The Game to Show the Games

THE GAME TO SHOW THE GAMES now available in paperback!

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After two months being available only for Kindle, my book, The Game to Show the Games, is now available in paperback from Amazon, for those who still prefer having their books on paper. A link to the Amazon page has been added to the book page on this site, and once Barnes and Noble begins offering it on their site I’ll add a link there too; it should also start to become available on various other online book retailers over the next few days. (Don’t bother looking for it in physical bookstores unless it really takes off, though.)

I’ve also added a cover image to the sidebar that will link to the book page, and as soon as I have suitable images I’m going to add links to buy the book to the ad spaces so the bottom one isn’t plugging a webcomic that’s been defunct and inaccessible for years. I also took the opportunity to finally get rid of that outdated Twitter widget hat hasn’t been supported for years, but the replacement had to go onto the right sidebar underneath the blog archive elements because Twitter currently supports only one style of widget and it can’t be narrower than 180 pixels.

Does ESPN Have a Fixed Cost Problem?

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Recently ESPN President John Skipper was interviewed by the Wall Street Journal about the numerous challenges facing the company in the age of cord-cutting, as became apparent over the past year. Here’s a telling excerpt from the interview:

WSJ: A lot of your sports rights deals are locked in for years. Given how pay TV is changing, how will that affect your negotiations with the leagues?

Mr. Skipper: It’s too soon to predict. Sports is a growth business. I think it would be foolish to predict that sports rights (prices) will decline. We hold more sports rights than the rest of the sports media combined. All we have to do is use all those rights to create continuing growth in revenue to cover them. To date, we’ve demonstrated that we’ve been able to do so, and I’m highly confident we will continue.

WSJ: Do you have any wiggle room with your league partners to adjust payments if things change and cord-cutting really picks up? Would you want that flexibility?

Mr. Skipper: We don’t have any contingent payment plans. We have rights agreements with defined payments. It’s probably not practical. I wouldn’t particularly entertain it if people came to me and said, “Gee, I’d like to do a deal with you, but if the economy’s worse I’d like to pay you less.”

Of course, there’s a big difference between a sluggish economy and cord-cutting: a sluggish economy is, in theory, a temporary phenomenon. Cord-cutting is a permanent shift in the way we consume our entertainment, and while declaring it a fad that’ll end once my generation has kids might be a good way to try and delude Wall Street into keeping investing into the business, deluding yourself into thinking that to the point of making long-term decisions based on that assumption would seem to be suicide. Indeed, BTIG analyst Rich Greenfield, perhaps the loudest voice on Wall Street casting doubt on ESPN’s long-term viability in the age of cord-cutting, identifies this as the single biggest fatal flaw that could come back to bite ESPN later:


Most of these sports, of course, ESPN “overpaid” for under a very different set of assumptions, that of the sports TV wars and the need and desire to keep valuable sports out of the hands of Fox and Comcast (the latter of which Greenfield has acknowledged elsewhere). In retrospect of course, the best approach for ESPN might have been to let Fox and Comcast have valuable sports to shore up the cable bundle, but to some extent they did that, particularly by tag-teaming with Fox on a number of rights. In the case of the NBA deal, Adam Silver quoted ESPN a price that Fox and Comcast were willing to pay, and ESPN could either pay that price, or wait for the exclusive negotiation window to end, at which point either the price would go up, Fox or Comcast would steal the rights away from ESPN, or both. Perhaps in retrospect ESPN should have let Fox or Comcast steal the rights and have them take the financial hit, but that would mean ESPN wouldn’t be able to sell NBA games (its most valuable non-football content) as part of any hypothetical future direct-to-consumer offering, and more to the point, Fox or Comcast would. As much as ESPN might suffer from accelerated cord-cutting, as it stands they’re much more able to monetize the rights they do have than Fox or Comcast, and those two companies might be poised to suffer much more (especially Fox), though their regional sports network interests might help offset that. It’s worth noting that ESPN consciously left a number of potential rights deals on the table, most notably NASCAR, in order to save up for an NBA deal, so it’s not like ESPN had the right to spend like Midas before; after all, even before cord-cutting became a household word, Disney was vigorously fighting a la carte bills in Congress. (And while ESPN and the NBA haven’t launched the OTT service that was part of the deal yet, its very inclusion as part of the deal suggests ESPN has taken at least some steps to shore up its empire against cord-cutting.)

Skipper argues that his company’s deals allow them to increase revenue, both by selling ads against the content and by using it as justification to raise subscriber fees further. So long as the cable bundle continues to exist, that’s true, even in the face of cord-cutting: the more audiences that find indispensable content locked up with ESPN, and thus find ESPN itself indispensable, the more indispensable ESPN is to cable operators, the more indispensable the cable bundle as a whole is to people that might otherwise consider cord-cutting, and the more audiences find value in any offering that has ESPN in it. Of course, I would argue that because of how much non-sports fans have been subsidizing sports networks, sports networks are probably overvalued compared to if they had to stand and fall on their own merits, so if the cable bundle completely broke up ESPN’s revenues would have no choice but to decline – the commonly-quoted $30 a month ESPN would supposedly have to charge to break even on an over-the-top offering is based on how many people would subscribe to ESPN in an a la carte world in the abstract, divorced from price, or at best at the $8 a month price ESPN and ESPN2 charge cable operators now, without regard for how many people wouldn’t be able to afford it at $30 a month. But realistically, the cable bundle isn’t going to break up tomorrow; Dave Warner estimates that, given ESPN’s continued carriage fee hikes, it wouldn’t even start making less money than the prior year until at least another year from now, and those losses wouldn’t become catastrophic until 2019 or 2020 at the earliest. By that point it’ll be time to renegotiate the Major League Baseball and Monday Night Football deals, allowing those deals, at least, to be brought up to date with the new reality, if ESPN’s able and willing to keep them at all, though it’ll be stuck with the NBA and college sports deals worth hundreds of millions of dollars a year until mid-decade and running the SEC Network into the 2030s.

But even if cord-cutting reaches the point that ESPN finds itself caught between deals signed under a very different environment and a present-day environment that doesn’t allow them to monetize it, there’s one more factor that could allow them to renegotiate many of those deals or may have justified the negotiation of contingency plans that go beyond a “sluggish economy”: sports entities would be just as upset about a contracting ESPN as ESPN is, even if they’d still be collecting the same money.

The College Football Playoff is the example I always bring up on this front. When the BCS first signed its blockbuster deal moving the Rose Bowl and college football’s national championship to cable in 2008, they made a lot of noise about how people wouldn’t be deprived of the games because ESPN was in the vast majority of homes and those homes it wasn’t in tended to fall outside of valuable advertising demographics, were disproportionately less likely to watch the games to begin with, or otherwise wouldn’t represent any big loss for ESPN and the BCS. That’s not a given anymore; my generation lies right at the heart of the cord-cutting movement, and as I alluded to earlier, not every sports fan, even those that find ESPN indispensable, will be able to pay $30 a month for it. I have always said that no major sports competition wants to go the way of boxing, with all the fights anyone would care about on premium cable and pay-per-view, and $30-a-month a la carte ESPN would be even more of a luxury than HBO, indeed would cost twice as much. There’s no way college football would want its national championship hitched to that wagon (assuming they actually want the playoff to succeed); the entire sport’s mindshare would plummet.

