Expert Article- The Future of Sports Media

 Cutting the Cord, Raising the Stakes: A Play-by-Play of Sports Media's Evolution

In a world where the term "linear TV" sounds like a distant relic and RSNs (Regional Sports Networks) are becoming endangered species, the landscape of sports broadcasting is undergoing a seismic shift. Before we jump into things, let’s rewind a bit and dissect the key aspects and players in this landscape before diving into the chaotic yet exhilarating world of streaming in sports. Think of this as a beginner's guide to the ever-changing space of sports media. 

*** A quick note before we begin: I have spent my last two years studying Sports Media at USC’s Annenberg School for Communication and Journalism and have worked under analysts and executives at CAA Evolution, a top investment bank and media rights advisor for sports.

Brief Rundown:

The professional sports industry, boasting iconic leagues such as the NBA, NFL, MLB, NHL, and Pro Soccer, along with global events like the Olympics and international competitions, is a powerhouse in the realm of entertainment. The industry's financial backbone rests significantly on media rights deals, serving as the primary driver of value. Teams and leagues capitalize on other revenue streams like sponsorships, ticket sales, merchandise, concessions, licensing deals, and various other avenues. 

Every so often, leagues find themselves in a position where their existing media rights deal is set to expire. This marks the commencement of a high-stakes “auction”, where companies present bids and pitch strategies on how they can elevate the league's visibility and profitability. The league, in turn, evaluates these proposals and ultimately votes on the deal they believe aligns best with their interests, often leaning toward the highest bidder. Teams also have the ability to sell the rights to their games and content that aren't nationally televised as part of their individual media rights deals. This decentralized approach allows teams to tailor their broadcasting strategies to regional preferences and demographics.

Linear TV and RSNs: The Dinosaurs of the Digital Age

Linear TV, often found as that trusty box in our living rooms, brings us scheduled programming through a set sequence of channels. It's like having a pre-set menu at a restaurant – you flip through the channels, think CBS, NBC, ABC, and ESPN, and each one offers a specific show at a particular time. This Cable or Satellite TV service is looking more and more like a thing of the past and seriously only hanging on because of a fan's desire to watch sports live, which I will get more into later on. 

RSNs, on the other hand, take the concept of local loyalty to a whole new level. They're the regional heroes, becoming the home turf for our favorite local sports teams on your cable lineup. Imagine them as the exclusive clubhouse where your hometown champions gather – a place where the cheers are louder, and the victories hit closer to home. When your favorite team has a game and you cannot find them on ESPN, ABC, TNT, or one of the nationally televised channels, you can almost always find it on their RSN channel. For example, one of the most popular RSNs and my personal favorite is MSG Networks. The Knicks and their historical lackluster record makes it so they almost never get the bigtime network games; that means when I am in the tri-state area I can flip on my MSG network and watch the games and other Knicks content. RSNs build a community around the local sports scene, providing dedicated coverage and a unique connection between fans and their teams. It is not just live games, but teams will air replays of iconic games, locker room footage, exclusive interviews, and more content big-fans dream of on these local broadcasts. According to the MLB, baseball continues to be the most popular RSN out of all pro-sports and their local programming options continue to outperform many of the popular nationwide broadcasts. In a rare instance, teams will offer free coverage. Just this past year, the NBA Phoenix Suns owner Matt Ishiba announced all local games will be free to watch for fans, in a new strategy where he feels visibility for team stars and engagement from free games will have a greater value than the RSN revenue. 

However, Nostalgia aside, these mediums are finding it increasingly challenging to keep up with the fast-paced evolution of the sports media universe.

Cord Cutting and Cable's Last Stand: Escaping the Ad Avalanche

In the era of cord-cutting, users are rebelling against the traditional landscape of cable TV. Cord-cutting, in simple terms, refers to the act of breaking free from conventional cable subscriptions. It's akin to escaping a crowded theater playing a movie you never signed up for, where you end up paying for a buffet of channels you seldom tune into, all while enduring an incessant stream of commercials.

Now, instead of being subject to the whims of cable giants, people are taking charge. Cord-cutters are turning to streaming services, where they can select and watch content without the interruption of endless ads. This shift is more than just a passing trend and seems to be the new way of accessing content. viewers are taking control of their right to enjoy sports on their own terms: whether on the big screen at home or a portable device on the move, this change is a liberation from the old, inflexible ways of watching games. 

OTT Media: The À la Carte of Sports Entertainment

Now, let's break down OTT (Over-The-Top) media, where the game of choice is everything. OTT services, like Netflix, Hulu, Amazon Prime Video, and Apple TV, have become the dynamic disruptors in sports broadcasting. These platforms aren't just about delivering content; they're about offering a tailored experience, allowing viewers to handpick their preferred sports feast.

Unlike cable's one-size-fits-all approach, OTT services operate on a diverse playing field. Each provider secures unique sports content rights, turning them into exclusive hubs for specific leagues and events. For instance, Amazon Prime currently has an 11-year media rights deal with the NFL for the rights to Monday Night Football, while Apple TV holds the streaming rights for MLS matches on a 10-year deal. In this new era, if you're a fan of both MNF and the MLS, you might find yourself subscribing to multiple platforms to catch all the action. And just a quick reminder as to why  media rights are the leading driver in enterprise value for these sports franchises, that NFL deal is only one game a week and worth $1 billion annually and the MLS deal for a league many considered a joke is worth over $2.5 billion.  

