What Does the WarnerMedia-Discovery Merger Mean for Sports (At Least Stateside)?

Earlier this month AT&T announced it was ending its involvement in the media business after only three years from the closure of its merger with Time Warner. The assets now known as WarnerMedia would be merged with Discovery to form a new entity with no AT&T ownership and with Discovery head David Zaslav in charge of the merged company, which might sound an awful lot like Discovery buying WarnerMedia (and AT&T would get plenty of compensation in the form of cash and absorption of debt obligations, albeit amounting to pennies on the dollar from the original Time Warner acquisition), except AT&T shareholders would own nearly three-quarters of the new company. WarnerMedia’s diverse portfolio of adult and children’s entertainment networks, plus news networks and sports content, premium cable, and the HBO Max service launched under AT&T, would now be joining forces with Discovery’s documentary, reality, and other nonfiction programming.

A number of analysts in the aftermath suggested this would be a “game changer” for sports with “one more bidder entering the market” for sports rights, with one analyst claiming it would have “profound implications” as the new company could create a “must-have sports streaming service”, but considering that WarnerMedia already had high-profile sports rights and Discovery didn’t have any US sports rights whatsoever, nor does either company have a broadcast network presence, it’s hard to see how the new company is any more of a factor in sports rights negotiations than WarnerMedia already was. To be sure, before this year it had been a long time since Turner had been much of a factor in trying to acquire rights they didn’t already own and that were in any way competitive, the main exception being a run with the UEFA Champions League that only ended up lasting a year and a half and didn’t particularly impress soccer fans.

Then sports media watchers were blindsided when Turner came seemingly out of nowhere to take the half of the NHL package Disney hadn’t locked up, effectively saving the league from having to take significantly less money than they were hoping for after NBC was lukewarm at best to continuing their involvement, Fox set a ceiling on how much they would pay, and CBS wasn’t interested at all. The rights could be said to have fallen into Turner’s lap, but it’s still impressive that Turner was able to pay pretty close to what the NHL was looking for and beat out all other comers (including the possibility that Disney might have simply taken the whole package), and as incredible as it was that ESPN, the outfit more responsible than any other for keeping two Stanley Cup Final games on cable over the past two decades, would be the outfit to finally put every Final game on broadcast, it was even more incredible to find out that the other three Finals over the course of the deal would air entirely on cable, after the great care NBC took in the latter portion of their relationship to ensure NBCSN wouldn’t air a Game 4 where the Cup could be awarded. Zaslav’s comments that he’d been working on the merger for months before word got out (and had been badgering AT&T about a deal pretty much from the instant the Time Warner merger was completed) could serve as fuel for speculation that he was the driving force behind the NHL deal all along, and suggests that if the only impact a WarnerMedia-Discovery merger has on the former company’s sports operation is an infusion of resources (even though the merged company is probably smaller than AT&T as a whole during the WarnerMedia era), that’s still going to be enough to shake up the sports landscape.

But there aren’t a whole lot of high-value rights left. MLS rights, currently shared by ESPN and Fox, expire in 2022, but the value of those rights are a shadow of even the NHL. The NBA is the only one of the traditional four major sports that hasn’t locked up new rights deals in the past few months and Turner will be playing defense there when those rights come up by 2025. The NFL hasn’t settled the future of NFL Sunday Ticket, and SportsBusiness Daily’s John Ourand thinks DiscoverWarnerMedia might become a player there, but it feels like an odd fit without holding any exclusive or linear rights.

With ESPN picking up CBS’ SEC contract, there aren’t any major college conference rights up for renewal before 2024, when the Big Ten and Pac-12’s deals expire, with the Big 12 and Big East following suit the following year; the NCAA’s deal with ESPN for less-prominent sports expires then as well, and those deals could be an opportunity for DiscoverWarnerMedia to deepen their relationship with college sports and the NCAA (whose web site they already run) and avoid simply parachuting in for March Madness. But both ESPN and especially Fox are likely to spend profusely to defend their Big Ten rights, and the Pac-12 right now is in a place where they’re in danger of becoming the clear fifth conference of the Power 5, while the Big 12 has the least valuable demographics of the Power 5 and the Big East has no football and hasn’t moved the needle for FS1 as much as they thought it would. The College Football Playoff, whose current deals run through the 2025 season, is likely to come up at this point as well, but I doubt they have much interest in continuing to be a cable-only enterprise given their popularity and the direction media is headed, and they certainly won’t go with an outfit without any other college football rights (covers ears and sings loudly to drown out people bringing up the BCS on Fox). That’s not even getting into the notion of a large-scale shakeup of college football that might come mid-decade (one that, depending on the players involved, could yet see DiscoverWarnerMedia benefit).

NASCAR comes up for renewal in 2024 as well, but Turner seemed like an odd relic last time they had those rights with a handful of early-summer races, both they and ESPN pretty much didn’t want anything to do with the sport anymore by the time that deal ended, and NASCAR ratings didn’t finish crashing through the floor until a few years into the Fox/NBC era. On the other hand, the shutdown of NBCSN means NBC could be vulnerable to a concerted effort from a determined rival, which, given their portion of the schedule coincides with football season, would mean either Turner or ESPN. Everything else that could move the needle, including the World Cup, SEC, and ACC, are all locked up for the rest of the decade, and anything else that is coming up in that time isn’t likely to move the needle very much.

What Discovery does bring to the table that might make an impact on WarnerMedia’s sports operations is their Eurosport network, and a lot of the excitement surrounding the merger concerns the possibility of blending the Turner networks’ sports rights with Eurosport’s to form an unbeatable sports streaming service. But Eurosport’s slate of rights is singularly unimpressive, at least from an American standpoint, which might be surprising given its prominence; in fact Turner’s rights slate might benefit Eurosport more than the other way around. (Also, the opportunities for synergy are limited given Eurosport broadcasts in each of Europe’s many languages.) What rights Eurosport does have that would be relevant to Americans – the Olympics and PGA Tour – are among the rights already locked up stateside into the next decade (and Turner’s efforts to pick up PGA Tour rights were simply embarrassing, talking about converting one of their networks into a duplicate of what NBC already had), and everything else is a hodgepodge of rights.

It has plenty of soccer, but not much of it applies throughout its territory (in fact very little applies outside Scandinavia and Romania) and what does apply tends to be decidedly lower-tier; they technically have domestic rights to the German Bundesliga (extending to much of Central and Eastern Europe) but resold those rights (as well as those in Austria and Switzerland) to DAZN (which led to DAZN launching German linear channels only reluctantly and while griping about how they shouldn’t be necessary, once again overlooking the true value of linear television). Both outlets would likely be interested in acquiring Premier League rights for as many territories as possible, but that seems to be NBC’s top priority now that Sky Sports, the outlet arguably responsible for the Premier League’s very existence, is a corporate sibling. Eurosport also has rights to the three Grand Tours of bicycle racing, and the Tour de France might be up for the taking with NBCSN shutting down, but it’s not like being on TNT or TBS is actually any different than being on USA.