So if cord-cutting started accelerating to the point where ESPN is in only a third of households, I would imagine the CFP would want the playoff moved to ABC, and in return ESPN would be able to win lower rights-fee payments. Similarly, the NBA could win more regular-season and playoff games on ABC in exchange for lower rights fees, and the same might go for college conferences although there would be more restrictions there (in football, most of them are probably already on ABC as much as they realistically can be, except for the SEC which has exclusivity with CBS). This process is already starting: witness the move to simulcast this year’s NFL Wild Card playoff game on ABC, as well as the much-hyped move of regular-season NBA games to ABC Saturday Primetime, even if they’re coming out of ABC’s Sunday slate at the moment.

Of course, this depends heavily on broadcasting itself continuing to remain viable, and I’m not sure it should continue to be necessarily free if it does. Still, the fact remains that the cord-cutting revolution is going to put a big hurt on all media companies, and ESPN might be able to weather it better than most, and have a better chance of getting out from under the rights-fee payments Greenfield worries about than the text of the contracts might suggest. A big bellwether is going to be the Big Ten negotiations that should wrap up sometime this year; the most likely outcome seems to be ESPN and Fox sharing the rights, and for ESPN to leave them on the table entirely would effectively be admitting that Greenfield is right and ESPN has paid too much for sports rights overall and is now trying to ratchet them down quickly in the age of cord-cutting, to the point of letting competitors have a property as valuable as the Big Ten, which may be second only to the SEC among college conferences. At the same time, it would be foolish to simply ignore cord-cutting and the prospects for its continuation when valuing the Big Ten rights, so if ESPN and Fox pay in the same vicinity of what they would have paid in the pre-cord cutting era, it might be less a mistake in and of itself, as Greenfield might see it, as a sign that ESPN still believes its rights portfolio will prove to be worth what they’ve paid for it even if cord-cutting accelerates. On the other hand, if they pay substantially less but still leave the Big Ten walking away with a decent chunk of change we’ll get a better sense of the real value of sports rights when they aren’t inflated quite so much by the cable bundle. But if they pay a fraction of what might otherwise have been expected, maybe even behind inflation compared to ESPN’s existing deal and what Fox is paying for the conference’s football championship game? That’s when it’ll be time to panic, both regarding the struggles ahead for ESPN and the house of cards (no pun intended) all of sports has come to be built on.

The Sling TV-style service ESPN really fears (and why Sling TV has what it has)

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According to SNL Kagan estimates from last spring (listed here), here are the most expensive channels on cable (not counting broadcast retransmission fees or regional sports networks):

  1. ESPN ($6.61)
  2. TNT ($1.65)
  3. Disney Channel ($1.34)
  4. NFL Network ($1.31)
  5. Fox News ($1.12)
  6. USA Network ($1.00)
  7. FS1 ($.99)
  8. TBS ($.85)
  9. ESPN2 ($.83)
  10. Nickelodeon ($.73)

The heavy presence of sports channels on the list, topped by ESPN having several times the figure of the next most expensive network, may be the most obvious thing that jumps out at you, but there’s something else remarkable about this list. I mention in the book that the vast majority of channels on your cable lineup are controlled by nine companies, but seven of the ten most expensive networks are controlled by just three companies: Disney, Fox, and Time Warner, who also represent two of the four major broadcast networks and the largest owner of regional sports networks. An eighth, NFL Network, isn’t controlled by any of the Big Nine. The remaining six members of the Big Nine account for just two of the ten most expensive networks, USA and Nickelodeon. Add Comcast to that group of three and you have three major broadcast networks, most of the country’s regional sports networks, and eight of the top nine most expensive national cable networks, not to mention HBO, with Showtime owned by the remaining broadcast network.

Last month I suggested that ESPN actually benefits from having as many companies as possible invested in sports, keeping them tied to the cable bundle and preventing any attempt to defect from it from being much use for sports fans. But only those four companies – Disney, Comcast, Fox, and Time Warner – have any serious investment in sports on cable, with CBS the only other Big Nine member with any stateside presence in sports at all. I talk about the Big Nine, but the reality is there’s a divide within the Big Nine between the Sports Four-and-a-Half – which as it happens, make up the most valuable members of the Big Nine according to the Fortune 500, in rough order of the level of their investment in sports aside from Comcast being propelled by its cable-operator business ahead of the rest – and the remaining members with no presence in sports. What would happen if those four companies – Viacom, Discovery, AMC, and Scripps – decided to defect from the cable bundle themselves, on their own or individually?

Let’s do some back-of-the-napkin math. Let’s start by assuming that the average American sees $50 of their cable bill go towards programming costs. Just getting rid of every network that’s not Nickelodeon on the list above takes out $15.70 of that total. Take out another 87 cents for ESPNU, NBCSN, and Golf Channel (based on numbers here). Take out another $5 for retransmission fees for broadcast stations, and another $3 for regional sports networks. Take out another $2.28 for another seven networks listed here, and around 10-20 cents for each additional network owned by one of these five companies in over 75 million households, so about 14-ish – let’s say that comes out to $2.15 so we get a nice, round number of dollars. That comes out to $29 in savings, over half of that $50 figure. That would mean a service from those four companies could cost as little as $21, about the same as Sling TV, though realistically in order to make up for the consequences it would charge at least $25. On the other hand, that figure also includes networks not owned by any of the Big Nine, as well as networks in under 75 million homes (which is still a substantial majority of homes), and it also undercounts the total for markets with multiple RSNs not counting college conference networks and might undercount the retransmission haul as well (not to mention the price for the remaining networks being taken out), so it’s possible the true figure might come down below $20. Viacom is the only company not already present in Sling TV, so if you take that as a baseline our service might cost as little as $10 just from taking Sling and removing the Disney networks, and if necessary Viacom has both the most expensive single network and a suite performing weak enough small cable operators are increasingly comfortable going without it and shareholders are questioning Sumner Redstone’s mental fitness to run the company, so jettisoning them would probably shave at least $2.40.

Whether $10, $20, or $25, what would that give the consumer? Well, there’d be an eclectic mix of documentary and lifestyle programming from the Discovery and Scripps networks. If you kept Viacom in the mix you’d have kids and family programming from Nickelodeon and Discovery Family, plus popular reality and other shows from MTV, VH1, and Spike, some of which might complement the Discovery/Scripps selection. Viacom would also have a back library of TV shows and it and AMC would have a decent movie selection, though maybe not on-demand, while AMC might also contribute some popular British shows from BBC America. And of course you’d have The Walking Dead and other popular and critically-acclaimed original shows from AMC, plus other original shows from OWN and the Viacom networks including South Park. Other than sports, the main thing you’d be lacking would be news or anything from the last decade that wasn’t originally produced for one of these networks (the main exceptions probably being on Comedy Central), and if you’re looking for anything specific associated with a network owned by one of the Sports Five you’d be out of luck, but as a complement to other services that exist such as Netflix and Hulu it could be a decently valuable collection, especially if you can price it substantially lower than Sling TV’s $20, and/or if Viacom brings enough value to the table to make up for the loss of the Disney and Turner networks.

Perhaps more important than the raw price, however, would be the fact anyone signed up for such a service would not be paying any form of sports tax. Unlike Sling TV, our service would allow anyone without a lick of interest in sports to get valuable cable content previously unavailable outside of a cable bundle without subsidizing a single sports network of any kind. That means even if it’s less popular than a Sling TV, if it gained any kind of traction whatsoever it would be a much bigger existential threat to the cable bundle and ESPN’s business model than anything else that exists so far. For the record, in the piece I linked to in my post a month ago about how a standalone ESPN would break up the cable bundle, the analyst in that piece specifically talks about a service consisting of precisely these four companies plus Turner, priced at $15 a month, suggesting $10 for these four companies alone is quite reasonable.

