Virtually from the moment the sports TV wars started, I have been wondering why ESPN seemed to have such a myopic fixation on NBC’s attempts to build the NBC Sports Network that it was willing to essentially give Fox rights left and right to potentially create a far more imposing competitor sooner than NBC might ever pose – especially when ESPN gave so many statements early on effectively dismissing NBC’s prospects of competing with them. Starting with the alliance for Pac-12 and Big 12 rights, continuing with Fox’s big wins of UFC and World Cup rights, up to the first rumors of the Fox Sports 1 plans, and right on through the bizarre saga of the baseball renegotiations, my bewilderment at ESPN’s game plan has grown and grown.
In retrospect, I shouldn’t have been so confused. In fact, maybe everyone should have written off NBC’s prospects of competing with ESPN from the start. Comcast’s cable operator business, seemingly the ace in the hole for carriage of all its other networks, may well be the Achilles heel that forever cripples NBC’s efforts to get any sort of head start.
What clarified this for me was a post on the Frank the Tank’s Slant blog earlier in the week (specifically the third full paragraph). Essentially, it suggests that what ESPN fears is not so much NBC as a competitor for sports rights and eyeballs as Comcast as a business partner potentially holding its own ace in the hole. ESPN really doesn’t fear any entity eating into its dominance, but what it doesn’t want in a million years is Comcast owning a sports network that might remotely be construed as anywhere close to on par with ESPN. An even remotely strong NBC Sports Network could give Comcast leverage to lower the rights fees it pays ESPN for carriage, and that could eat substantially into ESPN’s bottom line when combined with the impact of the sports network itself. ESPN may not want any real competitors to its dominance, but it really doesn’t want NBC to be one of them. It’s perfectly happy to build up Fox as its “competitor” if it means avoiding the fate a competition with NBC would entail.
I suggested that for ESPN, the smart play in the Major League Baseball negotiations was to pit NBC and Fox against one another, and that its move to grab all three of its existing primetime packages was therefore a mistake because it all but eliminated NBC from the bidding. But ESPN had a reason for its myopic focus on NBC. If it wanted to pit Fox against anybody, its first choice would be to pit it against Turner, or even CBS, before NBC. That’s exactly what it did by grabbing all three primetime packages, forcing Fox and Turner/CBS to slug it out for what initially appeared to be a single remaining package. (That ESPN didn’t come back in to grab more of the postseason when it turned out to be two packages after all remains mystifying.)
Comcast (and Cablevision, and to some extent Time Warner Cable) can leverage its cable business to build its regional sports networks. Most areas have one or two dominant cable providers, so they are primarily using regional sports networks to pry customers away from satellite companies like DirecTV, knowing they have few other options. In most cases, when there is one regional sports network in an area it develops a complete monopoly over the area’s sports teams, with the exception of team-owned networks. To my knowledge, there are only three places in the entire country where a Fox Sports network competes with a network owned by a cable operator: Los Angeles, where Fox Sports West and Prime Ticket compete with Time Warner Cable SportsNet; the South, where Fox Sports South and SportSouth compete with CSS; and Florida, where Fox Sports Florida and SunSports compete with Bright House Sports Network. But while the jury’s still out on TWC SportsNet, CSS falls far, far short of Fox’s monopoly over the South’s professional teams, with even its SEC coverage stuck behind Fox in the pecking order, and Bright House is so far further behind than that it barely even qualifies. Neither of them can use their networks to hold Fox hostage.
But when Comcast runs a national sports network, it’s competing on a completely different playing field. Its status as a cable operator becomes far less important because it must operate primarily as a media company, negotiating with other cable providers. Its goal is different as well; where a regional sports network seeks to form a monopoly over a market, the sports TV wars have all along been all about the opposite: to compete with ESPN. But it still remains a cable operator and customer of all the other sports networks as well, and the two roles must necessarily intersect. Nowhere does Comcast have so complete a monopoly that it can force favorable terms for its own sports network on anyone, because it must necessarily compete nationally, a problem numerous league-owned networks (as well as beIN Sport) have run into in recent years. Carriage on satellite providers wasn’t enough to get NFL Network on cable companies without the added carrot of RedZone, nor is carriage on some cable providers enough to get the Pac-12 Network on DirecTV. But it can do just enough to put pressure in the other direction on behalf of its cable business – but only if NBC Sports Network is already big enough to do so, and ESPN wants to make sure it never is.
If TWC SportsNet really takes off, especially if it wins Dodgers rights, it’s entirely possible it could force Fox to leave the Los Angeles market completely. Certainly whenever Comcast has moved into a market, Fox has pulled up its tent poles and fled town. When Comcast signed up with the Astros and Rockets to form CSN Houston, Fox shut down FS Houston virtually the instant its last Astros game ended. Fox also knew FSN Chicago wasn’t long for this world when the area’s teams signed up with Comcast as well. As I suggested before, Fox realizes that as a pure media company without a cable operator business, it is at an inherent disadvantage in the regional sports network market, and I think that’s why it is thinking of changing its sports strategy away from its current mix of RSNs and sport-specific networks and towards the formation of at least one general national all-sports network – and why I think it’ll cannibalize FSN’s remaining national programming to do so.
I have to imagine the NHL has to regret shacking up with NBC now, staking the future growth of the sport to Comcast’s ability to grow the NBC Sports Network at a time when that ability looked a lot bigger than it actually was. Had the NHL’s contract come due even one year later, I have no doubt it would have come crawling to Fox to take it in; as it is, it’s now stuck with NBC for the rest of the decade, at which point (assuming the Internet hasn’t rendered TV rights meaningless by then) I fully expect it to beg and plead with another entity to take it in anyway, pending the outcome of NBA negotiations and the overall course of the sports TV wars. (Having another two years on its previous NBC and Versus deals also means any customers wouldn’t have to worry about the lockout the NHL is going through right now. Just reason #2246 why Gary Bettman is clearly a mole planted by David Stern to undermine the NHL.)
This also affects how I see future contracts going down. I now suspect Turner has the lead over Comcast for whatever Thursday Night games the NFL elects to sell (though I still doubt they sell any), because if Comcast starts looking like a legitimate threat Fox and especially ESPN will go all-out to keep them down. (Fox would be the no-brainer favorite if not for its existing NFC package; as it stands I still see ESPN in third place, not that far behind Comcast.) Anyone looking for the return of “Roundball Rock” can forget about it right now, because it’s far more likely you’ll see Fox make a serious run at NBA rights than NBC, especially with NBC’s existing NHL commitments. And it’s hard for me to see a future where NBC has much of a chance to win MLS rights long-term, especially with Fox looking to complement their World Cup rights; I don’t think it’s far-fetched for Fox to beat both incumbents and rejoin MLS two years after losing those rights to NBC, especially as Fox Sports 1 wasn’t being bandied about at the time. Unless Comcast wanted to separate all its non-RSN sports properties, including the entire NBC broadcast network and stations, from at least its cable business, the NHL might remain now and forever the only thing keeping NBC Sports Network from CBSSN’s level.