What Hockey Needs, What Soccer is Getting, and Why Sports Cable Ratings Thrive – ESPN

Monday Night Football on ESPN is up over 20% from last season. College football on ESPN had its best year in over a decade, including its most watched game since the 1990’s. The Heisman Trophy presentation reached new high water marks. Last season’s NBA playoffs finished up. During football season ESPN is consistently the highest rated cable network each week, often by substantial margins.

Yes, sports in general and football in particular, are carrying TV ratings across the board, but much of ESPN’s success should be attributed to the marketing machine it’s created. A daily listener to their morning radio show, a few weeks ago I realized all they day on Monday morning is review Sunday’s games and hype Monday nights game, then on Tuesday they spend most of the show recapping Monday night’s game, bringing in a cavalcade of guests. This is not just a recap, its four hours of national radio smacking you in the face. I noticed it because I got sick of listening to it. Then when you turn on ESPN they are live from the sight of the game, it leads Sportscenter for a full 12-hour cycle at a minimum. Go online, same thing. As a more well-rounded sports fan, I was searching for a crumb of baseball coverage from the winter meetings, but nothing – all football, all the time. Even when the MNF game stinks, they still smack you upside the head with it.

Same thing with the Heisman. Cover stories all week, interviews, enough promotions so that you have the time, date, and tag line memorized. However, given how big the NFL is, maybe this would happen anyway, so its last night that really magnifies what ESPN can do. Broadcaster of roughly 90% of the college bowl games, last night ESPN had the less than illustrious Las Vegas Bowl, pitting BYU and Oregon State in what on paper was a decent matchup, but turned out to be a blowout. They moved the top two teams in college basketball to ESPN2 to put the game on the mother ship, then led Sportscenter with Las Vegas Bowl highlights and full coverage from the sight. The Las Vegas Bowl, a 24-point blowout, the lead on a night with NBA action, almost the entire Top 10 in college basketball on the court, and a significant MLB trade? When you have the control to dictate what people watch like they do, its amazing what is possible. If that game was on Versus, you would get a 30-60 second highlight no earlier than two segments into Sportscenter.

Don’t criticize ESPN for it, they are maximizing value of their assets, and the ratings show that people don’t mind. It shows that any sports property not bigger than ESPN, needs to partner with ESPN, notably hockey. ESPN is planning the white glove treatment for World Cup soccer in 2010, and its almost a guarantee that the ratings will set new records for soccer in the US. In the midst of their coverage, its also a guarantee that the NHL playoffs will get buried as ESPN goes double-barreled with World Cup and NBA playoffs.

It’s not the first time I’ve brought up this subject, but I think its worth noting now as ESPN’s tailored programming and the resulting ratings reached new heights this fall, at a time where hockey is more lost in the media landscape than ever before. They need to get on ESPN, they need to get on now, and they need to let ESPN show them how to market superstar athletes to the public.

ESPN Should Apply Mid-Major B-Ball Approach to Football

Spurred by increased media coverage, some talent dilution at top programs from players leaving school, and a run of NCAA tournament upsets mid-major hype hit new levels in college basketball the past decade. It led to an increased national platform, more money, improved recruiting, and overall, a more level playing field with the big boys. Mid-majors will never be on equal standing with BCS conferences, but we have reached the point where it’s not unheard of for mid-majors to get 1, 2, or 3 seeds in the tournament, and never mind surprise, its sometimes expected to see them knock of middle tier teams from big conferences.

These leagues fought an uphill battle and come tournament time always faced with defending what amounts to an easier schedule relative to big conference teams. Never one to miss a made-for-TV opportunity during a lull in the annual sports schedule, in stepped ESPN earlier this decade with Bracket Buster weekend. The premise – match up the best mid-majors across the country to help them boost their profile with a strong non-conference game. ESPN clears out the schedule and showcases these games the entire weekend, brands them, posts attention on the website, dedicates the studio and road show to these games, and gives it the 360-degree ESPN white-glove treatment. It guarantees that as a group the mid-majors get an RPI boost to combat a weak conference schedule and a bunch of them get wins.

College football needs this same event now. Mid-majors have followed a similar trajectory the past five years or so, a few teams paving the way into national prominence, not only breaking through to major but winning. Critics continue to point at the weak schedule these teams play and the current BCS system is biased against these teams playing for the national championship and against having multiple non-BCS teams play in major bowls.