When talking about the cable-bundle business model, sports writers often note that just as non-sports fans subsidize sports networks, so do sports fans subsidize networks like AMC.  Of course, this attempt at equivocation, even if it comes down to a single sentence in an article, seems way overblown; if you believe the total amount being spent on the cable bundle reflects fair market value for whatever each consumer gets out of it, then if some networks are getting more than their open-market value others are getting less, and it seems likely that by and large, sports networks fall into the former category and most non-sports networks the latter. But in this area, the notion that non-sports networks are receiving some value from remaining attached to the cable bundle, and being subsidized by its sports fans, seems to be an important one. It is quite telling that while only two of the Sports Five are associated with Sling TV, three of the non-sports four are part of it. How much do Discovery, AMC, and Scripps continue to value remaining tied at the hip with ESPN, or at least keeping the cable bundle stable? Were they already aligned with Sling TV and either ESPN felt obligated to join them or Dish felt obligated to recruit them? Conversely, if ESPN came first, did they have any say in what other companies would be part of Sling TV? And how long until the calculus changes and these companies decide they have enough to gain to be worth defecting from, and thus potentially destroying, the cable bundle? Right now ESPN and the non-sports four need each other enough to be tied at the hip even into their ventures into OTT, even more than the companies with sports investments, but one day the time will come where ESPN needs them more than they need ESPN – or worse, they come to see their association with ESPN as a liability – and that may well be the day the cable bundle dies, or is at least terminally injured.

Towards a New Broadcast Television Compact

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A common line of argument used to support policies that hurt broadcasters is that broadcasters received their spectrum for free. Cable companies complaining about how slanted retransmission consent supposedly is towards broadcasters claim the government requires them to carry all broadcast stations on the basic tier – broadcasters, they point out, who receive their spectrum for free. Whenever broadcasters complain about the many, many problems with the incentive auction, they are told they received their spectrum for free and they should count themselves lucky they’re receiving anything for it now. The government itself, in the form of the FCC and Congress, justify imposing regulations on content, such as decency restrictions and the E/I and public interest requirements, as part of the deal broadcasters have: they received their spectrum for free, and this is what they must do in return to serve the public interest.

That deal is the one that was struck all the way back in the Communications Act of 1934, and even back in the Radio Act of 1927 that established the FCC’s predecessor and put television under its purview back when it was still just an experiment. The idea back then was that, since no one could truly “own” the airwaves, the government would grant licences to stations to broadcast over them to serve the public interest, paid for by ads and available for anyone with a receiver to tune in for free. This was in contrast to the model taking shape in most other countries, especially Europe, where the government controlled most broadcasting and ran, or at least supported, the dominant broadcaster(s). America, by contrast, allowed the private sector to control the airwaves for free, so long as they used it to serve the public interest and made it available to everyone for free.

This worked well for a time when broadcasters had a monopoly on video content outside the movie theater, and when there were only three major networks providing programming. Some questioned the quality of the entertainment programming, but broadcasters provided high-quality news and affairs programming, and while the First Amendment meant the government couldn’t outright crack down on criticism of the government – it’s doubtful Walter Cronkite would have been able to criticize America’s involvement in Vietnam if he worked for a government broadcaster – the public-interest obligation and government licences allowed the FCC to crack down on stations that attempted to use their valuable spectrum to disseminate propaganda, which it used on several Southern stations that broadcast an anti-civil-rights message.

It began to break down, though, with the dawn of cable television networks. Since cable networks didn’t use the public airwaves, Congress decided it fell outside the FCC’s purview, meaning they didn’t have to follow any of the restrictions on content applied to broadcast stations. Rather than repeal those restrictions, though, Congress added more of them, especially in response to complaints over the “30-minute toy commercials” that took over Saturday mornings in the 80s, which only hastened the slow demise of Saturday morning children’s television completely as the shows kids actually wanted to watch moved to channels like Nickelodeon. The existence of “narrowcast” channels like Nickelodeon and ESPN themselves were increasingly not possible on broadcast television even as the digital transition expanded the number of channels available; subchannels had to earn their public-interest and E/I keep even if they had no interest in forwarding them or were trying to compete with networks that didn’t have to follow them. The idea, presumably, is to ensure some channels are furthering the public interest, educating and informing the public while serving as a safe haven from the sex and violence on cable, but by forcing every broadcast station to meet that standard, while expecting them to compete for advertising dollars with cable networks not so constrained and requiring them to offer their wares for free, Congress and the FCC are effectively forcing every broadcast station to follow the public-television model to some degree.

Perhaps that might be a fair price to pay for broadcasters’ “free spectrum”… except that as I’ve chronicled time and time again over the past few years, the technology of broadcasting is valuable in its own right as the Internet takes over the distribution of video, as the best, most efficient way to deliver content to a bunch of people trying to watch the same thing at the same time, especially to mobile devices where using over-the-air spectrum is the only way to deliver content, over-the-air spectrum that is inherently more constrained than a wired Internet connection. The FCC is about to auction off broadcast television spectrum to wireless carriers that need it, to the extent they need it at all, to deliver video, and AT&T and Verizon are working on technologies to use their own spectrum to effectively build their own broadcast networks, which will likely deliver much the same content between them but force you to sign up for one of their carriers to receive it. It would seem the public interest today is served by some sort of platform-, device- and carrier-agnostic service to deliver video, especially video people want to watch at the same time, without running up against data caps, but as it stands no one would want to buy a broadcast station for the purpose of such a service – it’d be useless for something like Game of Thrones that would run afoul of the decency standards, and they would need to meet the public-interest and E/I requirements even if they have no interest or ability to do so, and even if such content would have no reason to have a place on a linear television schedule, not to mention that they would need to operate such a service on the back of advertising (or donations) alone, unless they wanted to take retransmission consent, and if they did why are they running a broadcast station and not a cable network?

Clearly, the old broadcast television compact is outdated in an age where broadcasting is expected to compete with platforms not bound by it, and if we want broadcasting to continue to survive and thrive for years to come, we need a new compact. We need a service that serves as a complement to the Internet at large and a means to further our goals for it, a vision of over-the-air broadcasting as a fundamental part of the Internet, not merely an alternative as broadcasting was expected to be for cable. What we need from broadcasters today is to serve as a platform for any content that wishes to minimize the cost, whether to itself or to Internet providers, of reaching a large number of people, a means of ensuring a high-quality stream for all customers regardless of provider or the content producer’s resources while minimizing the demand for spectrum, simultaneously a control on and release valve for the big wireless carriers.

This platform can’t be placed under the control of those big wireless carriers or wired Internet providers, but to the greatest degree possible, should be open to whoever wishes to take advantage of it. The principle of the free market should apply here; neither the government, Internet providers, or a single large corporation or group of corporations should control what content gets to use this platform, but rather it should be decentralized among as diverse a collection of voices as is possible. Because the existence of this platform is valuable in its own right, there is plenty of reason to offer it to those already taking advantage of it for no greater cost than the opportunity cost of not surrendering it to wireless providers and without further strings attached, and doing the same for new entrants if there is enough spectrum available for all of them, but if there is enough demand to warrant auctioning off new channels the government can certainly do so.

The principle of the free market, and of fostering a vital technology within the overall system for the distribution of content, also means that requiring certain kinds of content on every channel, and certainly prohibiting certain kinds of content that might otherwise warrant taking advantage of the platform, makes no sense and at best bears no relevance to the goal or the technology; leave the furtherance of whatever specific public-interest goals interest groups want to the public stations and let the free market reign on the remaining stations. And as much as it pains me to say this, it also means letting go of the notion that broadcast television needs to be made available to consumers for free. If a pay-per-view event or something on a subscription service would still attract a large enough audience to warrant taking advantage of the broadcast platform, it should be able to do so, although the government may want a piece of the resulting fees. I have no doubt that in most cases the free market will reward content targeted at the broadest possible audience with the lowest barriers to entry.