What stands out to me, looking at Eurosport’s slate of rights from the perspective of the Turner networks, is tennis. Eurosport has pan-European rights to the French and US Opens (excluding rights to the US Open in the UK and Ireland, where Amazon holds rights), to the Australian Open in the vast majority if not all of Europe, and Wimbledon in a majority of countries they serve. They also hold rights to the ATP Tour in France, Russia, Scandinavia, Romania, and Hungary, and the WTA Tour in Denmark and Russia. In the United States, rights to most events outside the Grand Slams are held exclusively by Tennis Channel, which just locked up a deal to become the exclusive home of ATP Tour events, including the most prominent events in North America, for an indeterminate amount of time, though the similar deal with the WTA expires after 2023. Tennis Channel is also the main rightsholder at the French Open, with ESPN holding rights to the other three Grand Slams, though I haven’t seen anything indicating that they’ve reached an agreement with the Australian Open extending past 2021. Their deal with Wimbledon runs through 2023, while the US Open deal runs through 2025; Tennis Channel’s deal with the French Open runs through 2023, with NBC’s deal ending the following year. DiscoverWarnerMedia could be a surprisingly motivated bidder for rights to each of the four Grand Slams, at minimum, over the next four years. Anything else would likely require a relationship with Tennis Channel, and Sinclair Broadcast Group likely doesn’t see a reason to part with it (and certainly not to have the whole company being acquired if it means they don’t get to spread conservative propaganda on their broadcast stations anymore, and DiscoverWarnerMedia likely doesn’t have much stomach for running broadcast stations anyway). Still, this might be the biggest immediate impact of the merger.

There’s one more wrinkle to consider here, albeit one that’s only incidentally related to the merger itself. Though AT&T’s regional sports networks were acquired through the purchase of DirecTV, after the Time Warner merger they were placed in the same part of WarnerMedia as Turner Sports in the News and Sports division under Jeff Zucker, actually separate from the rest of the TBS and TNT networks in the Studios and Networks division. I haven’t seen any mention of the RSNs in any discussions of the deal, and there were rumors for a while that not all of the WB Games division would make the transition to the new company so it’s not a sure thing the RSNs will, but I would normally assume the RSNs will in fact make the transition. Certainly the RSNs were long subject to rumors that AT&T was hoping to unload them in some way, arguably predating the AT&T-DirecTV merger but shifting into overdrive as the RSN market seemingly collapsed, with the prospect of a reunion with their former Fox Sports Net bretheren at Sinclair being particularly floated. With the NHL deal, though, WarnerMedia now has national rights to each of the three sports that make up the backbone of most RSNs, and while ideally you’d want a larger group than just four RSNs (not counting the separate feeds for Utah and Nevada) for this, there’s an opportunity to create some form of synergy between the RSNs and the national outlets, if Zaslav wants it. At the very least, if the RSNs aren’t part of AT&T anymore they’ll probably need a change of name.

In short, there are a lot of obstacles to a combined Discovery-WarnerMedia being a bigger player in sports rights than either company alone, not the least of them being that there isn’t a single package of rights held by both Turner and Eurosport as it stands, other than Russia-specific rights to the NHL, which means there’s not a lot it can do at the moment to create a streaming service that would be fundamentally the same on both sides of the Atlantic. The ability to offer international rights in Europe would certainly help in WarnerMedia’s negotiations with sports leagues, but the entities that would be most interested in that are either locked up for the next decade, already with Turner, or have limited appeal, and Eurosport has shown little interest in the European leagues and competitions that would be interested in a stateside presence, so it seems doubtful the American sports consumer would notice much of a difference. Tennis is probably the only sport where joining forces with Eurosport would pay dividends for the Turner networks in the short term, but even there the impact is likely to be limited. So while this merger is likely to have a significant impact on rights to American sports leagues in Europe, could impact stateside rights to tennis and cycling, and gives both entities an infusion of cash and the ability to bid for trans-Atlantic rights to fuel the pursuit of more sports rights, hyperbolic claims about its impact on the sports landscape are probably unwarranted in the short term; if anything, a good chunk of the impact may have already happened. Still, it’ll be worth keeping a close eye on NBA rights negotiations in the next few years if the deal gets approved; to the extent DiscoverWarnerMedia can launch a trans-Atlantic streaming service, NBA rights will probably have to be the linchpin for it.

A Blast from the Past that will Shape the Future: What Does the NHL’s Return to ESPN Mean for the Future of Live Sports Video?

In 2007, after ESPN had screwed over Fox (who had reportedly been thinking of putting the entire Stanley Cup Final on broadcast television) in taking control of the entire NHL broadcast contract and proceeded to barely promote it at all (especially after taking over the NBA contract a few years later) and bump it to ESPN2 if just about anything and everything could be put on ESPN ahead of it, most infamously poker, then turned down a $60 million option to extend the contract in the wake of the lockout leaving the league to turn with their tail between their legs to the outfit then known as the Outdoor Life Network, then made NHL highlights virtually persona non grata on SportsCenter to the consternation of hockey fans who felt ESPN, then at the seeming height of their monopolistic power, was sticking it to any league or entity that didn’t bother to sign a contract with them… if you told hockey fans that ESPN would end up being the entity responsible for putting every game of the Stanley Cup Final on American broadcast television, would they have believed you in a million years?

But indeed, that’s what will happen in four out of the seven years, including (presumably) next year, of ESPN’s new agreement with the NHL announced Wednesday, a deal that will reportedly pay the NHL $400 million a year, close to twice what NBC was paying for only half the national television contract. Perhaps no other recent sports rights deal better captures the shifts in the video (it seems gauche to call it “TV”) business in recent years, and it’s hard to think of one that will have more of an impact (the reported move of Thursday Night Football to largely being exclusive to Amazon feels like more of a paradigm shift but hasn’t been announced yet and may have less relevance to defining the role of linear television going forward). In something that would have been unthinkable, certainly for ESPN, maybe five years ago, this appears to be a deal largely about ABC and ESPN+, with linear ESPN largely an afterthought. 

Read moreA Blast from the Past that will Shape the Future: What Does the NHL’s Return to ESPN Mean for the Future of Live Sports Video?

