To say that the ESPN’s acquisition of all 22 of the Fox Sports regional networks is complicated would be an understatement.
That transaction is just part of the Walt Disney Company’s $54.4 billion acquisition of Fox assets that is expected to be completed in the next 12 to 18 months, according to a letter sent from 21st Century Fox executive chairman Rupert Murdoch to his employees. What will happen until then and beyond is anybody’s guess. The only certainty is that none of the organizations involved want to talk about it right now.
A Fox Sports Southwest official said the network would not comment on the deal, and that any questions would be handled by Disney. Officials from Disney and ESPN also did not respond to a request for comment.
Almost two weeks ago, CNBC reported that the deal was likely going to happen. And when when reached for comment, Dallas Mavericks owner Mark Cuban’s only response to a dozen questions was: “I don’t have any clue.” Cuban’s refusal to delve into the issue likely stems from the fact that the Mavericks, as well as the Texas Rangers and Dallas Stars, all have multi-year television broadcast rights deals with Fox Sports Southwest.
The Star-Telegram spoke to Joshua Gordon, an instructor of sports business and sports law at the University of Oregon’s Lundquist College of Business about what the deal could mean for Fox Sports Southwest viewers in the DFW area.
How could ESPN’s acquisition of Fox Sports change the viewership experience for FSSW?
There’s an opportunity for ESPN to create greater synergy amongst its primary platforms and regional networks that they are picking up. What you might see is a more cohesive package of sports and integrations across their platforms. This is speculation, but as ESPN continues to embrace the reality that people are moving away from the cable bundle, it might make whatever ESPN offering someone may want to engage in somewhat more palatable from a consumer standpoint, because they have more to offer under their umbrella. The typical sports fan really appreciates following their teams, so it allows ESPN to give nuanced flavors of their package. So maybe you don’t have to subscribe to the whole bundle, but instead you could subscribe to the Southwest bundle. And that could include national games of your teams and, plus regional games, and that would be a pretty comprehensive package.
Sports premiums for cable are very high, and ESPN’s number is the highest. How does this deal impact the cable fees for ESPN and/or Fox Sports Southwest?
It’s so tough because there are a few things driving those numbers. One, ESPN and many others are locked into these long-term property rights fees, which didn’t anticipate this type of pivoting away from the cable model when they did the deals. So, they are pretty prohibitively restricted. On the other hand, it’s pretty clear that consumers want a very personalized experience with access to just their channels and teams that they want. It’s not that ESPN and others aren’t willing to deliver that; they’re just contractually in a tough spot at the moment.
Some of the in-house announcers and analysts for the Rangers, Mavericks and Stars appear on Fox Sports Southwest because of the broadcast rights’ partnerships. Does ESPN just wants the broadcast rights from these regional networks, and if so, will they let go of regional on-air talent to save money?
I could be wrong, but I don’t think so at the regional level. I think the driver behind the cut in talent is that people weren’t connecting to the talent at the national level the same way they connect with talent at the regional level. I do think there’s a difference between the way you present talent locally, because people like those local connections and they value them. And the price of that isn’t nearly as exorbitant as the national talent. Ultimately, I don’t even think ESPN wanted to get rid of their national talent, but they just had a really tough balance sheet with these exorbitant rights fees and you have a shrinking cable base. And you can only cut so much on production costs before it hits the on-air talent.
Could employees for Fox Sports Southwest and/or these teams leave as a result of the uncertainty?
My sense is that most people will wait it out. But if on-air talent and other folks haven’t already been establishing a private path for their own private brand, then they’d better start. Because I think the days are gone for any on-air talent to rely primarily on the brand affiliation of their network to control their career. You have to understand, ESPN does research where they do I-tracking labs with their consumers and see when certain on-air talent are on. Are viewers watching the talent, or are they watching the ticker, or a bookshelf over the shoulder? Some of that same analysis will probably come to these regional networks. Some people should be worried because they might not perform well under those analytics, while some people might be elevated.
Fair or not, do you think the perception of ESPN’s supposed political biases could turn away Fox Sports Southwest viewers?
ESPN is going to try and create a connection to the region because the effectiveness of these regional networks comes from the regional personalities, former players, the right games are on. It’s actually the antithesis of what ESPN does, because we don’t all have to rely on “SportsCenter” to get our highlights anymore. We can just go on the internet and find what we want to find. The more interesting question to me, is, does the ESPN brand play well in all of these different regional markets? And the answer might be: not right now. You saw that with Comcast and its regional networks. They’ve been moving away from their own brand. It’s still the same regional networks, but now you have NBC Sports Boston, NBC Sports Northwest etc. And the NBC brand is not a bad one for folks, but the Comcast brand has been.
ESPN is launching a new, expansive streaming service next spring. How does ESPN incorporate Fox Sports regional networks down the road?
I think ESPN’s greatest success in the last year or two has been its movement toward digital presentation of a variety of regional games. College football is a great example, where by and large, with all their partnerships, you can tune in to the ESPN app and find your team and a bunch of other games and stream through that. I would argue from a consumer standpoint, it’s easier to find your game through an interactive platform like ESPN’s app than searching through 45 channels on your cable box to find your game.
For example, TCU baseball isn’t the moneymaker that TCU football or basketball is, but the team is usually ranked and it has a substantial following in the area. How does ESPN/Fox Sports Southwest handle a sport and/or team like that?
If ESPN is smart, what they’ll do is have multiple audio tracks. So, you’ll have the local/regional track with the local personalities, and the national track should be different. The type of commentary for a hardcore TCU baseball fan should be different than a casual fan. In a perfect world, the consumer should be able to choose which audio path and presentation they want. That would also allow you to be much more focused on your advertising, because you would know exactly who your audience is.
With the uncertainty surrounding the future of Fox Sports Southwest, does the door open for regional/local competitors to fill that void for fans of Texas sports?
It’s hard to say. Some of the things that happened legislatively with Net Neutrality could come into play because the question remains: do you have to be a big entity to have the ability to deliver online (content)? If you don’t, assuming this has less impact than some people fear, then a start-up like Flo Sports can do a pretty good job of presenting niche sports to the right audience. I do think more and more you are going to see this narrowing of people are going to follow what they want to follow.
Right now, you have to pay for talent and analysis. Look at where we’ve headed with YouTube influencers and these rising stars in that platform. Most of the successful businesses in the past six or seven years are not paying for talent to deliver content. They are providing a platform and the content is being crowdsourced and delivered. It would be hard for me to understand why sports won’t head this way.
Peter Dawson: 817-390-7657