The success of any platform depends on its attractiveness to the most popular content that can take advantage of it, which usually means the largest players in the space. Right now broadcasting is only marginally popular by that standard, even though it is tailor-made for popularity. We need to let go of outdated regulations holding broadcast back in order to create the video distribution system of the 21st century, and that means not being led astray by the 20th century vision of broadcasting that spawned them.

TGTSTG Bonus Content: The Saga of the Longhorn Network

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ESPN and Fox had saved the Big 12. Their commitment to pay the Big 12 the same with 10 schools as with 12 schools, coupled with virtually the entire college football world outside the Pac-10 converging to try to prevent conference realignment Armageddon, enabled Big 12 commissioner Dan Beebe to offer Texas, Texas A&M, and Oklahoma enough of a financial inducement to stay in their conference and not defect to the Pac-10. Texas athletic director DeLoss Dodds effectively said as much, though not in so many words. Though a Longhorns network was “really important” to the school, and a move to the Pac-10 would have precluded that by forcing the school to surrender their rights to the conference for their own network, it wasn’t the “deal-breaker” to back out of the deal. Chris Plonsky, who headed the school’s women’s sports, similarly said that the ability to start a network wasn’t the “linchpin” that kept them in the Big 12, but it was a “very important variable”. Certainly it was a key element allowing the math to work out, and was widely perceived as the bedrock on which the foundation of the entire conference would be built going forward. Unlike other conferences that could plausibly claim to have an all-for-one, one-for-all mentality, the Big 12, it was just made clear, existed only because Texas allowed it to exist, and Texas allowed it to exist because it could collect much more money than the conference’s other schools, with many millions staked on a Longhorn network, an entire network dedicated to one school and potentially beamed directly into the campuses of many of its conference rivals, that would prevent the Big 12 from even considering going down the conference network path their peers were headed down. But Texas, despite having one of the biggest brand names and fan bases in college sports, was about to learn starting their own network would not be easy.

If anyone was as disappointed in the outcome as Larry Scott and the Pac-12, it was probably cable operators and satellite providers across the country. The formation of a handful of superconferences at least would have kept to a minimum the number of networks each of them would have tried to launch. Now, however, Texas, Oklahoma, and even Missouri were each talking about launching their own networks, and it wasn’t clear whether or not SEC or ACC schools would try to follow suit. There seemed to be a sense that launching a network was an automatic ATM guaranteed to let the money flow in. Cable operators wanted to make clear that things were not that easy and that they would take steps to protect their bottom line, and potentially, their customers’ bills. And they intended to make an example out of a Longhorn network.

Perhaps sensing the uphill battle ahead, Texas planned to invest no money in the enterprise and carry no risk if it failed. It would find a partner that could help with distribution and was willing to shoulder all the risk. Fox seemed to be the early leader in the clubhouse; it held most of the rights a new network would need and could conceivably use FSN’s existing deals with cable operators and satellite providers to get the network widely distributed right from the start. Fox also had experience partnering with the Big Ten on the Big Ten Network, something the other major contender, ESPN, had no experience in. But ESPN was able to make a renewed push to score the rights to, and full ownership of, the Longhorn Network. It would have to launch the network from scratch and go through all the bruising battles with cable operators, but as it turned out, if Texas did have to launch the network from scratch, it couldn’t ask for a better partner than ESPN.

The road was very bumpy to start. Even before engaging in high-level negotiations with cable operators, the network had an early misstep when ESPN decided it would be a good idea to air high-school football game, only for other schools to wonder whether that might violate NCAA recruiting rules or otherwise give Texas a recruiting advantage above and beyond that represented by the network itself. That, coupled with ESPN securing the rights to a conference football game, caused some to wonder whether the conference was on the brink of collapse again, and helped push Texas A&M and Missouri to jump ship to the SEC.

Meanwhile, ESPN went to distributors asking for 40 cents a subscriber, expensive for a cable channel but chump change compared to major-conference and regional sports networks (BTN started out charging 70 cents). Nonetheless, as the launch approached the network was far apart in talks with Time Warner Cable, DirecTV, and Comcast, in part because of the uncertainty surrounding high school and conference games, and in DirecTV’s case, because they wanted to wait for conference realignment to settle down (A&M was actively engaged in negotiations with the SEC as the network launched). It did have a deal with Verizon, but lacking a deal with TWC meant most people in Austin and a substantial proportion of people across the state wouldn’t be able to watch Texas’ 2011 home football opener against Rice. With even Verizon’s deal not kicking in until about a week after the network launched, the Longhorn Network opened in just 20,000 households. For all the controversy the network had engendered, almost no one, even within Austin let alone the state of Texas, could see it, and in a prelude to the CSN Houston and SportsNet LA showdowns to come, cable and satellite operators were remaining steadfast; by June, TWC and DirecTV weren’t even talking about carrying the network.

The network added AT&T U-Verse in time for the 2012 season, but the network was starting to look like folly; Oklahoma had gone deep into negotiations with Fox on a branded network, but what eventually emerged was merely a block of programming on Fox’s existing regional sports networks, while football coach Mack Brown, always uncomfortable with the level of access LHN wanted, seemed to imply that the distractions and added intelligence LHN provided may have contributed to Texas’ slow start that season. By 2013, it looked like LHN would enter a third season still without coverage on the largest distributors, casting a shadow over ESPN’s efforts to launch the SEC Network.

But just as the season prepared to begin, ESPN finally reached an agreement for Time Warner Cable to carry the Longhorn network. In March 2014, Disney reached a wide-ranging deal with Dish Network that included carriage for the Longhorn and SEC Networks, with DirecTV doing the same in December. What, exactly, changed to cause such a breakthrough, and whether it was a concession more on ESPN’s part or with distributors, may never be known, but one thing that is clear is that ESPN’s leverage with its panopoly of other networks was key to securing deals, certainly with satellite providers. Would the Longhorn Network have been able to overcome its early struggles to secure deals with distributors with any other partner, or certainly if Texas had opted to go it alone? It’s a question worth asking, and it helps explain why the ACC is still thinking about pursuing a network as a conference rather than individual schools looking into their own networks. Ultimately, the Longhorn Network’s success, as qualified as it is, may have more to do with the power of ESPN’s brand than Texas’.

Note: I’m probably not going to finish this initial series of Bonus Content posts this week; among other things, I still need to help put the finishing touches on the paperback. Hopefully the entire series will be done by the end of next week with whatever other posts I want to put together coming out over the rest of the month.

TGTSTG Bonus Content: How European Soccer Conquered America (With Fox’s Help)

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Chapter 3 of the book devotes three sections to soccer, and that was cut down from my initial draft of that part of the book. Because of the number of different important competitions represented, soccer presented several different examples of the fight between different sports outfits to pick up rights, and the most obvious example I found of how smaller, more niche sports and competitions benefitted from the competition. Even if soccer weren’t enjoying a boom in popularity, there would probably be a lot of it available on sports networks in the digital-cable era, especially given how much of it airs at times when no American sports are on. But my initial draft of the chapter would have spent a lot more time on the soccer boom itself, and just how much Fox Sports World/Fox Soccer Channel, and later ESPN’s World Cup coverage, contributed to it.

