contract for the Men’s NCAA tournament and the expansion of the tournament to 68 teams is a sign of a power shift from networks to cable empires. Although large media conglomerates own all networks, this shows that in the future some of sports’ most popular and potentially profitable commodities are going to need support from big cable companies because able has two revenue streams, subscriptions as well as ads. With the Final Four being broadcast on cable in 2016, it will only be a matter of time before the Super Bowl, NBA Finals and World Series will be broadcast exclusively on cable. This will end up taking away one of the few things that networks have left, championship sports.

Throughout this entire blog I have tried to show how big of an influence big media has on sports and vice versa. Sports media commodities are an easy way for people to see changes in the political economy of media. I have shown ways in which sports changes media and how media changes sports. They will always be connected and, like it or not, what happens with big media and sports have a huge effect on the political economy of the media as a whole.

Business News Blog

Wall Street Cheat Sheet Article

Business Insider Article on NCAA Online Ad Revenue

Indianapolis Business Journal Article on New Deal

Sports Business Journal Article on the deal

 

Corporate Profile: Comcast, and its control on sports media

By Erik Gundersen

Comcast is a fully diversified company. With their cable packages they provide cable, web, and telephone services in what they call the “Triple Play.” If the merger between Comcast and NBC passes, they will be in 1 out of every 5 television viewing hours. This is added to the fact they also provide Internet for 1 out of every 4 Americans, according to The Washington Post.  What was once a small Mississippi cable provider is becoming one of the most powerful companies in America.

Comcast is not just a service provider. They produce and distribute content through their own pipes. A good example is one of their 10 sports networks. These networks are all over the United States.  From New England to Portland they control how residents of those regions watch their local sports teams. Comcast achieves vertical integration in these markets by controlling the production of content, the distribution of the content and the way by which the areas’ residents consume their content when it comes to sports. In some of these areas, Comcast has full integration, both horizontal and vertical.

In the D.C. metro area they have sports media on lock as well. Comcast Sports Net Mid Atlantic broadcasts the NBA’s Wizards, the Capitals of the NHL, and University of Maryland football and basketball games in the D.C. metro area. Comcast has major control of the cable and Internet services in the D.C. metro area.  Along with the fact that they produce content for these sports teams, they also have naming rights on the University of Maryland’s indoor arena, the Comcast Center.  The University of Maryland controls the day-to-day operations of the Arena, but Comcast produces and distributes their Basketball games, which are then consumed in homes by people who have Comcast’s cable service. The level of control by Comcast in the D.C. metro area is smaller than some of its other markets, but it doesn’t leave room for other media companies to get a piece of the pie.

The floor of the Comcast Center where the University of Maryland plays.

In Philadelphia, along with being the largest cable and Internet provider, Comcast is the majority owner of the 76ers of the NBA and the Flyers of the NHL.  Comcast Spectacor is the division of Comcast that controls these assets. Along with them, they control the two major indoor venues in Philadelphia, the Wachovia Center and the Wachovia Spectrum. Also, to go to any events at these venues patrons need to purchase tickets through comcasttix.com. If you want to watch the Flyers or 76ers, you will have to watch them on the Comcast Sports Net Philadelphia network that produces and distributes the content, which is then consumed in households through the Comcast cable service. Residents of the Philadelphia area are forced to go through Comcast to watch their local NBA and NHL teams. Comcast has synergy in sports media in Philadelphia, one of America’s biggest cities, with complete control of all avenues by which people consume their beloved Flyers and 76ers.

Philly and D.C. are both great examples of Comcast’s power in sports media. Portland, Oregon, the home of the NBA’s Trail Blazers, is another market where Comcast is king of sports media. Comcast, as in D.C. and Philly, is Oregon’s largest cable and Internet provider. Just like in all of the other markets that Comcast controls, there is a Comcast sports network in Oregon, Comcast Sports Net Northwest.  Since Oregon only has one professional sports team, having the control of how people watch their Blazers, is mere child’s play in comparison to what they have achieved in bigger markets. Comcast Sports Net produces and distributes nearly all Trail Blazer content through the Comcast service. Also, Blazer tickets have to be purchased through the comcasttix.com service, as well as any other events that happen at the Rose Garden arena. Also, at the arena, if you want to buy food at the Rose Garden, you have to purchase it from an Ovations kiosk, which is a Comcast subsidiary. Comcast doesn’t own the Blazers or have their name in the Arena but they control nearly all activities concerning the Blazers.