Thoughts on @Ourand_SBJ’s Predictions for Sports Media in 2021

As we approach the end of the year we see the arrival of the season for reflecting on the past and predicting the future, and in the sports media business there’s always something going on that make the business of predictions exciting; whenever big rights deals come up for renewal the possibilities seem endless for what might happen, and as the legacy television industry struggles to come to terms with the advent of cord-cutting moves taken now will have ramifications for decades to come. John Ourand’s annual prediction column in the Sports Business Journal is generally good for a mix of bold predictions, assessment of the current landscape, and surprisingly odd analysis for someone so well-connected. I’ve dedicated entire tweet threads to his column in the past, but I haven’t entirely abandoned the notion raised way back when I started my Tweeter that anything that took up multiple tweets would go in a blog post instead, so here’s my take on Ourand’s predictions for 2021:

Read moreThoughts on @Ourand_SBJ’s Predictions for Sports Media in 2021

Handicapping the Thursday Night Football race (again)

Last week, John Ourand reported in SportsBusiness Journal about the state of the NFL’s ongoing contract renegotiations with networks. The league had hoped to have new deals in place before the start of the upcoming season, but the coronavirus pandemic has placed that on hold; however, things seem to be shaping up to mostly continue the status quo. CBS wants to keep its Sunday afternoon package, NBC wants to keep Sunday Night Football, Fox wants to keep its own package and specifically stating it wants to “keep an NFC-focused package”, presumably in contrast to the idea the league has floated in the past of decoupling the Sunday afternoon packages from the conferences. Ourand described ESPN as the wild card, as they have long groused about paying nearly twice as much as the broadcast networks for games but getting a weak package; ESPN argues that retransmission consent has leveled the playing field between broadcast and cable, and if they’re going to spend so much money they should be getting better games, though in contrast to what was reported in 2017, ESPN seems to be focusing more on upgrading its current package than dropping out or even reducing the amount it pays relative to the other networks. As has been previously reported, ESPN also wants to return the NFL to ABC and rejoin the Super Bowl rotation.

However, Ourand also noted that Fox said little about Thursday Night Football and characterized that as the likeliest package to change hands, and that became the biggest headline in other places‘ reporting on Ourand’s article.

Read moreHandicapping the Thursday Night Football race (again)

Cable Companies are Disrupting the Cable Bundle – In a Way Their Streaming Counterparts Aren’t

A little over a year ago, Verizon did something that flew under the radar, and considering how much their deployment of Fios services has slowed, wasn’t really as important as it should have been. Following ESPN’s lawsuit over its “Custom TV” service, Verizon effectively defanged the service and switched to offering two base packages, one with sports channels and one without, to comply with contracts prohibiting the biggest sports channels from being on an add-on tier. A year later, however, Verizon went to a hybrid of the old and new Custom TV packages. Today’s Custom TV service consists of seven different base packages, only three of which (Sports and News, News and Variety, and Home and Family) contain ESPN and other sports networks. It’s not quite a la carte TV, and the Verizon site gives a list price for Custom TV of $64.99/mo, but that’s for bundles containing it; if you order the slowest Internet speed that can be bundled with Custom TV, the quoted price is exactly the same as the same speed without Custom TV. The fine print indicates that you would take on only $20.88 in set-top-box rental, broadcast, and RSN fees, on par with Sling TV, and presumably the non-sports packages without RSNs would cost nearly $6 less than that. That’s pushing less than half of what streaming cable services like YouTube TV and PlayStation Vue charge.

For that price, you could get most of the most popular cable networks other than sports, news, and Discovery networks on the Action and Entertainment package, or you could regain the mainstream news and Discovery networks while losing more reality-oriented channels on the Infotainment and Drama package. Both of those packages include Disney Channel and other channels owned by the four major companies with investments in sports, so you aren’t limited to channels from a small selection of companies. A truly comprehensive lineup would require upgrading to a more expensive package with sports networks, and some combinations of networks (like both Discovery and History) would require going that route, but Verizon seems to have largely recreated the comprehensive, watch-whatever-you-want feeling cable and satellite companies tried to create in the 80s, 90s, and early 2000s without the downward spiral that created.

What has attracted more attention is Charter’s soft-launch last week of Spectrum Choice, currently being offered only to 100,000 “hand-selected” customers, presumably primarily people who have threatened to cancel their existing Spectrum service and/or as a way to upsell current Internet-only customers. Programming appears to only be available by streaming to Roku or other connected devices (and thus, at least potentially subject to all the delays and problems of streaming), DVR service costs extra and is loaded with restrictions, and there is a confusing maze of restrictions to your ability to watch shows on other devices or outside the home. But once you get past all that, what it offers is remarkable: true a la carte TV. You get all the broadcast networks and Music Choice channels, and then you add any ten channels of your choice. Not all channels are available (and RSNs are among the channels that aren’t), but a sports fan could add ESPN, ESPN2, FS1, NBCSN, NFL Network, and all three channels showing March Madness, and still have two channels left over, having picked up every network showing the most popular national sports events.

But of course, what’s really attractive about this is the ability to stitch together groups of channels with no sports networks whatsoever. Nick Jr. is the most popular primetime network not to be offered, and Disney Junior is still available for families with young children. You could stitch together the most popular general entertainment or reality-oriented channels – USA, HGTV, TBS, TNT, Nickelodeon, Discovery, History, and maybe a handful of others to round it out. Perhaps more to the point, you could join Spectrum Choice with the Philo service, and then use your ten channels on channels not offered by Philo: USA, TBS, TNT, Hallmark, FX, Bravo, Cartoon Network, Freeform, Hallmark Movies and Mysteries, and Syfy, mixing up what channels you order based on what channels have the shows you want and maybe throwing in a news network or two if you want. You’d have access to an incredibly wide variety of entertainment – without any sports-specific networks.

The potential of this is such that to me, the biggest problem with Spectrum Choice is that there is no price feedback to your choices: you pay the same whether you include ESPN or not. This may explain why it costs $25/mo for the first two years and $30/mo thereafter, which makes combining it with Philo non-economical and arguably doesn’t even compete well with other streaming cable providers as is. It smacks of saying “we tried to offer an a la carte offering but no one took it”. Of course, if it did offer ESPN at a different price than other networks, that would smack of offering ESPN separately, as a premium service, which ESPN would probably never stand for, and the other restrictions and constraints might be necessary to appease programmers as well; Verizon may be closer to a more viable approach to shaking up the cable bundle (it’s worth noting that both Verizon’s Action & Entertainment and Lifestyle & Reality packages each contain all but one of the non-Philo networks I listed above, if you’re willing to go without major news networks). The fact that Spectrum Choice is so close to being a true game-changer, however, should not go unnoticed. They may be halting steps, but Charter and Verizon are moving closer and closer to allowing you to watch the programming you want without having to pay the sports tax.

