Chapter 17 Sport Broadcasting

1. Chapter 17 Sport Broadcasting

2. Introduction • Electronic media has transformed the sport industry and its relationship with the public. • Today, sport fans can watch events unfold as they happen around world. • Broadcasting has also profoundly altered the business of sports. • Symbiotic relationship • Sport entities rely on broadcasters for revenue and publicity. • Electronic media know that sporting events are a sure-fire means of attracting audiences that advertisers pay to reach.

3. The Electronic Media • What is electronic media? • Radio, television, and the Internet • Sound and images are captured by electronic devices and electronically encoded. • Information is transmitted at the speed of light (cables or broadcast transmitters/satellites) to receivers. • Information is decoded and transformed back to sound and images. • Electronic information can also be recorded for use at a later time.

4. History • 1800s: Electronic communications began with telegraph (1844) and telephone (1876), which relied on electricity and conductive wires. • By World War I, “wireless” (radio) was well established. • 1921: First radio broadcasts of sporting events. • KDKA in Pittsburgh broadcast first baseball game—Phillies vs. Pirates. • WJZ Newark, New Jersey, broadcast the Dempsey–Carpentier fight and the Yankees vs. Giants World Series later that year.

5. History (cont.) • Network radio allowed many local stations across the country to broadcast the same event. • Broadcasters understood that sports sold radios. • 1930s: Colleges sold exclusive rights to football games to a sponsor, who then purchased radio time from broadcasters to air games. © Ralf Stadtaus/ShutterStock, Inc.

6. History (cont.) • Radio increased fan support and was a valuable publicity and promotional tool. • After World War II: With television, consumers could now both hear and see their heroes in action. • 1960s: Growth in sport broadcasting was dominated by two men. • NFL commissioner Alvin “Pete” Rozelle • ABC executive Roone Arledge

7. History: Rozelle • Pete Rozelle • NFL pools its regular season and playoff TV rights and sells them to the highest bidder, with revenue to be divided equally among the teams. • Sport Broadcasting Act of 1961 was a result of antitrust litigation over Rozelle’s plan. • Granted professional football, baseball, hockey, and basketball teams immunity from antitrust actions regarding the pooled sale of broadcast rights

8. History: Arledge • Under Arledge, instead of simply showing the game, ABC would combine sport and entertainment. • It would take the fans to the game by showing them exhausted players on the bench, cheerleaders, and mascots—bringing fans “up close & personal.” • 1970: Created Monday Night Football. • Broadcast Olympics in primetime. • Developed Wide World of Sports to show fans “the thrill of victory and agony of defeat.”

9. History • Huge ratings garnered by Monday Night Footballand the Olympic Games led broadcasters to pursue the rights to additional sporting events. • 1980s • NCAA limited the number of times any one university could appear on television and distributed television revenue among its members. • Led to Board of Regents v. NCAA (U.S. Supreme Court case), through which colleges won freedom to sign their own deals for college football.

10. The Business of Broadcasting • Network: Responsible for getting event on the air and generating sufficient advertising dollars to pay the growing costs • Rights holder: Responsible for putting the event on the field • Advertising on cable costs considerably less than advertising on broadcast television • Financial gap between cable and over-the-air television is closed to varying degrees by the additional revenue that cable networks realize from subscriber fees

11. The Business of Broadcasting • Network must obtain rights fees. • If several networks are interested, a bidding war can drive up the rights fee. • Three typical rights arrangements • Rights and production deal • Rights only agreement • Time buy • Advertisers measure advertising efficiency by calculating an advertisement’s cost per thousand (CPM).

12. The Business of Broadcasting • Audience researchplays a vital role in deciding what sports get on the air. • Leading broadcast media research firm in the U.S. is the A.C. Nielsen Company. • Nielsen monitors television sets in ~5,000 homes across the country to represent a statistical model of the nation. • Monitors what channel the set is tuned to and who is watching.

13. The Business of Broadcasting (cont.) • Program’s ratingrepresents the percentage of television households in the survey that are tuned in to the program. • Program’s sharerepresents the percentage of the television households watching television at the time that are tuned in to the program. • For advertisers in search of key demographics (males, ethnic, higher education/income), sport broadcasts are the ticket.

14. The Business of Broadcasting • Economics of sport broadcasting industry are based on advertising. • Value of program is determined by the size and composition of the audience it attracts. • Formula used to calculate how much revenue must be generated: • Cost of rights + Cost of production + Allocable overhead + The ideal profit for efforts • If salespeople think the number is attainable, the deal is made; if the sales people are not so optimistic, there are alternatives.

15. The Business of Broadcasting • Should always consider total return (benefits that do not immediately appear on the balance sheet). • Gaining a competitive edge over rival station or network • Generating goodwill and favorable public relations • Building good relations with a team, league, or conference to gain the inside track when additional, more profitable events are up for bid • For sports producers: Promotional opportunities to stimulate additional ticket, licensed merchandise sales, or favorable publicity to introduce a new team or sport to a market

16. Career Opportunities • Career opportunities in sport organizations should multiply as teams become increasingly involved in producing their own game broadcasts. • Knowledge of broadcasting industry and how it works is an important qualification for anyone interested in a sales and marketing career. • Students pursuing a career on the air should explore radio and TV production and performance courses as well as communications and journalism courses.

17. Current Issues: Cable Television • Cable operators realized that once they provided unique programming, they could move into densely populated suburban and urban areas. • Today, more than 80% of viewers have cable. • 1979: ESPN’s satellite signal was delivered to cable systems across the country, providing sports coverage beyond anything available over the air. • ESPN expanded to include ESPN2, ESPNEWS, ESPN Classic, and no less than 25 owned or co-owned networks throughout the world.

18. Current Issues: Cable Television (cont.) • As TV dials have grown more diverse, TV audiences have divided into ever-smaller chunks. • ESPN and other specialty services pursue niche programming, hoping to reach some of the people all of the time. • Financial success depends on creating • An audience that is either large enough to attract advertisers who will pay the bills or • An audience eager enough to purchase information and entertainment in numbers great enough to cover cost of production

19. Where Do We Go from Here? • New electronic environment presents both opportunities and challenges. • The financially beneficial and symbiotic relationship between television and sports may eventually kill the golden goose—prime-time games alienate young fans because of the PM timeslot. • Women’s sports have benefited greatly from the multichannel television environment. • Combination of potentially valuable audience and available broadcast time offers opportunity for international sports of soccer, rugby, and cricket.

20. Where Do We Go from Here? (cont.) • Specific audiences are smaller than in the past; however, advertising revenue is less and cash rewards for playing on television have diminished. • Revenue sharing between networks and leagues/teams: Spreads the risk between the broadcaster and the rights holder. • Frees broadcasters from financial burdens and forces teams/leagues to become active partners and to market and promote their games.