These streaming giants spend billions knowing the unwavering loyalty of sports fans and the irreplaceable excitement that comes with live sports. However, this exclusive rights race transforms into a costly competition for fans. To witness all the diverse sports content, fans find themselves navigating a maze of numerous OTT offerings, each with its subscription fee. It becomes a balancing act, where enthusiasts must weigh the value of each subscription against their desire to catch every game or event.  It's a race that's thrilling for the providers and sometimes expensive for the fans, who must strategically decide which streaming services are worth the investment for their personalized sports experience and must now stay on top of all their subscriptions and rates whereas with cable their one fee was always in one place. 

Streaming giants understand that sports games are consistent in viewership and this reliability makes investing in sports broadcasting rights a safer bet compared to the uncertainties of spending millions on producing a single series, which might not resonate with viewers and could flop. The consistent loyalty of sports enthusiasts becomes a strategic and financially sound choice for streaming services and thus drives the streaming race where these tech giants are skyrocketing pro-sports valuations.

A Personal Outlook on the Future

As we look into the future of this landscape there will always be one demand. LIVE SPORTS. LIVE SPORTS. LIVE SPORTS. The thrill of being in the moment, whether at the stadium or watching a live broadcast, is an irreplaceable aspect of sports fandom. Simply said, it is pulsating energy and unscripted drama that can not be found anywhere else. However, in 2018 this need for live action is no longer driven from fandom. Per Axios, nearing six years ago The Supreme Court dismantled the federal ban on sports betting in 2018, and 37 states have legalized the activity. Fans now can engage more fervently with live events with the ability to participate in the excitement of live betting. This aspect gives a major advantage to linear TV as  streaming services are at a delay. For ardent fans and high-stakes bettors, this “lag” is a deal-breaker and they are forced to stick with their cable or satellite tv provider. However, streaming giants pockets talk and soon enough fans will not have a choice.  Cable companies will continue to find themselves at the losing end of the bidding wars due to the exorbitant spending power of these digital behemoths .

We can assume a future where streaming giants forge strategic partnerships, leveraging synergies and potentially forming strategic alliances with sports leagues. The escalating prices are inevitable for broadcasting rights and this might lead companies, especially those facing challenges like ESPN, to look for strategic partnerships in leagues in hopes of staying afloat. The MLS deal with Apple is only possible because it is valued at a fraction of the giants like the NFL and NBA where no one could afford to have every game in one place. However, there is a chance for smaller deals with teams leaving RSNs for steaming platform partnerships. Just this last year, MSG Networks, who host many sports-teams including the New York Knicks, and YES Network which broadcasts the Yankees, Brooklyn Nets and New York Liberty both followed the streaming trend and launched DTC digital access for their games last year through MSG+ and the YES app. They two just announced a joint venture called GAME, which would stream both assets under one roof and help other teams launch their own streaming service. The shift towards consolidated streaming platforms, akin to Apple's exclusive deal with MLS, seems inevitable and great for the consumer. In the greater picture is is clear the big players like Apple, Netflix, Youtube TV, and Amazon Prime, will continue to outbid each other and drive the streaming race in sports, where smaller companies like the ESPN and Hulu bundle deal will be forced to reconsider their business plan and hopefully for their parent company, in this case Disney,  be acquired. 

The future landscape of sports media is undoubtedly exciting and one thing is for certain: Streaming is not going anywhere and Live Sports = Power.

Sources:

A.J. Perez, M. M. (2023, August 7). How the tight-lipped apple deal is affecting MLS clubs, partners. Front Office Sports. https://frontofficesports.com/apple-deal-affecting-mls-clubs-advertisers-major-league-soccer-tv/

Badillo, K. (2023, December 13). How much revenue does the sports industry make? [sports industry revenue statistics]. 15 Outstanding Sports Industry Revenue Statistics in History. https://playtoday.co/blog/stats/sports-industry-revenue-statistics/#:~:text=Sports%20and%20sporting%20games%20have,in%20revenue%20this%20year%20alone.

Bailey, A. (n.d.). Sports betting laws by state: Where it’s legal, where it isn’t. Race for legal sports betting continues. https://www.axios.com/2023/11/26/legal-sports-betting-states

Crupi, A. (2024, February 1). What you need to know about U.S. Sports TV contracts. Sportico.com. https://www.sportico.com/feature/sports-television-contracts-media-nfl-nba-ncaa-rights-1234764931/

sherman4949. (2021, March 18). NFL finalizes new 11-year media rights deal, Amazon gets exclusive Thursday night rights. CNBC. https://www.cnbc.com/2021/03/18/nfl-media-rights-deal-2023-2033-amazon-gets-exclusive-thursday-night.html

Vorkunov, M. (2024, January 5). MSG Networks, YES Network announce joint venture game. The Athletic. https://theathletic.com/5180174/2024/01/04/msg-yes-network-yankees-tv-deal/