For all the brouhaha over streaming TV services, for the most part they haven’t offered anything that truly sets them apart from the traditional cable bundle. In the name of trying to get enough programming people want to attract customers, they’ve almost all hitched their wagon to all of the Big Nine cable programmers, throwing away the one thing that could truly set them apart from the cable bundle. Even Sling, with a lower base price point and multiple smaller base packages, doesn’t offer a base package without sports networks. Philo has taken the best available approach to building a truly sports-free package and thus a package with the most potential to strike fear in the heart of ESPN. The question surrounding Philo has been whether it has enough valuable programming to attract customers without networks associated with the sports-heavy companies – without USA, TBS, TNT, FX, or Disney Channel. If the programming you want to watch is associated with those companies, you might be stuck paying the sports tax; if there aren’t enough people satisfied with what Philo offers, sports networks, especially ESPN and regional sports networks, will continue to rule the cable bundle for the foreseeable future, even as people increasingly chafe under their power. That is, assuming Disney’s pending acquisition of a large chunk of Fox, including its regional sports networks, doesn’t end up backfiring on them, as I suspect it might, by centralizing enough of the most expensive cable networks in one place that either cable operators or streaming providers decide it’s finally worth it to go without them.

But if the merger does go the way Disney thinks, then if the likes of Charter and Verizon continue to be allowed to be more flexible with their offerings – allowing people to get FX but not FS1 or Fox News, USA but not NBCSN or MSNBC, Disney Channel but not ESPN – that could finally break the stranglehold sports has on the cable bundle anyway. And in turn, that could ironically result in the collapse of the entire cable bundle if the most high-profile sports decide it’s not worth it to continue to hitch their wagon to the smaller audiences of cable networks and focus more attention on broadcast with a side of streaming, potentially starting a downward spiral of cable subscribers touched off by the departure of those that feel they need cable to watch the College Football Playoff, Final Four, or NBA playoffs, leaving the very cable networks that made it possible to either change their business models or die.

Could ESPN Kill Thursday Night Football?

In 1987, ESPN achieved something of a holy grail for the cable industry, picking up a half-season package of Sunday night NFL games, paid for with the imposition of a surcharge on the fees cable operators paid them. In 1998, ESPN picked up the full season of Sunday night games, paid for by the negotiation of clauses with distributors ramping up the fees paid to ESPN every year. This was the start of the process that resulted in ESPN charging every cable subscriber over $7 a month, far more than any other national cable network, and a key component in ESPN’s ability to acquire top-of-the-line sports rights such as the biggest college football bowl games.

In 2005, Disney was outmaneuvered in its efforts to renew both ESPN’s Sunday night package and ABC’s Monday night package, as the NFL struck a deal with NBC to move the league’s marquee primetime package to Sunday night in order to institute flexible scheduling that would ensure good, competitive games late into the season. Disney was left paying as much as it had for both of its previous packages for a single package for airing on ESPN. Ever since, ESPN has paid nearly twice as much as the broadcast networks for a package not much better, if at all, than the marginally-attractive matchups it had been getting on Sunday night. ESPN executives have chafed at this, claiming that for the amount it pays it should be getting matchups at least on par with the broadcast networks; to be sure, part of the fee pays for ESPN’s ability to use highlights across its myriad of programs, but that’s only a fraction of it, maybe no more than a fifth. But when the time came to renew the deal, after nearly a decade of knowing what Monday Night Football had become with the move to cable, ESPN ponied up nearly two billion dollars a year, once again close to double what each of the broadcast networks were paying. ESPN’s package of NFL games may be weak, but they’re a big part of what makes ESPN so valuable to cable operators, what makes it such a must-have for sports fans, and without it ESPN not only becomes a lot less valuable, but that same package of games becomes a tool an FS1 or NBCSN can use to instantly establish near-parity with ESPN.

At the same time it was shaking up its existing primetime packages in 2005, the NFL carved out a package of late-season Thursday night games to air on its own network, hoping to turn NFL Network into a cash cow that could collect hefty subscriber fees directly for the league. The package grew until it eventually took up the whole season, both to coerce holdouts to carry NFL Network and to establish the worth of a package to sell to other parties. Initially, the league was thought to be selling part of the Thursday night package to another cable outlet like FS1, NBCSN, or TNT, any of which would be salivating over the prospect of using NFL games to increase their own worth to cable operators, but instead it ultimately sold the right to simulcast and produce half a season of games to broadcast networks while also selling the right to stream games to Twitter and later Amazon. Sure, Thursday night games meant teams would be playing on a short week, increasing the risk of injury and potentially resulting in sloppy games, and the league’s policy of making each team play on a short week exactly once during the season limited the package’s ability to show marquee matchups. But Thursday night was a place to collect another pound of flesh from TV partners and air the games that made NFL Network worth paying for for cable operators, as well as a place to experiment with new formats and partners. It wasn’t like there were any other places for them to do this. Sundays and Mondays were taken.

Things have changed quite rapidly over the past few years. Cord-cutting has taken off like a rocket as people increasingly turn to on-demand streaming services for their entertainment, undercutting the primacy of linear television. In the short term, this only increases the value of live sports as one of the few types of programming people will willingly watch live, without skipping commercials, and are willing to pay for cable packages to watch, but it also changes the very nature of linear television, as it’s becoming increasingly apparent that anything your network airs that isn’t live events is just filler between live events (as much as ESPN and Fox sometimes don’t seem to recognize this). In that context, highlight rights are considerably less valuable than they used to be.

ESPN and the NFL are also looking at a future where the cable bundle collapses and the NFL can’t simply sell whatever it offers for a billion dollars to whatever cable network pays for it, which is no doubt part of the reason why it sold TNF to broadcast networks and streaming services rather than cable networks. In this context, ESPN’s future is no longer in collecting as much money as it can off the back of every cable subscriber, but in converting itself into a service offering its wares direct to the consumer, and it has less to worry about from FS1 and NBCSN – who have benefitted ESPN more by keeping the cable bundle propped up than hurt it in any way, and which now become more untenable propositions both in general and for the league specifically – than it does from Amazon and its ability to synergize sports rights with its Prime service. A package of mediocre NFL games may be valuable to cable operators that can pass on the cost to all their subscribers and that NFL fans can watch at anytime after paying for the entire cable bundle, but a subscription service offered directly to consumers can best attract subscribers by covering certain sports comprehensively, or else a broad array of important sports events that can combine to make it a must-have service for sports fans, and that single mediocre NFL game each week isn’t going to fit the bill and certainly isn’t going to be worth two billion dollars.

In that context, it’s easy to see why, as James Andrew Miller, the man who literally wrote the book on ESPN, suggested in a guest column for the Hollywood Reporter, ESPN might be thinking about going without NFL rights when they next come up for renewal, for the first time since 1987. ESPN has been removing clauses conditioning its high subscription fees on its continued carriage of NFL games from its contracts with cable operators, which makes sense when you consider the gap in fees between ESPN and NFL Network (and the fact that TNT charges more than NFLN without football or really much of anything other than NBA basketball and select NCAA Tournament games), and freeing up two billion dollars a year of spending money allows them to pay for events that offer a larger tonnage of content and may be more likely to entice more people to sign up for an ESPN subscription service.

