Category Archives: Media

When Will Software Eat The Super Bowl?

Compared to the massive turmoil across all forms of media, the structure of live sports broadcasts looks relatively similar to the way it did 30 or even 40 years ago. National rights are bid on by the big networks, local broadcasts are owned by regional stations. The only major change is the emergence of the leagues themselves as media companies with the NFL, NBA and MLB all having their own dedicated linear cable channel. The checks have grown exponentially and the players at the local level have all consolidated. But for the most part the business of buying, producing and watching sports on TV is the same.

The next 5 years do not look to be nearly as peaceful. When Yahoo! announced it acquired rights to stream an NFL game this October, the blue print for the future started to be unveiled to the casual sports fan. Bob Iger pulled back the curtain more when he described an OTT service for ESPN as inevitable. Now traditional power CBS is streaming NFL games as well.

The cost to acquire these rights is a huge protective moat as are the length of the contracts. For traditional TV companies content rights is a regular operating expense. But for an outsider trying to enter the market a strong balance sheet could become a powerful weapon. Who has the dry powder to dramatically upend live sports broadcasts and with it all of the TV model? Here is a quick list of the companies that have both the means and a strategic connection to the content. Things could look very different when the next large contracts start to expire. Some of the largest checkbooks in the world are technology players that could acquire sports broadcast rights to bring eyeballs to their platforms.

Which Companies Can Use Their Balance Sheet as a Weapon?

Which Companies Can Use Their Balance Sheet as a Weapon?

Early candidates for displacement are the local rights holders outside the NFL/ NBA/ MLB triumvirate. Can a low cost technology player create a more compelling experience for watching the Columbus Blue Jackets or low level Division I Basketball?  Clearly, yes. It’s easy to see a market for fans of Fordham Football or Siena College Basketball agreeing to a paid service that gives us just these games available (ok, maybe I’m the only one for those 2 teams but you get the point).

The best hope for traditional broadcasters may be the leagues themselves. Consumers cannot just up and switch their viewing habits like they moved from print newspapers. Leagues still get to determine to whom they sell rights. They may find they have a real need to maintain the status quo and give up revenue in order to hold on to governmental protections. Leagues enjoy great benefits such as tax exempt status, anti-trust exemption and low interest debt for new stadiums that could be plucked away if there is not enough consideration to local fans. But eventually even that may not be enough. The decline of the TV business model will thin out the margins of ESPN, Fox and CBS over time and watching Monday Night Football on YouTube and the World Series on Facebook will be the outcome.

Shooting Ducks

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Two recent media events point to be a selective misunderstanding of the First Amendment in America today and it’s relationship to free market capitalism.

When A&E chose to suspend Phil Robertson from Duck Dynasty they were not following government orders to silence someone whose comments were rightfully deemed ignorant and hateful by many citizens. Was the network taking a moral stand based on principles? Maybe. More likely they were making a business decision that they would lose more viewers, advertisers, employees and dollars through silence than thru the suspension. It was a business decision that is not regulated by the government.

Today’s New York Times highlights an issue that is strikingly similar to the Duck Dynasty affair. The Times details the blacklisting of Dick Metcalf, a gun journalist who dared to question the hard line NRA stance on gun rights. When readers and advertisers became outraged at the writer’s stance, his employer made the same financial decision AMC did and parted ways with the writer.

Depending on your level of cynicism, the NYT and the “I Support Phil” group are either ignorant of the Constitution or choosing to apply different arguments on similar issues to fit their position on the issue. The typically free-market loving right should be supporting A&E’s freedom to make the best financial decision for their shareholders but instead they decry the infringement of Phil Robertson’s first amendment rights. The Times implies that Guns & Ammo magazine caved to financial interest instead of supporting Metcalf. Again, maybe the magazine was taking a moral stand supporting the 2nd Amendment, but they were likely just making a business decision.

The First Amendment prevents the government from restricting speech, not corporations. When media companies like A&E or Guns & Ammo dismiss employees for their speech the companies are exercising their 1st Amendment rights while making free market capitalist decisions.