If I had to guess, I doubt anyone at Fox had any high-minded notions of increasing soccer’s popularity in the United States when they launched Fox Sports World. They just wanted to get their piece of the digital cable boom and supplement the Fox Sports Net group of regional sports networks they were building, and international rights Fox already held was an easy way to build such a network. Besides the rights Fox owned itself, the Prime network that was FSN’s foundation had aired a weekly hour-long highlight show of matches from England’s Premier League until losing the rights to ESPN in 1996, as well as airing the 1995 FA Cup final live, and operated a Spanish-language RSN in the Los Angeles area Fox converted into the (nationwide) Spanish-language version of Fox Sports World. To be sure, Fox ran an ad campaign for the network centered around its soccer coverage during the 1998 World Cup, less than a year into the network’s existence (until ESPN put the kibosh on cable companies and ABC affiliates running ads for a competitor), but Peter Ligouri, head of marketing for the division that included Fox Sports World and FSN, claimed the ads were targeted at people who were already familiar with the world-class leagues Fox Sports World aired. “We are not trying to grow the sport, we are trying to showcase our inventory,” he said. Even within Fox, it must have seemed doubtful anyone would be interested in FSW’s programming other than expatriates looking to keep up with the action back home.

Two years later, though, people at Fox were already starting to change their tune, as a quote from FSW’s then-general manager in the book shows. Fox Sports World’s programs, later Fox Soccer Channel’s programs, may have been shot out of broom closets at public-access budgets, but besides exposing many would-be soccer fans to action never before available in America (or in many cases, outside their home country) before, it served as a place where they could get soccer news and information at a time when the Internet was in its infancy, and became the hub of an entire soccer community, one destined to change the course of American soccer history. Their impact was already being felt in the aftermath of the 2006 World Cup, when they expressed outrage with ESPN’s lead announcer, Dave O’Brien, a baseball announcer with limited soccer experience. As a result, part of John Skipper’s strategy for the 2010 Cup was to build an announce team consisting entirely of British announcers known for their work on the Premier League – mostly people that had appeared on ESPN’s coverage they had already begun sub-licencing from Fox.

Jon Miller, who helped create the NHL’s Winter Classic and became President of Programming for NBC Sports after the Comcast acquisition, tells a story about getting up early on a Saturday morning to play golf, only a year or two after the 2006 World Cup, and seeing the surprising sight of his son, having come in late the previous night, up barely five hours later watching Manchester United play. His other son also got up early to watch Liverpool games, and he saw other neighborhood kids get up at the crack of dawn to watch the Premier League. “I said to myself, ‘There’s got to be something here to this.’ If you don’t learn from your kids you’re making a big mistake,” he reflected several years later. It was his first inkling of just how powerful a property the Premier League could be, and how successful it was already being for Fox Soccer, which would soon become Nielsen-rated and put numbers on the Premier League’s stateside popularity.

MLS, which had attempted to court youth soccer players at its launch, pivoted to embrace a more European model of soccer fandom based on older fans with more of a connection to the team. Seattle Sounders FC was a pioneer of the strategy; it reached out to local bars and restaurants at its launch and capitalized on many older fans’ connection with the team’s prior incarnation in the NASL, and was rewarded by shooting to the top of the league’s attendance charts, pulling in attendance figures higher than most MLS stadiums even held in capacity (many of them “soccer-specific stadiums” built in the preceding decade) and that would put them in the middle of the pack in the Premier League. By 2015, when the new New York City FC club created a new intra-New York rivalry, both sides did their best to try to imitate the European model of soccer fandom – in both its best and worst aspects: in August, fans of NYCFC and the older Red Bulls threw sandwich boards and curses at each other and sang taunts straight out of the English playbook. Thanks in part to increased interest in the league and the increased rights haul from the most recent television deal, MLS has also become a more attractive destination for players from around the world, even some in the prime of their careers, particularly from Latin America.

As for Fox Soccer, the international soccer fanbase it helped build not only proved its undoing, it ended up turning on its creator, the result both of its increased power as the fight for sports on cable heated up and the increased attention soccer was getting from people higher up the chain of command. Towards the end of Fox Soccer’s run, Fox began making a number of moves to target the general American sports market that succeeded only in alienating the hardcore soccer community it had built, the most infamous of them being an attempt to groom Gus Johnson as “the voice of American soccer”. Johnson had become a cult figure with his exuberant calls in the NCAA basketball tournament, but putting him on high-profile Champions League, Premier League, and FA Cup matches with next to no soccer experience only led to him becoming nearly as reviled as O’Brien among soccer fans. The Johnson experiment and other ill-fated moves, and a general perception of falling behind ESPN in production quality, meant many soccer fans weren’t all that broken up to see Fox Soccer go. Fox Soccer, the chief vector for the increasing popularity of the sport in the United States, had ended up collapsing under the weight of the very phenomenon it helped spawn.

TGTSTG Bonus Content: How Comcast Went from Cable Company to Sports Power

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As promised, this week I’ll be posting supplementary material consisting of content excised from the book before publication or that I just didn’t have time to write before getting the book out the door, as we prepare for the book’s availability in paperback. This week I’ll try to have one outtake from each chapter from 2 to 8, in order; in coming weeks I hope to have further outtakes ready, some on topics that didn’t fit the structure of the book.

Though his father Ralph may have been the founder of Comcast, Brian Roberts was not groomed to take over the company at an early age – though not for lack of his trying. The elder Roberts attempted to gently steer his son away from the business, but Brian remained persistent and began working for Comcast full-time in 1981, shortly after graduating from his father’s alma mater, the University of Pennsylvania’s Wharton School of Finance. It took a decade for him to prove himself to the point of being named the heir apparent in 1990, when he became president of the company.

Both before and after that point, Roberts found time to pursue his other passion: squash. An All-American at the sport, Roberts helped lead the United States to silver medals at the Maccabiah Games in 1981, 1985, 1997, and 2009, winning the whole thing in 2005. As my book chronicles, sports was a big driver for the cable industry from the beginning, even before the launch of ESPN, with boxing on HBO and Braves games on TBS, and many cable companies had interests in regional sports networks and other sports programming interests. But during the late 90s and early 2000s, as cable companies such as TCI and Cablevision surrendered their RSNs to Fox and as they chafed under ESPN’s post-1998 rate increases, Comcast under Roberts’ leadership set out to build its own sports empire that would make it as much a beneficiary of the latter-day sports boom as a victim.

During the decade from Brian Roberts’ ascension to the president spot in 1990 to when his father transferred him his voting stock in 2000, Comcast was involved in the launches of Speedvision, the Outdoor Life Network, and the Golf Channel, and acquired the Philadelphia Flyers and 76ers in 1996 to launch its own Philadelphia-area RSN along with the Phillies, soon acquiring a second RSN in Home Team Sports in the Washington, DC area. As chronicled in Chapter 6 of the book, after Roberts spearheaded the acquisition of AT&T Broadband, Comcast set out to expand its RSN empire by selling stakes in its RSNs to teams, using the template laid out by YES Network to its advantage. But Comcast had its eyes on a far bigger prize.

In 2004, with Disney CEO Michael Eisner under fire for questionable performance and decision-making, Comcast launched a hostile takeover bid of the company worth $54 billion in stock and assuming nearly $12 billion of Disney’s debt, with ESPN, whose agreement with Comcast was slated to expire the following year, widely figured to be a key motivator of the deal. But the offer popped Disney’s stock price above what Comcast’s offer valued it at, Comcast refused to raise its offer, and less than three months later the offer was withdrawn.

Rebuffed in its attempt to own ESPN, Comcast began to focus on competing with it. Comcast held talks with the NFL about forming a new sports network, possibly in combination with other cable companies, or putting NFL games on OLN, and the NFL hadn’t yet decided to put its Thursday night package on its own network – and Comcast was considered the favorite among non-league bidders – when the NHL fell into Comcast’s lap. Though the casual sports fan may have scoffed at the notion of the NHL moving to the Outdoor Life Network, Comcast had already been talking about transitioning OLN into a general sports network, potentially competing with ESPN, and while there were few paying attention to the sports television business at the time that weren’t in that business, those that were had at least an inkling of Comcast’s plans.