Meanwhile, faced with a second year of headlines of declining NFL ratings, networks have begun complaining to the NFL about oversaturation of games and games being taken out of the Sunday afternoon packages. They want to move all London games back to 1 PM ET and end the “breakfast football” games that kick off at 9:30 AM ET. And they want the league to cut the Thursday night package back to eight games. That latter point would be difficult for the league to acquiesce to; all eight games would need to be exclusive to NFL Network to meet the network’s own contractural agreements with TV partners, preventing them from selling the games to another partner or a streaming service and once again forcing them to produce the games themselves, and potentially irking cable operators seeing NFLN’s tonnage being reduced to what it used to be when it was having trouble finding partners. And there’s nowhere else for it to go; again, Sundays and Mondays are all tied up. Or are they?

If ESPN decides NFL games are no longer vital to their business, if they decide to go without the NFL in the next TV contract, because of market forces that mean the NFL can’t prop up the cable bundle or any particular cable network anymore, that opens up a package of games that the NFL likely can’t sell to ESPN or any outlet looking to imitate it, but can use for whatever other purpose the league wants. They can put half the games on NFL Network, at least as long as it remains a tenable proposition within the cable bundle, and sell the remaining half to broadcast networks as they do with TNF now, or to a streaming service like Amazon, potentially selling the full season once the cable bundle completely collapses. Without ESPN preventing the NFL from doing whatever they want with MNF, the league could turn Mondays into the experimental night Thursdays are now, potentially doing away with Thursday games entirely except for opening night, Thanksgiving, and the week after Thanksgiving when both teams can be taken from the Thanksgiving games and play on a full week’s rest, curbing concerns about the league wearing players into the ground to collect a pound of flesh it’s becoming increasingly difficult to collect.

The competitive concerns motivating ESPN to keep paying up for MNF haven’t completely eased; ESPN wouldn’t want to walk away from the NFL only to pave the path for Amazon to become a competitor for sports rights. But I continue to believe that no entity that doesn’t at least control a linear television platform can truly be a player for major sports rights, and while Amazon has a lot more going for it than most Internet outlets, it’s not immune to those fundamental forces. At the very least, if ESPN continues to control a linear outlet it has a major asset to offer to sports entities, and if Amazon were to find its way onto one, and spend as prodigiously on sports rights as media companies have over the past decade, it would risk losing some of the advantages Prime has over cable networks if not recreate the worst excesses of the cable bundle. ESPN can handle creating a new competitor in Amazon while freeing up funds to maintain its supremacy in other ways, the NFL gets to continue raking in money from whatever revenue streams are available even if they aren’t as big, and players and fans could potentially find themselves in a world without Thursday Night Football and all the excesses and problems it represents and perpetuates. Everyone wins.

What Happens If Disney Gets Blacked Out On Altice?

If it weren’t for the crappy state of everything else going on in the country (including Ajit Pai seemingly being about to dismantle net neutrality) it would be an exciting time for the evolution of the TV industry, as the cable bundle looks like it’s about to be on its last legs. Earlier this month, reports came out that Viacom, Discovery, Scripps, AMC, and A&E were joining forces to form their own, relatively cheap, skinny bundle called “Philo” – the inclusion of the last of which was very surprising to me, as A&E is co-owned by Disney and Hearst, which also (separately) co-own ESPN, and just the other four companies forming their own skinny bundle is the last thing ESPN wants. But Disney and ESPN have a bigger fight on their hands. Altice, the French conglomerate that now controls Cablevision and Suddenlink, hass Cablevision’s old carriage agreement with Disney expiring after this weekend. Disney has faced contentious carriage agreements with the likes of DirecTV and Dish in recent years, which have gotten certain elements of the media worked up over the possibility of showdowns with companies that had ramped up their rhetoric about the high price of sports and stood up to regional and college sports networks, but in the end the power of ESPN was too much to resist and the companies sucked up and signed up for another round of fee increases and adding the Longhorn and SEC networks. But just days before the expiration of the agreement, there seems to be no end in sight to the Altice standoff, and plenty of signs that Disney’s luck and indispensability has run out, not just with Altice but with other cable operators as well.

Were it not for these two stories, I wouldn’t normally think the decline of the cable bundle has reached a tipping point. Large majorities of people still subscribe to the cable bundle… but they’ve now fallen below the 80% mark, and it’s clear that things have reached a critical moment. Disney trying to add yet another high-priced regional ESPN spinoff, one with significantly less value than the SEC Network, certainly looks like an ill-timed misstep that sent things spiraling down further (and Disney wants Altice to add not only ACC Network to a fairly basic package in New York City, but SEC Network as well). On the other side, Disney has announced the launch of OTT Disney and ESPN services, with the latter being limited to events that won’t hurt the value of ESPN to cable providers too much to lose but the former being stocked by Disney pulling its movies off Netflix a relatively short time after signing a big deal to put them on. Continuing the return of sports to broadcast, Fox will air the majority of next year’s World Cup matches on its broadcast network, meaning if the United States makes it, matches that gave ESPN gerbonkers ratings in the last two World Cups will air on broadcast where they belong, possibly even on weekdays. And while I’m still, in general, skeptical of streaming services’ ability to win major sports rights while also justifying their cost, in the wake of their Thursday Night Football deal, it’s hard for me to argue against the notion that Amazon at least has the potential to overcome most, though not all, of the obstacles I worry about (the fundamental problem of streaming being inferior to deliver live events than real linear channels, which bedeviled Amazon this past Thursday, is in my view ultimately insurmountable) to become a real player for mid- to lower-tier sports events.

There’s also the recent history of carriage standoffs to consider. Before its acquisition by Altice, Suddenlink kept Viacom channels off its systems for nearly three years, with Cable One possibly still leaving those channels off their lineups, and both companies made clear that they were just fine without Viacom’s networks. Viacom is on the expensive end of the non-sports four and, at least at the time, didn’t have as many shows with serious buzz as the others, so it could have been considered more expendable than most other Big Nine members. By dropping Disney channels, Altice would be risking a significantly larger backlash, not only from sports fans but from fans of Disney Channel’s kids shows, especially with the Yankees playing their wild-card game on ESPN Tuesday. But if it coupled dropping the Disney channels with a significant drop in customers’ bills, it could gain more than that in goodwill from non-sports fans.

