Efforts to Challenge ESPN in an Evolving Sports Media Landscape

Yesterday (Aug. 17) Fox Sports 1 – the greatly hyped effort from the Murdoch Empire to reshape the cable sports industry – celebrated its one-year anniversary. Executives set high expectations from the outset, brashly claiming the new network would be the ‘fun’ alternative to ESPN. While Fox Sports 1 has acquired rights to many premiere sports properties, bold proclamations about overtaking ESPN so far have not panned out.

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Strategy in Year One for FS1

In order to gain a significant number of viewers – let alone become a legitimate competitor to ESPN – Fox needed to acquire the rights to major live events. At the outset of its launch, Fox had the rights to Pac-12 and Big-12 college football, Big East college basketball, NASCAR, Formula 1 and Champions League Soccer. This season Fox hopes to use its contract with Major League Baseball to bolster the relatively new network. Fox Sports 1 is carrying 40 regular season games in 2014 and as many as 15 playoff games. So far though, ratings for baseball on Fox Sports 1 have been disappointing.

Fox Sports has also acquired the rights to the World Cup in 2018 and 2022. The network is counting on soccer continuing to grow in popularity in the United States to extract value out of its $425 million investment. Fox significantly outbid ESPN, with the hopes that gaining rights to the highest profile events like the World Cup would help the upstart network strengthen its presence. Having the rights to so many major events sets Fox’s efforts to launch a 24-hour sports network apart from previous efforts.

Fox will also be involved in the upcoming negotiations for the next NBA rights contract. Gaining rights to the NBA would be a major coup for the network and a major step toward challenging ESPN. At the very least, the presence of Fox Sports 1 will require the NBA’s current TV partners, ESPN and Turner, to shell out more money in order to keep their rights for the NBA. In total, Fox Sports has spent about $9 billion since 2010 to acquire the rights to major sporting events. Having this amount of popular inventory prior to launching Fox Sports 1 is the main reason that this is the most formidable attempt yet to challenge ESPN.

While Fox has made public comments about about its desire to compete with ESPN, it has a long way to go before this goal becomes anything close to a reality. In Feb. 2014, ESPN averaged about 1.5 million viewers in prime time. Over the past year Fox Sports 1 has averaged 260,689 prime time viewers. Bill Wanger, executive vice president of programming, notes that the network is still in its early stages and that many of its biggest events – including MLB, NASCAR, USGA events and eventually the World Cup – have yet to air.

 A Crowded Sports Media Landscape

While Fox may have the best chance to directly compete with ESPN, other networks and leagues have launched channels that have had a significant effect on the sports media marketplace. In Jan. 2012 NBC launched the re-branded NBC Sports Network (previously Versus). The highest profile events on NBC Sports are the NHL, English Premier League (EPL) and the Olympics.

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While NBC Sports has received accolades from media critics and its viewers, the network’s staples of hockey and soccer both have niche audiences. Both fan bases may be loyal and passionate, but neither garners ratings that can match professional baseball or basketball, let alone football. In contrast with Fox Sports 1, where executives regularly make public comments about the network’s aspiration to compete with ESPN, NBC Sports Network – at least for now – seems content to focus on sports that are not featured as prominently in other places. While ESPN would undoubtedly love to have the rights to properties like the EPL and NHL, NBC does not represent a direct threat with these sports as its staple programming. Still, NBC Sports has made its impact felt, especially compared to Fox Sports 1. During May and June, the Stanley Cup Playoffs on NBC Sports significantly out-rated Fox Sports 1 in primetime.

In the past decade, numerous other 24-hour sports networks have launched. The NFL, MLB, NBA and NHL all now run their own channels whose distribution is growing. The NFL Network, for example, launched in 2003 and was available in about 12 million homes. Steve Bornstein, the CEO of NFL Network and former president of ESPN, said the league was unsure initially whether a year-round channel dedicated exclusively to the NFL would work. Ten years later, the channel was available in about 72 million homes.

ESPN Responds to Potential Challengers

While Fox has attempted to position itself as the fun alternative, ESPN has sought to hire what it considers the smartest, most talented analysts in the business. In different contexts, the recent hires of Nate Silver, Jason Whitlock, and Keith Olberman – as well as the investment in the “30 for 30” project – all demonstrate this push. Along with obtaining rights to the most popular and prestigious live sporting events, ESPN seems to believe that another important piece of the puzzle is having both the smartest and most entertaining commentary in the business.

For now, NBC appears content to remain a network that mostly features leagues with slightly smaller fan bases in the United States, like the NHL and EPL, where NBC has exclusive rights. Jon Miller, President of Programming for NBC Sports, is pleased with the network’s coverage of those sports. He also hopes to develop more original programming to help establish the network as a destination for sports fans and acquire the rights to more live events – but only when the right opportunities present themselves.

Any potential challengers to ESPN’s dominant position atop the sports media landscape are still a ways away. The industry is much more crowded than it has ever been, with networks employing a variety of strategies to find their place in the pack. The growing market may make life difficult for the networks, but it has been fantastic for sports leagues, which are seeing vast increases in their rights fees. Fans should benefit from increased coverage of a diverse set of sports and improved analysis as a result of competition for viewers of studio shows. And networks need to be prudent about which programming rights to pursue and how best to attract viewers with distractive and entertaining original content.