ESPN should pick a weekend around this time of year, preceding the conference championship games, and call it BCS Buster. Schedule 3-5 neutral sites (or at least pick the sites in advance of the season) in different regions and create match-ups among the top non-BCS teams. If only TCU or Boise legitimately has a chance, let them play each other to help the winner get a better shot at a top two spot. Besides the wins and losses, it raises the profile of the leagues and adds legitimacy to both teams. If ESPN applies its hype machine – Gameday crew, primetime audience, top story on Sportscenter, commercials and teasers on radio and TV all week, web integration, the whole nine yards, Boise would not need to hire a PR firm. If it’s better for the two best not to play, the likes of Houston, BYU, and Utah still create a formidable lineup. Outside of the primary matchup, it gives each team a chance to improve its bowl standing, helps recruiting, and starts to create momentum for the following season.

Clearly, the college basketball and football postseasons are two completely different animals, and the nature of scheduling a football differs from a basketball game. That said, the key point here is that football is at the point they need to apply this concept and who better than ESPN to make it happen. I can’t tolerate too many more Indiana-Iowa, Florida-Mississippi State Saturday doubleheaders now that baseball is over.

Basketball Local Streaming Launches, Still Missing Key Target

Earlier this year the NBA became the first league to officially hand over local digital rights to its teams and local media providers, contrary to the tight control that MLBAM has kept over local rights. After no movement last season, and a trial run by the Yankees and Padres during baseball, the Sixers and Blazers both went to market with local streaming offers at the start of this season.

The Blazers plan to charge a la carte or flat rate for the full package of 15 games, but thats where the problem starts – 15 games. Portland plans to stream the 15 games scheduled for over-the-air broadcasts, none of the remaining games to which Comcast Northwest hold the rights. Portland is one of the markets with carriage problems preventing fans from watching the team. CSN Northwest does not have carriage deals with Charter, Dish, or DirecTV.

This is where live streaming is most valuable, the fans who can’t receive the broadcast on television. Those fans likely have a higher willingness to pay for live streaming, a higher likelihood of using advanced online features and becoming the type of engaged user that advertisers covet. Yet, Comcast excludes them, just as the Yankees and Padres did during the season.

We understand offering it to subscribers that also receive the cable network to prevent cannibalization and prevent free riding from undermining the cable business. But its still hard to convince those customers to pay incremental fees to watch on a laptop the same game they can watch in HD on the big screen, though the number of people interested continues to grow.

However, fans that are not cable subscribers – or not subscribers to a provider with carriage of the local rights holder – arguably have more overall value. If CSN has a functional authentication process in place, it could still offer the package for non-subscribers, possibly using price discrimination and charging a higher fee since they don’t technically pay affiliate fees for your cable channel. The team benefits by extending its digital marketing platform and adding value to the advertising inventory, the right holder benefits by luring in valuable new customers. Customers from Comcast competitors, and customers from the same MSO’s that CSN is negotiating carriage deals with. And everyone earns additional revenue.

Why would CSN not want to make money off customers from the same companies that won’t carry its channel. It could help provide leverage in the carriage negotiations. If not, at the very least, it increases revenue and may help add a premium price component to the product if they can charge non-subscribers a higher rate.

The team and rights owner both maintain control and it’s paid content, so I’m not sure why none of the local streaming deals has gone this route yet. It’s possible the authentication schemes are not as advanced as providers would lead us to believe, its possible they want to take baby steps for now, but for streaming to move the needle it needs to be accessible to the entire local market using a well-thought, profitable pricing scheme.

NBA Cinches Critical Cable Carriage Deals

Rumors surfaced last year, following the NBA partnership with Turner about a compromise of lower affiliate fees for expanded coverage on Time Warner Cable. It made sense given the Turner relationship, and as I continue to harp on, is critical as league-owned networks near a make or break tipping point.

In advance of last week’s Opening Night, NBA TV closed carriage deals with Time Warner, Cablevision, and Dish, adding to its distribution roster of Comcast, Cox, DirecTV, and Verizon. The latest additions put NBA TV at 45m homes, a 3x increase from last year’s opening night, and a clear signal the network plans to become a major player.

What the NBA has going for it that none of the other league networks have are the Turner partnership and a strong digital offering that aligns with the on-air product. No, I’m not forgetting the power of MLBAM, but I am accounting for the fact that MLBAM operates in a silo and appears to clash more than integrate with MLB Network – and the league for that matter. However, taking a page from MLBAM’s playbook, NBA Digital recently released a mobile application for its streaming video package and it continues to market and improve the online version. They have done well to leverage TNT talent and production capabilities to create a quality mix of online and broadcast programming.