Meanwhile, sports and Disney fans aren’t as out of luck as in the carriage disputes of the past, thanks to online cable providers like Sling TV. No service carrying ESPN would cost less than the $10-15 that’s likely to be the most Altice would refund customers; Altice’s moves wouldn’t totally break up the cable bundle unless they dropped multiple companies’ programming. But what would hurt Altice, but is likely to hurt Disney more in the long term, is if customers dropped Altice’s TV service entirely in favor of Sling or a more comprehensive service like PlayStation Vue, DirecTV Now, YouTube, or Hulu. Based on listed prices, dropping down from a TV+Internet bundle to just Internet should save $20/month with Optimum for New York customers; throw in fees charged only to TV customers, and that could be enough to justify getting one of the online bundles for $35/month (and that’s assuming they don’t drop Optimum entirely for Verizon FiOS). Sports and Disney fans that drop Altice’s TV services entirely are no longer directly putting pressure on Altice to add them back to the lineup. If that gives Altice enough backbone to leave Disney off the lineup entirely, especially if people with no investment in those networks start telling them not to restore them and threatening to quit if they do (especially once Philo launches), it puts Disney, and ESPN more specifically, in a very tight spot financially, as well as in terms of standing up to other providers, with deals with Verizon, AT&T/DirecTV, and the old Time Warner Cable deals now controlled by Charter looming over the next two years.

In 2011, Dish chairman Charlie Ergen suggested there was room for a cable or satellite operator to position themselves as a cheaper non-sports alternative; today he thinks Altice can survive without ESPN, and he certainly must be rooting for it. If Altice is successful at saying no to Disney and ESPN, it gives other providers, as well as potential future online providers, more confidence to say the same. Altice is not one of the larger providers, but if they manage to weather the storm and spend two years or more without ESPN on their lineup, Disney will suddenly look like an emperor with no clothes, and will find it hard for their demands to be met when they enter negotiations with AT&T, Charter, and further down the line, Comcast and Dish, and will find it especially difficult to get the ACC Network off the ground. Couple that with the pending launch of Philo representing the one thing Disney hoped to avoid by staying shackled to the cable bundle, and suddenly there’s a very real possibility that ESPN goes full-on direct-to-consumer with all of their content before the end of the decade (and indeed A&E’s inclusion in Philo starts to look more understandable if Disney thinks the cable bundle is already collapsing). Sports fans would probably still need Fox, NBC, and Turner’s networks to get all the sports they want and need, at least in the short term, but a successful standoff with ESPN would also allow cable operators to show down with those companies for lower fees and lower penetration for expensive regional sports networks. It’s possible the sports four-and-a-half will start to find that clinging to the old cable bundle model will bring down their smaller and non-sports networks more than prop them up, making a sports-specific bundle an increasingly viable proposition. At that point, Disney might just bail on cable operators and even their would-be competitors and seek to salvage whatever revenue (and data) they can for themselves.

Even if Disney and Altice reach a deal, it could still be bad news for Disney, ESPN, and sports leagues. Disney wants to ratchet up its fees and restore some of the coverage lost when they gave providers flexibility to offer skinny bundles. If Disney takes lower fee increases than they’re hoping for and keeps ESPN at present levels of penetration to avoid the catastrophe of being outright dropped, they’re going to have to budget less money for production and rights fees. Look for more layoffs to come down the pike and ESPN to scale back on what they’re willing to bid for rights as they come up early in the next decade. And the ads Altice has been running have arguably already increased awareness of just how much of their cable bill is being passed on to ESPN regardless of how much or little customers watch it, meaning if a deal is reached without ESPN being dropped, there could be a deluge of customers dropping service.

Keep an eye on how this situation develops over the next couple days, because no matter what happens, it could well mark the point of no return for the sports cable boom, as well as the beginning of the end for the cable bundle as we know it, and the start of shaping whatever comes next.

For Fans of Lesser Sports Properties, the Party is Over

Back when I was posting more regularly about the sports TV wars – in part because the wars themselves were burning brighter and the stakes seemed higher – a point I routinely made was that, as good as the wars would be for the largest, most popular entities with content that could attract large audiences to sports networks, they would be an absolute boon to lesser entities that might not otherwise attract much of an audience at all, or even enough to justify their existence, as the glut of sports networks looked for properties to fill out the rest of their time. Truly tiny leagues and conferences didn’t see much of a bump from the wars (a TV deal with CBS Sports Network only kept the UFL afloat for an additional half season) but lower-mid-tier leagues, the sort that could attract audiences approaching a million on broadcast and regularly top several hundred thousand on networks the size of FS1 and NBCSN, saw their visibility vastly increased. As I explained in my book The Game to Show the Games (and as expanded upon here previously) no sport benefited from the glut of sports networks more than soccer, even before the sports TV wars properly became a thing, as a veritable soccer boom enveloped English-speaking America driven in large measure by coverage of the English Premier League on Fox Soccer Channel and its predecessor Fox Sports World, driving NBC to not only break the bank for Premier League rights but to make it as much of a tentpole for NBCSN as the NHL.

If no sport benefited more than soccer from the sports TV boom, no single deal demonstrated the power of TV to elevate a sport more than the Premier League’s deal with NBC. NBC’s high-quality coverage, semi-regular games on broadcast television, and dizzying array of games on NBCSN only scratched the surface of what NBC would do for the Premier League in America. Perhaps more remarkable was NBC’s decision to place all the games it couldn’t fit on its linear networks on an array of “Extra Time” channels and available for streaming for any subscriber to a cable package that included NBCSN. American viewers could watch every single Premier League game live, something people in England itself couldn’t say, if only because the Premier League contracts there were arranged to protect gate revenues, especially at lower-tier clubs.

This week, NBC announced that those games not airing on NBC’s linear services would now be available on a “Premier League Pass” subscription service, no longer free with NBCSN. The headline on Re/code touting this deal focused on the “no cable subscription required” aspect of the service, which is a bit disingenuous considering games on NBC’s cable networks aren’t part of the deal, but not really any different from people who get ESPN3 from their Internet provider (or who sign up for ESPN’s long-delayed direct-to-consumer offering) and get to watch mid-major college sports and less popular events without access to ESPN’s actual linear networks. Despite its uselessness to cord-cutters, though, I was surprised to see headlines on more soccer-focused sites bemoaning what a big step backward this was for NBC’s coverage of the Premier League, with Vice Sports going so far as to claim that the move of what it admits is “the crappiest third” of Premier League games to a premium service amounts to NBC “kill[ing] America’s EPL Golden Age“.

Certainly for Premier League fans used to signing up for the cable bundle, this is a huge step backwards. $50 is a relatively steep price, though for an entire season of Premier League games it compares favorably to American sports leagues’ pay-per-view/out-of-market/streaming services, which often top $100. And it’s not like Premier League fans can save money by just signing up for Premier League Pass, since again, it doesn’t include games on NBC’s linear networks. But it’s hard to declare the loss of the least interesting, most perfunctory matchups, that were already consigned to streaming and overflow channels, as completely undermining the visibility and value of the Premier League on American television, especially since given the ongoing shifts in the media landscape, a move like this may have been inevitable. Even if Extra Time wasn’t really “too good to be true” even at the time, setting aside specialized channels and propping up the cable bundle even more was becoming difficult to justify. With Premier League Pass, NBC is pivoting towards the sports distribution system of the future, one that more specifically targets fans of various sports, that sports networks in general will have to pivot towards.