By 2009, though, any dreams of OLN, now Versus, competing with ESPN had become a distant memory. At least publicly, Versus President Jamie Davis disclaimed any notion of trying to compete with ESPN, instead focusing on “super-serving” fans of those sports Versus held the rights to. Though Comcast had never been as bombastic about competing with ESPN as Fox would be, nonetheless Comcast had learned firsthand how difficult it could be, especially after failing to get NFL or (in 2006) MLB rights.

NBC Universal was a prime target for another takeover attempt. It was never particularly on-brand for owner General Electric, with most other broadcast and cable networks owned by companies focused on being media conglomerates, and 2009 seemed like a particularly ripe time for GE to get out of the media business. It was the aftermath of the BCS deal, broadcast advertising had been battered in the Great Recession, and the retransmission consent market had not yet heated up. NBC in particular had become a laughingstock, mired in last place for years and going through the Jay Leno Show fiasco, and the Universal movie studio wasn’t much better. Cable networks, though, backed by the stability of their subscription fee revenue streams, were thriving, with NBC Universal’s outlets like USA, SyFy, and MSNBC gaining in viewership. By most accounts, it was those cable networks, which would give Comcast control over more of the content it would deliver over its pipes, that was Roberts’ main target when he set out to acquire NBC Universal, with the broadcast network being heavily de-emphasized and potentially spun off if regulators put up objections strenuous enough to seeing one of the Big Four broadcast networks owned by over-the-air broadcasting’s nominal competitor.

But for those in the sports field, it was NBC’s broadcast operation and its bucket of sports rights, led by the legendary Dick Ebersol, that seemed to be the most valuable part of the deal. Ebersol’s expertise at producing top-notch productions of big events, especially the Olympics, would raise the quality and prestige of Comcast’s sports operations, and NBC would both be able to share its existing sports rights with Versus and provide much-needed muscle, and an attractive broadcast outlet, to acquire higher-profile rights for the network, while Comcast could integrate its regional sports networks in Chicago, Philadelphia, the Bay Area, and Washington, DC with NBC’s owned-and-operated stations in those markets. In turn, having an all-sports cable outlet and its subscription fees would in turn help NBC acquire rights it might not otherwise be able to score; Ebersol made comments both before and after the deal closed suggesting he had long looked wistfully at ESPN’s subscriber-fee income and welcomed the opportunity to play with a sports network that could take advantage of it. For many, a merger would create the most credible competitor to ESPN yet, at least until Fox’s Fox Sports 1 plans came to light. Just how valuable sports really was to Comcast in making the deal became apparent shortly after the deal closed in early 2011, when Ebersol began making sweeping changes to both sides of the newly-formed NBC Sports Group, including promising a name change for Versus – it would eventually become the NBC Sports Network, leaving no doubt as to the impact the merger had on Comcast’s sports operations – and re-branding NBC’s golf coverage as “Golf Channel on NBC”, much as ABC’s sports operations had become “ESPN on ABC”.

But barely four months after the deal closed, and less than three weeks before the International Olympic Committee was set to accept bids for Ebersol’s beloved Olympics, Ebersol abruptly resigned after he and Comcast were unable to reach terms on a contract extension and following much friction between Ebersol and Comcast, especially over how much they were willing to pay for sports rights, in the interim. Without Ebersol and his passion for the Olympics and relationships with the IOC, it was widely believed Comcast would be less willing to bid as much for an Olympic contract, especially given how much money the last contract was losing, and ESPN and Fox smelled a golden opportunity to steal the Games. CBS and Turner, which had previously met with the IOC but had little interest, even started talking about making a joint bid, though didn’t make the trip to Lausanne, Switzerland. The IOC had told bidders it expected to at least match the $2 billion NBC had paid for 2010 and 2012, but with NBC’s losses and Comcast expected to be more responsible, ESPN and Fox prepared to give the IOC lowball offers.

Three days after Ebersol’s resignation, Roberts and Steve Burke, the man he’d installed at the head of NBC Universal, as well as Mark Lazarus, Ebersol’s replacement, met with the people that had been working on NBC’s presentation to the IOC. The executives sat through the presentation that had been prepared and listened to the employees tell them what the Olympics meant to them and to NBC. By the end of the meeting, the employees were fully reassured of Comcast’s commitment to the Games.

The final presentation included a video of NBC employees talking about their Olympic memories and what the Games meant to them, which had IOC officials tearing up. It had also, apparently, moved Comcast executives. When the sealed bids were opened, ESPN and Fox offered up bids in the $1.4-1.5 billion range for two Olympics, not much higher than Fox’s bid from last time, which had IOC officials wondering whether Fox was even serious about pursuing the property. Comcast, on the other hand, bid nearly $2.4 billion. The IOC also gave networks the option of bidding on four Games, an option ESPN didn’t even take; Fox bid $3.4 billion for that package, but NBC paid a billion more than that in the bid the IOC ended up taking.

Comcast would end up bringing back Ebersol for the 2012 Games in an advisory capacity, and unexpectedly announced a stunning, no-bid 12-year extension of their agreement in 2014, ensuring NBC and Comcast will continue delivering the Games into American households into the 2030s. But other than the Premier League and a brief, two-year spell with MLS, NBC has acquired few other sporting events it didn’t already have the rights to before the merger; ESPN and Fox beginning to tag-team on sports rights made Comcast’s climb even more uphill than it was already, and the advent of Fox Sports 1 meant a more attractive alternative to ESPN for sports leagues. There are still hopes for NBCSN to acquire the NFL’s Thursday Night Football package, but they have become increasingly distant since the NFL’s broadcast-centric negotiations awarded it to CBS in 2014. NBC knows just how hard it is for them to compete with ESPN for sports rights. But at the very least, they’ve ensured that Comcast has some sports muscle of its own to flex with other cable operators.

Does ESPN LIKE the “Competition” from Fox and NBC?

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Before I left for Seattle for a week and a half, I had reason to start thinking about the possibility of our household becoming a cord-cutting household, because as we were wrapping up the book my Dad mentioned that he had thought about cutting the cord, and maybe that he should cut the cord, but something was keeping him from pulling the trigger. What immediately leapt to my mind (besides the fact that our “TV” is not only SD, but an old-fashioned tube with dials that’s older than me and has decayed enough to be really fuzzy, especially with our cable box letterboxing literally every channel) was the fact he’s a pretty decent-sized sports fan, and an absolute soccer fanatic. (This is one reason Chapter 3 of the book spends three sections on soccer.) His favorite team is Italian, his second favorite is the Seattle Sounders, and near as I can tell his third favorite is Barcelona. So you might think he’d be able to get by with a subscription to Sling TV, which carries beIN Sport for games from Italy and Spain and ESPN3 for any Sounders games that aren’t nationally televised. His second favorite sport is basketball, specifically the NBA, and Sling TV works very well for an NBA fan, since it carries both ESPN and TNT (but not, apparently, NBA TV, despite what I say in the book).

But in order to catch every Sounders game, namely a substantial percentage of the biggest ones (such as playoff games and games against rivals Los Angeles and Portland), he would also need access to MLS’ other English-language TV partner, FS1, which he would also need to catch most of his favorite European teams’ UEFA Champions League games, most of the World Cup, and half the baseball playoffs (which is another sport he follows). Since the Sonics left Seattle and he’s spent more time in LA, he’s become attracted to the Clippers as they’ve actually become good and lost their incompetent, racist owner, and regularly turns the TV on to their non-nationally-televised games on Fox Sports Prime Ticket, another Fox Sports outlet he would need access to. And while he’s not that big a fan of the Premier League, he has taken to watching a good number of their games given their wide availability under NBC’s contract, so he wouldn’t mind getting NBCSN as well.