Mike Barrett and Mike Rice, the announcing crew for the Blazers on Comcast Sports Net Northwest

Professional and college sports teams by nature create profitable media commodities and Comcast controls not just these 3 markets but they also control 7 other large sports media markets.  Comcast’s control in these three markets is just one set of examples of their stranglehold on sports media commodities in local markets. They don’t just profit from what they are known for, as a cable and Internet provider. As of March of 2009, Comcast has over 20.1 million customers dwarfing the competition. For sports fans in areas where Comcast reigns supreme, the “Triple Play” understates the power Comcast has. They own teams, venues, ticket services, food service, networks and other entities along with their cable empire. Comcast’s power is unmatched. All of Comcast’s power comes from how they interact with us through media, and sports media is just one of the ways they gain more power. With the Comcast-NBC merger on the horizon, their power will reach new heights, never seen before in the world of media. If the merger is approved, the fans in these 10 markets aren’t going to be the only ones at the mercy of Comcast to watch their favorite teams play on any given night.

Washington Post Article about Comcast-NBC Merger

University of Maryland-Comcast Center

Comcast Subsidiary, Ovations Food Service

Article about Media Market Control by Comcast

Comcast Corporate Site

Comcast Sports Networks

 

The World Cup: One of Sports Media’s most valuable commodities

By Erik Gundersen

Every 4 years, the FIFA Soccer World Cup takes place. This year is a World Cup year. It is not only the world’s largest sporting event but it is probably the most advertised as well. Unless one is living under a rock, we all know the World Cup is this summer in South Africa. The World Cup, which to many may just be a soccer tournament, is in fact a valuable media commodity, which impacts many other markets, all while generating a huge revenue stream for FIFA. Also, it is likely that there will be a large rating increase in the United States due to the nation’s improvement in the sport.

The FIFA (Fédéracion Internazionale de Football Association) which is soccer’s governing body has got all bases covered when it comes to the advertising, the distribution, and the branding of the World Cup. In 2006, FIFA made $1 billion dollars in advertising. One thing that makes the World Cup such a valued commodity is that the sponsorships for the tournament stay constant for the whole duration. Everything in the tournament has a sponsorship. The MVP trophy for the tournament and tournament ball are both sponsored by Adidas who paid $200 Million in 2006 to FIFA, to be the exclusive apparel provider for all gear carrying the World Cup logo. During every game there will be a panel on the field with an Adidas advertisement, with panels for the other official FIFA and World Cup partners such as McDonalds, Coca-Cola, and Hyundai. All of these corporations are paying top dollar to be able to have their names attached to the media commodity that is the World Cup. As partners, the World Cup logo will also be seen on products made by these corporations.

The 2010 World Cup's official game ball made by one of FIFA's corporate partners Adidas

Something different about World Cup partnerships is that they are package deals, including commercials, in-game plugs, as well as being able to have ads on the field. FIFA allows their exclusive partners to be part of the game rather than only air commercials. However, the partnership rights usually only last during the airing of the games themselves. The networks are not forced to allocate all commercial space only for FIFA partners so that the networks can also generate ad revenue from other companies that may not be FIFA partners but have invested a lot in the Cup such as Nike, Pepsi and Puma.

The FIFA profits from the World Cup as a media commodity in other ways as well. The exclusive television rights for broadcasting the World Cup have quite the price tag. In the United States, the rights for broadcasting the games lie with 2 corporations. Univision (Saban Capital Group) and ESPN/ABC (Disney) both reportedly paid $425 million dollars in 2005 for broadcasting rights for the Men’s and Women’s World Cups through 2014 in the United States.  The commodity of the World Cup is by far FIFA’s most profitable.

Not only does the World Cup have synergy with exclusive television rights and advertising partners but the event also inspires third parties to make content about the tournament which in turn gets picked up by FIFA to help the synergy develop even more. Other companies who are not FIFA partners may try to imitate the ad campaigns of the officially sanctioned companies. One of the ways FIFA has developed the advertising “buzz” even more is by having artists whose songs become “the official songs of the World Cup.” In 1998, Ricky Martin performed his song “La Copa de La Vida” at the World Cup Final, which helped launch him into superstardom. In 2006 Shakira and Wyclef Jean performed the number one hit “Hips Don’t Lie” at the final.