As such, I’m not sure I agree with Richard Deitsch that this is entirely about monetizing a more expensive Premier League rights deal; if so it would raise the question of whether the deal was really worth it to begin with. I think there’s a bigger picture to look at here. Going back to its days as Versus, NBCSN has staked its territory around providing comprehensive coverage of sports that might get shorter shrift at ESPN or Fox, and that’s a territory that lends itself well to providing services oriented directly at those niche sports fans. The NBC Sports Gold service already sells access to many of those niche sports bundled together for up to $70 a year, but depending on how many butthurt Premier League fans (especially those that have attached themselves to teams further down the table) swallow their pride and pony up, Premier League Pass could easily make them more money. I could easily see NBC as laying the groundwork for the day it may ultimately have to shutter NBCSN in its current form and fold many of its rights into networks like CNBC or USA as the cable bundle finally utterly collapses, folding together many of its mid-to-lower tier rights into a direct-to-consumer offering targeted at the niche sports fans NBCSN serves today. I may have felt Fox was better positioned to run down ESPN than anyone else (certainly Fox themselves did) before it turned out Fox didn’t quite have the quality of rights to convince people to turn to FS1 on a regular basis, and I’m skeptical that anyone other than ESPN will survive the collapse of the cable bundle and shift to Internet streaming, but NBC may be better positioned than any of the alternatives to pivot to marketing a national service directly to the consumer, offering a simple value proposition to fans of niche sports (ignoring the question of the fate of local sports and what it would mean for Fox and NBC). With Premier League Pass, NBC is building the groundwork and subscriber base for whenever the day may come when NBC Sports Gold has to become its main offering to sports fans.

Ultimately, I think the effect of the Internet will be to collapse any intermediate distinctions preventing a step down from the ESPN level directly to pure streaming, with the only distinction being between the resources and quality poured into that streaming, with the likes of Amazon, Twitter, Facebook, and potentially Google on the high end, down to lesser offerings oriented towards more niche audiences like Premier League Pass, all the way down to free streams where there’s no room for monetization and no budget for any but the most rudimentary setups at all. For the truly tiniest leagues, I’m already seeing signs of streaming, of various degrees of monetization, being a boon to them; when the number of channels is effectively limitless, there’s little reason not to put up a stream of every game you have so long as you have the resources for it, especially when it comes to leagues popular in their home countries that just need to export their feeds to the States. But for these mid-tier leagues that have become used to comprehensive coverage subsidized by non-sports fans who continue to subscribe to the cable bundle, the party is over. Even if you believe that the most apocalyptic scenarios still involve the vast majority of Americans continuing to subscribe to some sort of comprehensive cable bundle for the foreseeable future, there’s still clear evidence of the fear of cord-cutting and sports-free packages driving sports networks to reduce their investment in mid-tier properties that don’t drive enough viewership and subscriptions on their own to justify the level of expense the cable bundle has inflated their perceived value to. Services like Premier League Pass are the first sign of sports networks sending a message that it’s time for sports fans to pay more of their fair share of the boom of sports television that has erupted in recent years.

The Music May Be Stopping for Cable Networks

It feels empty, going back to talking about television and the future of video at a time when it feels like, for a young liberal like myself, we might not have a future of any kind at all, but there was some news this week that made me reflect on one of my older posts and how the television landscape is shifting.

In 2012, Comcast was looking for something to do with its ten-year-old video game channel, G4, which had been dropped by DirecTV two years earlier and seemed to be inexorably on the wane. It eventually decided to rebrand it to the Esquire Network, a joint venture with Esquire magazine. Two weeks before the rebrand was to finally take effect, Comcast, now in control of NBC Universal, decided to rebrand the Style network as Esquire instead, figuring that Style’s female-oriented programming was now redundant with Bravo and Oxygen, and giving Esquire a slot that actually had DirecTV carriage. G4 would remain on the air under that name, endlessly rerunning its back library, until its existing carriage agreements ran out, and it was finally taken out of its misery a little over two years ago.

That Comcast was willing to rebrand Style as Esquire Network without having anything else to do with G4’s space was surprising to me, because as I wrote shortly before G4 was put out of its misery, the trend in the cable business seemed to be to constantly rebrand channels until companies found a format that stuck, holding on to established channel space and using whatever channel hadn’t caught on to launch the next format idea that came to the suits. Which brings me to this week, and the news that came out Wednesday that Comcast will be shutting down Esquire Network’s linear feed later this year, converting it to a digital on-demand service. On one level, that Comcast replaced Style, not G4, with the Esquire Network means they have now effectively killed two channels instead of one. But on another level, there’s no guarantee Comcast wouldn’t be shutting down Style now anyway, if they hadn’t already done so. In that sense, Comcast may have simply been ahead of its time, knowing that it might not have any new channel ideas with which to replace either Style or G4 – for both channels, the alternative to giving Esquire Network a try would be a full shutdown.

The notion of “cable network musical chairs” was from the start rooted in one of the dynamics captured in my book, The Game to Show the Games. As described in Chapter 7, for many years the Big Nine companies that control most of the channels on your cable lineup were able to use their popular channels to bully cable operators into carrying less popular channels. By about ten years ago, it became nearly impossible to launch a new channel from scratch unless you could convince cable operators it would have a built-in audience from the start, and since then the only channels the Big Nine have attempted to launch from scratch have been regional and college-conference-affiliated sports networks. But outright closing a network and giving up its channel space was unheard of. Until G4, the only truly national cable networks to completely shut down since the 2004 closure of CNNfn and TechTV were ABC News Now, which had highly limited distribution to begin with, and SoapNet, which only survived the launch of Disney Junior because of Disney’s inability to get cable operators to swap one out with the other. It made sense to keep a channel around, just to squat on the space, until you came up with a new idea for what to do with it, knowing that unless things became truly dire cable operators would continue to carry it.

Of course, the same phenomenon that keeps companies from launching new channels from scratch also makes it difficult to relaunch existing channels and attract enough of an audience to make up from the audience lost from the old format, especially in the age of cord-cutting where starting up a new linear network seems like a decidedly outmoded, foolish proposition, if you don’t have any of the live events that are the main purpose of linear television going forward, or any established shows moved from other networks. It’s become decidedly obvious to all parties involved that the cable network landscape is badly oversaturated, but I felt that, without cord-cutting accelerating substantially, no one had any incentive to shrink it – so long as the Big Nine could still get cable companies to carry them, they had no reason to shutter any of them and deprive themselves of a revenue stream. Rerunning old content over and over would still bring in more money than losing the space without being able to get it back if you had a better programming idea.