While none of those channels are on Sling TV, all of them are on PlayStation Vue, the streaming service Sony introduced last year, and Los Angeles is one of PS Vue’s few launch markets (as the presence of Prime Ticket indicates). But a year ago, when Sling TV was announced, I mentioned that it was preserving the cable bundle, not breaking it up, and PS Vue is that much more so – once it adds the Disney networks, as it’s slated to do soon, it will have channels from all nine of the companies I mention in Chapter 7 as controlling most of your cable lineup – so it hardly represents breaking free of the cable bundle or in line with the real spirit of cord-cutting, as Cord-Cutters News recently pointed out. A package of channels containing beIN Sport and Prime Ticket would set him back $59.99 a month, $54.99 a month under a promo offer, assuming those prices don’t go up when the service adds ESPN, and he still wouldn’t be able to catch non-nationally-televised Galaxy or Laker games on Time Warner Cable SportsNet, let alone Dodger games on SportsNet LA. Time Warner Cable, by my calculation, will be charging him about $125 once their rate hikes take effect, while offering the Internet speed he’s currently getting standalone for $45 for the first 12 months; throw in a $10 fee for modem leasing, and under all promotional offers he’d be paying $110, the same price he pays now, to essentially switch television providers and lose access to any channel not programmed by the Big Nine (or the Epix he receives in a promotional deal), before even picking up any other streaming services he might want like Netflix, or any other fees he’d still be paying.

In October, Todd Juenger, an analyst for an investment firm, laid out the exact process for how a standalone ESPN would dismantle the cable bundle. It wouldn’t be because sports fans would dump cable en masse to sign up for ESPN – like my dad, they would want to watch their local team on regional sports networks and other sports on FS1, NBCSN, TNT, and numerous other networks. Rather, it would be because ESPN’s defection would trigger a massive move to similar streaming services by all the other networks in the bundle, making it that much easier for non-sports fans to cut the cord and break free of the cable bundle – without sending $100 a year to ESPN. It’s a delicate balance holding the cable bundle together: ESPN needs everyone who wants to watch The Walking Dead, The O’Reilly Factor, Naked and Afraid, or Adventure Time to take part in some sort of bundle that forces them to pay the ESPN tax, but in order to justify that bundle’s existence, they need sports fans to need the entire bloated cable bundle. Look at it this way: sports fans whose cable companies are members of the NCTC wouldn’t cut the cord if the NCTC and its members followed through on their threat to drop AMC and deprive them of The Walking Dead, but losing the NCTC as a distribution partner would make it much more attractive for AMC to launch some sort of standalone service that would make it a lot easier for Walking Dead fans to stop paying the ESPN tax (especially if they could team up with Viacom, which has been missing from Suddenlink for over a year, as mentioned in the book), while doing the same to Fox or some other outfit with valuable sports might just set off a chain of events that causes the cable bundle to collapse surprisingly rapidly. ESPN is effectively ransoming all the other members of the Big Nine to remain tied at the hip with them, and the more of them that are themselves invested in sports on cable, the better.

A while back, after wondering why ESPN kept helping Fox win sports rights in order to box out NBC when Fox was already looking like a more credible challenger to ESPN’s throne, I seized on a throwaway comment in a post on the Frank the Tank site to write a post of my own suggesting that, while ESPN may not have wanted competition, what they really didn’t want was for that competitor to be associated with one of their distribution partners, making it that much easier for Comcast to drive them a harder bargain on distribution fees, to the point of building FS1 as their own competitor in order to keep NBCSN down. In turn, Dave Warner, proprietor of the What You Pay For Sports website, seized on that post and made it an important piece of his own message, even as I became uncomfortable with building too much of a theory on a one-paragraph comment that may not even have reflected its author’s full thoughts on the issue, or even necessarily was held all that strongly by its original author (especially after NBC’s original Premier League deal, made shortly after my post, re-raised the spectre that Comcast just wasn’t that interested in running down ESPN). My post led Warner to believe that there was no way ESPN would let NBC re-up with the Premier League when that contract came up for renewal last year, that NBC had built the value of the property so much and had picked up enough momentum from it that ESPN would have to bring it to a screeching halt. Obviously, that didn’t happen; in fact, even before that ESPN decided it didn’t want to keep NASCAR any more, which combined with Turner’s own decision to that effect basically placed perhaps the most valuable property NBCSN has yet attained into their lap. Clearly, there’s more to the story of why ESPN would help out Fox so much than just “we need to keep NBC out at all costs”.

Part of the explanation, as suggested in the book, might be that companies are willing to team up to keep their own price down. But perhaps a more accurate explanation might be that ESPN doesn’t want to have a complete monopoly on sports on television – if it were, everyone else could team up to create a service without it (which, ultimately, is why ESPN and Disney signed up for PS Vue, a deal only announced in November). Instead, ESPN is willing to sprinkle just enough sports throughout the rest of the cable bundle to give sports fans a decent enough reason to keep giving money to as much of the Big Nine as possible, without giving up so much to actually allow anyone to challenge them (or raise their fees enough to accelerate cord-cutting, or dilute ESPN’s own value). ESPN is fine with staying out of the regional sports network business and letting Fox and Comcast be the dominant players there, and they’re willing to let Fox and Comcast have enough content to build their own national sports networks without getting anything truly valuable. It’s true they would rather have Fox be stronger than Comcast be strong enough to drive a hard bargain with them, but that doesn’t mean they don’t want Comcast to have anything valuable, just that they’d rather have NBCSN remain a niche sports network (and in some very real senses, the Premier League and NASCAR are still niches) and help Fox get the stuff on the higher end of the value scale that ESPN is willing to give up. After all, as more sports (like, say, the half of the LCS that wasn’t there already) move to cable, regardless of the network that airs it, giving sports fans more of a reason to stay tied into the cable bundle, ESPN benefits more than anyone. As Awful Announcing’s Matt Yoder put it, “In what other industry can you still get 24 times as much money from a customer who chooses your competitor’s product over your own?”

This turns pretty much everything I’ve written about the sports TV wars – including the big book I just put out – upside down. I’ve framed the war as ESPN protecting their hegemony against insurgents, but cord-cutting is the real insurgency, and it may be that ESPN (maybe without even initially realizing it) has actually used Fox and Comcast to protect their hegemony by fortifying the resiliency of the cable bundle. The title of my book, The Game To Show The Games, may have been more accurate than I realized – for ESPN, it’s just another game for them to benefit from, perhaps even more so than college football or the NFL. The cable bundle truly is ESPN’s world, and everyone else is just paying the rent – literally.

Binge On and Stream TV: Showing Why Net Neutrality Isn’t Enough

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In November 2014, advocates of a free and open Internet were starting to see some hope that, in spite of its connections to the cable industry, the FCC would enact the real net neutrality rules they’d been fighting for. Tom Wheeler’s proposed mishmash of the worst elements of both Title II and the previous Section 706 justification for net neutrality rules was DOA but showed the FCC chairman’s willingness to adopt Title II if the movement for it had enough momentum, and President Obama himself had come out in favor of real net neutrality rules, lending the cause a further mark of legitimacy and making it all the more politically difficult for Wheeler to go against it. In spite of the millions of letters Americans had sent the FCC encouraging real net neutrality on a Title II basis, it was the events of that November that marked a real turning point that led to the FCC adopting Title II and enacting strong net neutrality rules early last year.