Another example of the World Cup's synergy, The World Cup video game made exclusively by EA Sports.

In 2010 FIFA has taken yet another step with the official World Cup song. This year’s World Cup song, a re-written version of “Wavin’ Flag” by Somali-Canadian, Universal Music Group recording artist K’naan was chosen by Coca-Cola (FIFA Partner) as the anthem for the Cup. Given the effort to channel the African spirit that this year’s tournament embraces, it is no shock that the new “celebration version” of “Wavin’ Flag” was chosen. K’Naan has been on tour as part of the FIFA World Cup Trophy Tour sponsored by Coca-Cola, which takes the trophy all over the world en route to South Africa where K’Naan will perform it as part of the opening ceremony. His song has also been translated into other languages for the world’s game.

Akon who is also a Universal Music Group recording artist and native of the African continent made the song, “Oh Africa” as an ode to the world’s largest sporting event and the African continent, which will be hosting its first ever FIFA World Cup. However, likely due to controversy surrounding Akon, Coca-Cola and FIFA did not choose his song. But, Coca-Cola’s major competitor, Pepsi picked up Akon’s song and is now using it in their latest ad campaign for the World Cup featuring many of the game’s biggest stars. The music of the World Cup helps FIFA and other corporations take advantage of the tournament’s impact on world culture.

Corporations are paying top dollar to get a piece of the market that the World Cup creates. The World Cup, as a media commodity, creates synergy. FIFA achieves synergy with music, video games, apparel, corporate sponsorships, and new ad campaigns from third parties attempting to get a piece of the pie. The World Cup is FIFA’s most valuable commodity and this year’s tournament is already generating more revenue for FIFA than the 2006 tournament. The World Cup is a media commodity in a league of its own and when it kicks off on June 11th we will be reminded of its impact both financially and culturally.

Article about exclusive American television rights

Network profits and exclusive sponsorships

List of FIFA’s corporate partners

2006 Ad Revenue from World Cup for FIFA

Growth of revenue from 2006 to 2010 World Cups

Official FIFA World Cup Website

ESPN World Cup Website

Univision World Cup Website

 

Vertical Integration of Media Corporations in the NBA

By Erik Gundersen

If you have been watching NBA playoff games as of late, you’ve probably been watching them for LeBron James, Kobe Bryant, or Dwyane Wade. However, what you get besides the game are lots of commercials during the breaks, references to sponsors who brought you the game and also the name of the arena, which, rarely doesn’t have a corporate name on it. We regularly see these and I know you are probably thinking to yourself, so what? To get their names on the arenas companies have to spend insane amounts of money. Now many media corporations who have naming rights are integrating themselves into every way you consume an NBA game.

It is not just the venue that has a name or a corporation behind it, it’s on the tickets, on your television and, on top of all that, in many cases that corporation is bringing you the broadcast.

The NBA is one of the best examples of this vertical integration by media corporations because it is so easy to see. Take for example the New York Knicks. If you are in the New York area, and you want to go to a Knicks game, you go to Madison Square Garden. Madison Square Garden is as they say on their website, the “World’s most famous arena.” The name has stood for many years but now Madison Square Garden (Corporation) has integrated itself into media and entertainment. The MSG network broadcasts all New York Knicks games, and is wholly owned by Madison Square Garden.  The name of the arena is printed on the ticket to the game, is on the outside of the building, and is on the court itself.  If you can’t make it to the game, you can just flip on the MSG network to watch the game.  All ways to consume the New York Knicks are controlled by and have the name of Madison Square Garden everywhere.

Madison Square Garden

Another example that I couldn’t help but notice while watching the NBA playoffs was the Charlotte Bobcats and their building, the Time Warner Cable arena.  While I was watching the Orlando Magic play the Bobcats in Charlotte I couldn’t help but notice that the game was being broadcast on TNT, a Time-Warner subsidiary. For the national viewer, this gets Time Warner big time exposure. Not only do you see the name of the corporation on the court during the game, but also the announcer constantly reminds you where the game is being played. Also, during commercial breaks, and during the game itself, there is a constant barrage of commercials for other Time Warner programs.