Thinking bigger picture for a second, while the NFL may command the most demand, the NBA and MLB have the longest season and the most content, two ingredients that work well for media. The demand for the NFL may actually work against NFL Network, since it increases the competition it faces and the event driven nature of football concentrates the competition into certain days and times. Meanwhile, though they have less absolute number of fans, NBA TV has an opportunity to capture a bigger share of the market, and partnering with its top television partner for production and marketing only adds to the possibility.

Long term, if the network can entrench itself with fans, slowly build a stable of exclusive games, grab rights to ancillary basketball events (Olympics, college, overseas, maybe NBA games played overseas), it has a chance to continue to expand that 45m subscriber base and boost its subscriber fees. It’s pulling the right strings hiring solid talent (adding McHale to a cast that include C-Webb) and proliferating digital distribution channels. Within a few years, NBA TV can become a meaningful revenue stream for the league and a serious competitor in the sports television landscape.

Success in media continues to get more difficult with lower barriers driving increased competition and fragmentation. However, NBA TV, and the other league networks have one significant advantage – they own the content. MLBAM has proven on the digital side that managing content correctly can lead to big business, while on the other side the NFL Network shows that just putting games on will not bring customers and providers to their knees.

Similar to my criticism of the NHL Network for not committing to wider carriage and making a strong push, let’s commend the NBA for getting the deals done and putting the resources behind what can become a big future revenue stream for the league that will offset some of the decreases it expects in other business lines.

NHL Trip Abroad Misguided

A few weeks ago the NHL dropped the puck on its new season, which many of you may have missed. Even those who watch hockey might not know opening weekend took place in Helsinki and Stockholm. Another misguided, failed business move by the league, though I can’t say what they failed at since its not clear what the goal was.

For the NFL, MLB, and NBA, international makes sense since these sports are near a saturation point in many domestic markets and need to establish themselves outside the country to develop new revenue streams. Further, most of the world is not as familiar with baseball and football – though baseball has come a long way recently and is big in the Pacific Rim, so the mission of those leagues is part educational, part evangelist, all to drive future business, similar to what the NBA did starting with the Dream Team.

On the other hand, hockey is arguably more popular in some Northern and Eastern European countries than it is domestically. Not to mention the NHL is far from a saturation point in the US, and still has growth opportunities in its home base of Canada. By taking opening weekend out of the country, it became out of mind, out of sight on the sports scene. The games started at noon, a losing proposition during the week or on the weekend against college football. They were buried on Versus, so no casual fan was likely to stumble upon it. And most importantly, the league did next to nothing to market the games, neither hear nor in Sweden, according to reports from the game. If the NHL plans to have the games, at least stand behind the decision and try to make it successful.

Here’s my confusion. No marketing push. No chance that a team will move to Sweden, so cross off market testing. No need to establish the sport there, as its already popular. Maybe I’ll buy extending the NHL brand, but Sweden has produced numerous NHL players, so fans are likely familiar with the league – and Sweden does play in the Olympics, often finishing better than the US.  Attendance was disappointing, and the league garnered no additional media deals or sponsorships (to my knowledge), so not much on the revenue angle.

All this said, what exactly were they trying to accomplish? While they were trying to accomplish this, did they notice they missed another opportunity to gain some notice with casual fans in local team markets by pushing Opening Weekend, or by having a big game on Versus (think Crosby or Ovechkin) to start the season. Instead, local television in Florida decided not to air one of the games in Helsinki. Explain how that helps a struggling franchise.

Hockey may never compete with the other leagues, but with continued in fighting and poor business decisions, its going to move in reverse as smaller sports surpass it.

What to Make of the NHL Network

Earlier this decade starting 24-hour cable networks became the cool thing to do for major sports leagues – NBA TV, NFL Network, more recently MLB Network, and of course the NHL Network. The first three have sustained notable successes and failures, nonetheless most people are aware of the three networks and what their position in the market is. The NHL, on the other hand, is an afterthought.

Few people know about the network, let alone watch it. That begs the question if your brand wants to use television as a marketing tool and revenue-generating utility, how do you plan to succeed with relatively little penetration. Last check the NHL Network is only in about 12mm households (though the number may increase with the Comcast deal), and despite league management saying the goal is wider distribution, I have not heard much of a fight from their camp to achieve this.