So where did we find ourselves a year after that fateful November? Well, T-Mobile has announced a new program called “Binge On”, allowing you to watch all the video you want from certain sites without counting against your data cap, which sounds great until you realize it effectively amounts to prioritizing certain sites over others, what net neutrality is supposed to prevent (after the new rules were applied to wireless providers not subject to net neutrality rules before). And Comcast has indicated that its own Stream service, targeted to the mobile devices of broadband-only customers, also won’t count against its data cap in markets where it’s trialing the caps.

T-Mobile says the program is open to anyone without qualifications or any money needing to change hands, but it’s easy to be skeptical that it’ll stay that way, especially since it forces all video to be streamed in SD quality, something YouTube, not part of the program, has complained about, with the only difference, so far as I can tell from T-Mobile’s statements, being that Binge On partners have to compress the video themselves (so it’s not really without qualifications, and that’s significant). If every carrier took this tack, even if none of them charged for it, nascent streaming services would have to spend a lot of effort going through a lot of hoops to make sure they were qualified and signed up for every carrier’s program. As for Stream TV, Comcast says it doesn’t even fall under the domain of the FCC’s net neutrality rules because, though it’s an IP service, it’s delivered over the regular cable system, not through their Internet tubes. Net neutrality advocates point out that such distinctions are meaningless to the end user, meaning Stream TV can crowd out competing services that do count against caps. But it’s easy to come to the conclusion that Comcast and other such providers already offer a video service over a different part of their network that doesn’t count against caps and has been running for decades: it’s called cable television. (Indeed, AT&T’s U-Verse TV service explicitly works the exact same way.)

I told you this sort of thing might happen. Video is such a massive consumer of bandwidth that it was destined to become the new ground-zero for the net neutrality debate no matter what the FCC’s rules ended up being, and Internet providers would inevitably look for ways to take control of the video content being delivered over their networks. Regardless of whether data caps are strictly necessary to manage congestion, or even the degree of competition faced by Internet providers, the basic rules of business make it inevitable that Internet providers would attempt to meter the use of video on their networks – and if, as many predict, all video will one day be delivered over the Internet, the issue is going to become that much more pressing, especially as 4K becomes the norm. T-Mobile and Comcast are trying to portray their offerings as meeting laudable goals – T-Mobile by optimizing video for the size of the screen, Comcast by moving video consumption out of their Internet network – and while it’s telling that Tom Wheeler initially praised these sorts of schemes as “innovative” and “pro-competitive” (though he’s since asked T-Mobile and Comcast for more information about these services), unless net neutrality advocates can come up with a better solution, those phrases may prove closer to the truth than they’d like to admit.

One solution could be some sort of video delivery system open to all and immune to the manipulations of wireless or wired Internet providers, available to any device on any network, that content providers would only have to prepare for once. Similar to Comcast’s Stream TV, it would have to operate in a different band of spectrum than other Internet service. To reduce the bandwidth and spectrum demands of all carriers, live streaming video watched by multiple people at the same time would only need to be sent once, and that one signal could be picked up by any device. Oh wait: we have that already, it’s called broadcast television, and rather than help it fill that role its dominant entrants are desperately clinging to retransmission consent as their only reason to stay in the market at all, while the FCC is actively trying to destroy it with the upcoming incentive auctions that aim to “free up” spectrum that wireless providers supposedly need to provide the same video broadcast television is already delivering more efficiently than they ever could and that its more forward-thinking entrants hope to compete with. If you don’t want programs like Binge On and Stream TV to be the future of video and the Internet, you should be pushing to save broadcast from the forces trying to destroy it.

Blog-day… and now Book-day!

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This is just the 51st post in Year Nine of Da Blog, shattering the previous record low that I thought at the time would be unbreakable. A good chunk of that total consisted of the Flex Schedule Watch and the Broadcast Rat Race (which I still intend to take up again next year, though I probably won’t pick it back up again this year), with over a third of the year from April through August consisting of one post a month, and many of the posts in the early part of the year being ratings posts, so there wasn’t a lot of high-quality content on here this year. Looking at this, you may think this was a horribly unproductive year, and certainly not what was intended when I moved down to LA to be with my Dad a little over a year ago.

You’d be wrong. Well, you’d be half-right. Let me explain.

The main focus of my mental and creative energies this year was writing my book about the sports TV wars, which you may recall I mentioned in last year’s blog-day post as potentially “tak[ing] up a lot of my time in the first four months or so of the new year.” That… didn’t exactly happen. Had I stuck to that original four-month schedule, I might have been able to produce the finished product as early as September; instead we sent an incomplete draft to reviewers a few months ago with a stated release date of December 1, which at least would have made it a great gift for Christmas. Instead I’ve been working overtime to get the book ready before I fly up to Seattle on Christmas Eve again, all while new developments have been unfolding in the area the book is supposed to cover, and the later it falls the less relevant it becomes.

51j-YErfIiL._SX310_BO1,204,203,200_With all that out of the way, I’m pleased to announce that the book, The Game to Show the Games, is now available for your reading pleasure on Kindle, with a paperback version slated to come out sometime in the new year. Here you’ll learn about the business model that has allowed ESPN to grow from a ramshackle operation in Bristol, Connecticut to an unstoppable juggernaut that seemingly dominates all areas of sports, about the efforts of media companies to copy that business model and how it’s both benefited and transformed sports great and small in ways good, bad, and neutral, how the importance of sports and ESPN’s business model to the television industry is affecting it on every level, and about the force that’s in the process of sending it all crashing down. Whether you’re a sports fan or sports hater, a cord-cutter or cable addict, you’ll learn something important from this book.

In correspondence with the book, I’m going to be making a number of changes to Da Blog, and the rest of the Morgan Wick Online Universe, over the next couple weeks:

  • Part of the reason the book took so long is that I actually wrote more detail than was strictly necessary about some things. There are also some topics I didn’t quite have time to cover by the time I could have gotten around to them, or that didn’t fit in the structure of the book. So over the next two weeks, in addition to catching up on some developments in the cord-cutting and broadcasting worlds I was too busy working on the book to talk about, I’m going to post a number of outtakes from the book touching on topics insufficiently covered, or not at all, in the book itself. Those posts will go in the new Game to Show the Games subcategory of the Sports TV Business category, along with my past posts about the sports TV wars. I’ll also create a new landing page at morganwick.com/tgtstg with links to key past posts for further understanding each chapter, as well as the outtake posts.
  • I’m going to try to freshen up some elements of the site layout as well, things that haven’t aged well or don’t work at all (like the Twitter widget that was always a red-headed stepchild to begin with). In particular, the plugin I’m using for the Sports and Webcomics subsites should allow me to finally have a different left sidebar for them. I also hope to have the forum back up and running again before the new year. And while I’m not going to start dismissing or ignoring it entirely, I am going to tone down mentions of my… “condition” in places like the About Me page to not be quite so scary.
  • Oh, speaking of which, I have a new profile image I’m going to start rolling out on my various social media platforms and other Internet hangouts, especially those that are particularly important to my “professional” image, as opportunities arise to update them, starting with a new, less-outdated Twitter bio.

With the book out in the world, hopefully I can get back to a more regular posting frequency in the new year. More to the point, with the release of the book I’ve taken my first steps in truly expanding my brand out into the wider world. Time will tell what the reception to the book is, if there is any, and whether Year Ten is the year that sets the tone for the rest of the decade if not the rest of my life, the year that fulfills the purpose of moving down here to LA to begin with, or is just another year like the last nine that keeps me toiling away on another approach to getting ahead. But we’re going to be going as all-out as we can to make it the former, and that means no matter what, it’s going to be a wild ride.