There is some evidence, though, that cable companies are getting more and more empowered to at least try to dump networks they see as worthless, as they look for ways to shrink their packages to deliver more value and more reason for people to sign up for them. As much as online pay-TV services like Sling TV and PlayStation Vue have failed to live up to their promise of slimmed-down channel lineups, instead carrying most of the Big Nine’s entire portfolios, they’ve still placed some pressure on the Big Nine to shrink down what they have to carry, especially coupled with traditional cable companies’ efforts to create truly “skinny bundles”.

It’s hard to say what the tipping point was. By the time A&E Networks followed through with its announced replacement of H2 with the Viceland network in February, it was already widely ridiculed despite the head of Vice boasting that it would “return millennials to cable TV”. The general consensus was that Vice had no illusions of reaching “millennials” by any means other than online, and a linear network would simply broaden who it could reach at very little cost to Vice itself with the potential to bring in additional ad revenue. Al Jazeera America shut down two months later without replacement, despite the efforts of OneAmerica News Network to take over the space, in part because it wasn’t backed by any of the Big Nine. The same goes for the October shutdown of the Pivot network, itself already a merger of the Documentary Channel and Halogen network. The shutdown of Esquire, triggered by both AT&T and Charter looking to dump it, suggests the Big Nine’s bundling practices won’t insulate them from having to cut down on their networks.

To be sure, the Big Nine will continue to play musical chairs for as long as they can – Comcast is reportedly also looking into converting Oxygen into an outlet for crime dramas – but if the shutdown of Esquire is any indication, we may finally be about to see a market correction as the cable network landscape contracts to just those networks that are absolutely necessary, or at least sustainable. Losing Esquire on its own won’t cause anyone to dump cable, but if the trend accelerates fast enough, as more networks shut down there will be less of a reason for those subscribers that remain to keep their cable subscription, and eventually we should reach an equilibrium where cable is priced low enough to actually be worth the cost for those subscribed to it, while the migration of the “lost” content to the Internet, heralded by Esquire’s conversion to a digital platform tied to the Esquire magazine web site, will minimize the damage from the contraction and increase the value of cord-cutting. We could be seeing the start of the formation of the video landscape of the future. Again, assuming there is a future.

How NBC Gets the Olympics Exactly Backwards

Another Olympics has come and gone, and with it another round of hand-wringing over NBC’s tape-delay policy, fueled further this time around by NBC’s historically low ratings for its primetime coverage. NBC’s primetime coverage averaged a 14.4 household rating, dominant over the rest of TV but the second-lowest mark for a Summer Games since at least 1968 and probably ever, beating only Sydney in 2000, with declines especially acute among key young-adult advertising demographics. People are still trying to figure out the reasons for the low ratings, especially since everyone expected numbers much closer to London (the highest-rated non-North American Summer Olympics since 1972), but plenty of wags on the Internet and among sportswriters are pointing the finger at NBC’s long-standing and woefully outdated policy of tape-delaying the marquee events for primetime. This, of course, despite the fact that Rio is only an hour off of the East Coast and many events, including the marquee track and swimming events, aired live in primetime, meaning if anything NBC is likely to come to the conclusion that the Games suffered because they were live, not because they were taped. London had no events live in primetime, while NBC pulled strings to get Michael Phelps’ chase for gold into the morning time slot in Beijing, putting it in primetime on the East Coast. The result: London’s completely taped coverage beat Beijing’s mostly-taped coverage, which beat Rio’s mostly-live coverage. It sure looks like tape delay helps NBC’s ratings rather than hurts them, no matter how much people on social media may whine about it.

Further fueling this attitude is the popularity of the Olympics on the West Coast, where even NBC’s live primetime coverage is delayed, and thus where the whining about tape delays reached a fever pitch, but which is perennially the region where the Olympics are most popular, something NBC Sports chairman Mark Lazarus pointed out. But the dominance of the West Coast is not what it used to be; Salt Lake City and Denver were the top two markets, but San Diego was the only other market in the Pacific or Mountain time zones to crack the top 20. In Beijing, those three markets were joined by Portland in the top 10, and at least in the first week (when Phelps raced), four more West Coast markets placed in the top 17 with higher-than-average ratings, including every West Coast market in the top 40 except for Seattle (which gets the CBC’s live coverage on our cable systems). Had that held, it would seem to suggest that, even holding the time slot and specific games constant, tape delay only improves ratings. Instead, it raises the question of whether the West Coast, and indirectly audiences in general, really are souring on tape-delayed Olympics coverage.

Of course, since 2012 NBC has allowed people to stream almost all the events live regardless of where they live, albeit with the Olympic international feed’s announcers, and NBC claims that when streaming and cable are added in (for the first time ever, NBCSN and Bravo aired coverage in primetime that cannibalized some of NBC’s audience), the Rio Games trailed only London as the second-most watched ever. Streaming, however, remains only a teeny-tiny subset of total viewing, with the total amount of streaming for the entire games accounting for as much consumption as an hour 45 minutes of NBC’s primetime coverage.

But even though live sports streaming in general has a fraction of the popularity of viewing sports on linear TV, that only gets to the real problem with NBC’s “Olympics as ultimate reality show” approach, namely that it treats the Olympics as a type of programming that is slowly losing its relevance to linear television. Indeed, as “cord-cutting” increasingly emphasizes being able to watch what you want when you want, leaving live events as the sole area where linear television retains a purpose in the face of the rise of the Internet, NBC’s approach of streaming the Games live and delaying events to be neatly packaged for its linear network seems to be exactly backwards. As I’ve said before, streaming is not and may never be well-suited for airing major live sports events, and while complaints about Olympic streaming seemed to be more about the experience of getting through NBC’s authentication and its insistence on delaying the Opening Ceremony even on the stream than the sluggishness experienced in London, if NBC continues to insist on streaming as the only guaranteed method of watching marquee events live, it will only put themselves under more and more strain, or alternately greatly increase the cost of delivering the Games smoothly, as streaming becomes more normalized as a means of watching content. On the other hand, it’s disingenuous for NBC to insist on packaging the marquee events for showing when everyone is at home and then require that those events be shown at the same time for everyone even when they’re not live; after all, not everyone has a 9-to-5 job where primetime is the most convenient time to watch the Games. There is a place for recorded, prearranged programming on linear television, but that place is heavily reliant on social media, and social media was disproportionately represented by those that didn’t like NBC’s current strategy.

By the end of NBC’s current contract running through 2032, I could see NBC’s linear channel(s) (assuming it still exists as such) sticking strictly to airing the marquee events live, while also offering its traditional packaged coverage for streaming online whenever someone wants to start it for those who want the Olympics as “ultimate reality show”. That NBC does not do this already, instead forcing both the sports and reality fans to watch tape-delayed, packaged coverage at a specific time in order to maximize ratings for that specific time and sell ads at the highest price, is a sign both of how far streaming has yet to go to achieve normalcy, and a sign of how slowly linear television is embracing its true nature and the key to its future.