Conversely, they don’t have much leverage with cable operators. MLB, NFL, and the NBA each have major national television deals and broadcast and cable that earn substantial ratings, plus MLB and NBA ratings on regional networks often exceed NHL ratings in similar markets. Clearly, the other three sports have much more demand in the US. MLB boasts more content than any sport because of its long season, the NFL has made ancillary events such as the draft and combine into annual media frenzies, and the NBA’s work with Turner have given its network a boost. The NHL has none of that going for them.

The league tried to leverage cable operators by tying its Center Ice out-of-market package to network distribution, but again the package does not have the demand or popularity to force the hand of cable operators. Given the low subscriber penetration rate, and the difficult battle it faces to move the needle on that, plus the minimal subscriber fees it earns from the cable providers, I’d argue the NHL is failing to achieve both goals – marketing to a broader audience and revenue generation. That said, the league should reconsider its network strategy, rather than pursue a losing proposition.

If the league wants to stay in the content business, they should focus on developing shows and licensing them out to regional networks and international providers, rather than striving to program a 24-hour network. This could help reduce costs, while maintaining a revenue stream, and bolster distribution by leveraging with more availability – i.e. RSN’s, other niche sports networks.

Further, NHL’s online presence is well-designed and provides a great fan experience. It can try to shift the network completely online, have free and premium components, still license content out to television networks and web portals, use iTunes and other mobile distribution platforms, and shift the cable provider strategy to more VOD, which they have pursued with Comcast.

As the red-headed step child of major US sports, the NHL needs to stay ahead on the innovation curve and be willing to take more risk. Following the same network model that other leagues use is a doomed strategy for the NHL at this point. The league needs to develop something unique that extracts value from the current fan base (without gouging them), and achieves the reach and relevance needed to expand its fan base.

Versus Needs Big Football Splash

If any doubts remained, football’s booming start on television leaves no doubt that it is arguably the most dominant television franchise. The NFL was up across the board during its first week, even more telling it’s meaningless preseason games ranked near the top of the weekly primetime ratings. The buck doesn’t stop with the NFL though, college football has been on fire as well. Last week’s OSU-USC game was the most watched ever on ESPN (including bowl games), and this week’s UT-Florida game was one of the best on CBS in recent years. Notre Dame has posted solid ratings, as did ESPN’s other big games.

While the NFL’s TV deals are locked up and game packages static for now, college football is not – and it can have a significant impact for a network. We’ve spoke about the upcoming contract negotiations for the ACC, Pac-10, and Big 12. If Versus wants to become a significant player in sports television, it needs to make a big push on one or more of those properties for exclusive basketball and football coverage. Hockey is not and will never be a big enough television property to carry a network. Tour de France and MMA have boosted Versus, but the ratings and revenue will never be mistaken for a Florida State-Miami football game or UNC and Duke basketball games.

Versus tried to make a splash bidding on the NFL Thursday night package, losing out to NFL Network thanks to some extenuating circumstances. That made it clear they want to be a player. More importantly, with deep-pocketed Comcast running the show, Versus has the money it would take to lock up these rights. If Versus can partner with two of these conferences its subscriber fees immediately become more valuable, its distribution would reach the next level, and Ad Sales would receive a jolt.

The conferences also have a lot at stake, mainly they need revenues to match the SEC and Big 10 in order to compete, and they need the marketing machine that ESPN provides its properties. Without other sports to steal the spotlight (i.e. MLB, NBA, NFL, golf, tennis, etc.), Versus can put a conference like the Pac-10 front and center on a national stage, providing the exposure new commissioner Larry Scott seeks.

Down the road, if the plan succeeds Versus would position itself to make serious runs at the NBA, MLB, and maybe even NFL in the future. At some point, though, if Versus wants to be a serious player in ESPN’s world, Comcast needs to push the chips to the middle and go for it. The NHL and bike racing is hardly coveted sports programming. Big college football and basketball – Top 25 games and historically powerhouse schools can move the needle. Add a conference tournament, some bowl games, and suddenly the 1-2 ratings the NHL gets for playoff games move to 3-4 ratings for big college games.

Ancillary to television, additional content and presumably some sports personalities, would make the web property more valuable (though not a hard task given the lack of web presence the network currently has). Destination programming would also make the network more valuable in Comcast’s TV Everywhere push and network of online TV content, providing synergy value across the company. College sports programming also opens the door for content licensing in local markets – another revenue stream to cover programming costs.

It carries risk, but the ratings show football is about as steadfast as you can get with programming and college fans have shown they will find their teams on television. College can take the network to the next echelon, and possibly help get to the tipping point of national prominence where it can get better channel placement and better affiliate deals.