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Cable Operators

Analysis: Fox Has Eye on Rights Calendar

4/09/2012 7:01 AM Eastern

Fox would love to have a national cable sports network. But can it put together
enough reach, and enough rights?

Publicly, Fox officials are declining comment
about the prospects for such a network, which
would likely be converted from the existing
Speed service, which counts 82 million subscribers.
(Reports of Fox’s intentions first surfaced
via Bloomberg on March 28.)

Reports have indicated the gambit could have
come as soon as next year — with the caveat that
it might not occur at all.

“It’s April. It’s certainly not happening in 2013.
It’s much more feasible looking out 18 months,”
said one executive with knowledge of Fox’s
thinking.

Indeed, 2014 makes more sense as a potential
target launch date. That’s when there could be a
new rights roadmap to guide broadcast and cable
networks. Major League Baseball’s national
rights contract expires after the 2013 season,
while NASCAR’s is up after the circuit’s 2014
campaign.

WORLD CUP IN FOLD

The rights to the collegiate Big East Conference
are also expected to draw industry-wide attention
later this year.

“It makes sense,” Lee Berke, principal at consultancy
LHB Sports, Entertainment and Media,
said. “Fox has a very strong regional sports
network portfolio and the national broadcast
sports portfolio. A national cable sports network
is a natural progression. And it’s doable.”

Fox’s push would put it in competition with
NBC Sports Network, which was rebranded
from Versus on Jan. 2 and now counts some 80
million homes, and the 45 million-subscriber
CBS Sports Network. Both of those services
hold importance to their corporate parents
not only relative to the dual revenue streams
they provide, but in terms of serving as flankers
for the sports broadcast units’ ability to secure
properties.

A potential Fox national cable sports service
could include football and basketball rights secured
from recent deals with the Pac-12 and
Big 12 Conferences, as well as soccer’s 2018 and
2022 FIFA World Cup tournaments.

Fox also has UFC, the premier mixedmartial-
arts outfit, in its corner for the next
seven years, through a $700 million rights deal.
That pact features a quartet of cards on the
broadcast network, plus fights and a reality
show on FX and some 2,000 hours on Fuel.

Berke said he believes Fox would be better off
reversing field again when it comes to making
FX — whose original series and bevy of theatricals
are coalescing to make it one of cable’s
top networks in delivering the Madison Avenue-
coveted demo of adults 18-49 — part of
its sports mix.

“USA Network had some sports properties,
but it is serving NBCUniversal much better as
a pure entertainment play,” he said. “I think the
same would hold true for FX.”

Although UFC executives might welcome
more exposure on the broader-reaching national
sports channel, a vast transfer of the
programming from Fuel would short-circuit
its Nielsen gains.

“UFC has been terrific for Fuel,” said the executive
with knowledge of Fox’s thinking. “It’s doubling
and tripling its audience through UFC.”

Both Fuel and Fox Soccer have been mentioned
as potential starting points for the national
cable sports service, but they only count
37 million and 41 million subscribers, respectively,
totals that place it behind CBS Sports
Network and at half the base of NBC Sports
Network.

Decisions from NASCAR will be central to
any conversion of Speed into a broader national
service. In the past, NASCAR has held talks
with Fox about forming a joint venture. Currently,
Speed airs NASCAR fare, including the Sprint
Showdown and Sprint All-Star Race, its truck
circuit and “happy hour” practice sessions.

“We talk to our partners all the time about the
future,” Steve Herbst, vice president, broadcasting
and global media strategy at NASCAR, said.
“We understand the value of our product and
the opportunities out there for NASCAR. We
greatly value our relationships with our partners.
But our No. 1 priority is our fans, and they
want a dedicated home for their sport.”

Formal rights negotiations are expected to
take place in 2013, with the incumbents Fox/
Speed, TNT and ESPN.

It remains to be seen whether Fox joins the
national sports cable-network business alongside
NBC Sports Network and CBS Sports Network
and proves to be another prospective
outlet for rights-holders and a viable advertising
alternative for clients. If it does launch, it will
likely change significantly over time.

ESPN WON’T WORRY

“What the network is on Day 1 versus Year 10
will be two different things,” the network executive
said. “You don’t think NBC Sports Network
will be disappointed if it’s still all about the NHL
and MLS 10 years from now?”

One thing seems certain, though: It would be
a misguided notion to think that any of these
services will pose a true challenge to ESPN anytime
soon.

The worldwide leader is armed with a monthly
subscriber license fee now in the $5 range. Its
war chest has enabled it to secure long-term
deals across an array of properties, including a
record, $15.2 billion NFL rights extension; the
vast majority of the top college sports events,
minus the NCAA men’s basketball tournament;
as well as MLB, NBA, NASCAR, and Grand Slam
golf and tennis coverage, among others.

“They didn’t really bid for the Olympics and
the 2018 and 2022 World Cups were more important
to Fox,” said a sports media executive.
“But make no mistake, ESPN gets just about everything
they want.”

September