I also investigated what impact this had locally in Charlotte. Time-Warner is Charlotte-area’s largest cable provider. To watch the game in-person or to watch it on television you have to go through Time Warner. Much like the Knicks with Madison Square Garden, consumption of the Bobcats is going to have the Time Warner name attached to it, whether the fan wants it or not.

Finally, is an example with which I am all too familiar.  The Portland Trail Blazers are my favorite team, and are in the midst of a playoff battle. However, during the regular season I can rarely watch their games because of Comcast’s control of the consumption of the Blazers. The Blazers play at the Rose Garden in Portland.  I know it doesn’t have Comcast’s name upfront, but just keep reading. Comcast SportsNet Northwest is the station where nearly all Blazer games can be viewed with the exception of about 20 on national television or on local networks in the Portland (KGW) and Eugene (KEVU) areas. Since I, like many others in Oregon, subscribe to satellite I cannot watch my beloved Blazers when I please. I am at the mercy of Comcast.

Comcast also controls the means by which Blazer fans go to live games. Blazer tickets, and for that matter almost all events at the Rose Garden, are sold through the Comcasttix.com ticket service. Not to mention, on the back of a ticket you can see an advertisement for Comcast’s “Triple Play” service which is a combination of cable, broadband and telephone service. Unlike Charlotte and New York, the media company doesn’t have its name on the arena in Portland, but Comcast controls nearly every way to consume the Blazers.

Comcast Ad on back of Blazers ticket.

Vertical Integration in the media industry has become very common in music, entertainment and movies. The NBA franchises in New York, Charlotte, and Portland are examples of how media corporations are vertically integrating themselves in the sports media industry. From the cable service, to the channel one watches the game on, to the name on the building or the company who sells the ticket, media companies are trying to integrate themselves into all ways of consumption. In these three markets, Madison Square Garden, Time Warner, and Comcast have achieved vertical integration by controlling the ways through which people consume the NBA.

Comcast Corporate

Comcast Tickets Website

Madison Square Garden Corporate

MSG Network Website

Time Warner Corporate

Time Warner Cable Arena

Rose Garden

 

“When SportsCenter Poppin’, Everything Stoppin’”

A Commodity Profile of SportsCenter

By Erik Gundersen

“Dare I say, En Fuego,” “He’s cooler than the other side of the pillow,” “Rumblin’ fumblin’ stumblin,” “Booya!”  All of these phrases have become known in the United States and around the world because of one show, SportsCenter.   SportsCenter is the flagship show for the Entertainment and Sports Programming Network more commonly known as ESPN.  SportsCenter helped turn ESPN in to an international brand, with 46 networks, broadcasted in 16 languages worldwide. The majority of the programming around the world differs, however, one thing is always constant, SportsCenter and its universally known theme music.

History/Context

SportsCenter’s first broadcast was on September 7, 1979 at a studio in Bristol, Connecticut with George Grande as the lead anchor. SportsCenter now has a stable of 16 anchors that are regularly on TV. Now in its 31^st year, SportsCenter is broadcast in America from Bristol, Connecticut and its new Los Angeles studio later in the day. Also, internationally it is in 16 different languages in 200 different countries.  The show typically runs for an hour, with highlights, updates, interviews and analysis on the day’s most recent or topical sports stories.

In 1995, ESPN who was under the umbrella of ABC and the Hearst Corporation, was purchased by one of the worlds largest media corporations, The Walt Disney Company.  20% of ESPN is still owned by the Hearst Company.

Production

On the main channel of ESPN, SportsCenter will air daily anywhere between 8-12 or more times a day depending on the live sports the channel may be broadcasting. It is produced in Bristol, Connecticut with a stable of anchors switching in and out most of the day; however, when the hours get into the early morning on the East Coast, the show shifts scenes to Los Angeles where the regular crew of Stan Verrett and (fellow Duck) Neil Everett take over. Verrett and Everett run until ESPN decides to replay some other sporting event that happened earlier in the day. ESPN does not release figures of how much it costs to produce an episode of SportsCenter, or how much their anchors make. Also, many notable former SportsCenter anchors have found success away from ESPN, such as Keith Olbermann and Dan Patrick who were a couple of SportsCenter’s most recognizable faces.

Left to Right: Neil Everett and Stan Verrett hosts of the late-night SportsCenter in Los Angeles

Since the first broadcast, SportsCenter has prided itself on being the first on the story, the first to break it down, and analyze it into something their viewers can digest. Whether it was a big playoff game in the NBA where LeBron James went for a triple-double, John Lester throwing a complete game gem at Fenway against the Yankees or Ben Roethlisberger running away from pass rushers to win a playoff game like he is dodging those charges from Georgia (too soon?) SportsCenter is there. They cover all aspects of the sports world and that is what helps separate their product from all others who try and get a piece of the sports news market.

There is a barrage of commercials every break from the likes of Pepsi, MillerCoors and Asics trying to attract the everyday SportsCenter viewer who is most likely a male in any age group. I have yet to find how much ad-space is for National Ad campaigns on SportsCenter but an article from LegalZoom.com states that a 30-second spot in a suburban neighborhood on ESPN can be as cheap as $25 dollars; however, the article gives no specifics for the time of day, or what show they will be on. Also, many musicians and groups, like the Plain White T’s that get their song played as the theme on SportsCenter’s Ultimate Highlight, get huge exposure.

Distribution and Consumption

SportsCenter is distributed on ESPN’s two main networks, ESPN and ESPN2 multiple times a day. On any ESPN Radio station, every 20 minutes there is a SportsCenter update.  Also, now on EA Sports video games, such as Madden 10, FIFA 10 and NBA Live 10 there are SportsCenter updates from ESPN Radio if you have an XBOX Live Gold Subscription. The goal of every episode is to bring new information to the viewer, thus there are no DVD sets of old episodes of SportsCenter episodes.  However, you can find some of SportsCenter’s content on YouTube, prefaced with an advertisement and authorized by ESPN, like John Gruden’s QB Camp or their weekly Sunday Conversation.

You can download podcasts from SportsCenter and other ESPN programming at their Podcenter and at the iTunes store.  Certain highlights and other segments of SportsCenter can be found everyday at ESPN.com. The SportsCenter brand spreads its wings even more with hundreds of commercials that air on ESPN and other channels. SportsCenter also has a Twitter page.  All trademarks of ESPN are property of ESPN Inc., which is a subsidiary of the Walt Disney Company and the Hearst Corporation. In June, ESPN will launch ESPN 3D adding to its already large number of ways you can consume ESPN and SportsCenter.

Synergy

SportsCenter has helped ESPN evolve into a brand not only in television but also on the Internet, in radio, restaurants, and merchandise industries. SportsCenter, and ESPN, is one of the Walt Disney Company’s best assets. ESPN, which is the 4th most viewed channel on cable, carries a huge demographic of mostly teen-age to adult and even elderly males.

Also, SportsCenter has also helped ESPN become a figure of pop-culture. By being depicted in sports comedies such as The Waterboy and Dodgeball: A True Underdog Story helps ESPN go way beyond its regular TV audience. SportsCenter has even been idolized in music such as Lil Wayne’s song “3 Peat” in which he references anchor Stuart Scott and the show itself. Interestingly enough, Lil Wayne, who is regarded by some as the “Best rapper alive,” has had a blog for ESPN The Magazine and has appeared on the panel show Around the Horn.  Lil Wayne, also known as “Weezy,” is an example of SportsCenter and ESPN’s synergy because he spread the brand to a larger audience.

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SportsCenter Anchor Stuart Scott

The SportsCenter theme song can be found on the Jock Rock: Volume 1 CD and has developed an association to great plays by athletes with its “Da Da Da, Da Da Da” ending. Even more impressive is that in the crowds at sporting events you’ll likely find a sign saying “SportsCenter is Next,” or when a player makes an impressive play, one of the announcers during the game may say, “man, that ought to be a Top 10 play tonight.”

Conclusion

SportsCenter is one of the media’s most versatile commodities. From when SportsCenter first got big in the late 80’s and early 90’s until now it has transcended its original intention as a sports news show to become a mark of popular culture.  Showing us the large effect SportsCenter and ESPN have on the political economy of media, with its influence on popular culture and its content appearing in more areas of the media we consume than we ever thought possible.  ESPN has all but cornered the sports news market around the world, and who’s to say they are going to be stopping anytime soon?

Walt Disney Corporation Website

ESPN Corporate Website

ESPN.com

Listing of highest rated Media Companies

ESPN Restuarants

SportsCenter and ESPN’s biggest competitor: Fox Sports

Database of SportsCenter Catch Phrases (proof, that something like this actually exists)

ESPN Radio Website

 

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