Long Island businessman Bill O'Connor is the type of guy broadcast television networks are increasingly banking on. When O'Connor-the busy owner and operator of two yogurt stores and a thriving pizzeria-isn't counting cones or checking the oven and wants to relax, chances are he tunes in to one thing. Television. But not just any television: Football, basketball, baseball-pick a sport. It just depends on the season.
While sitcoms, dramas, and news shows have their share of fans, few forms of television programming can inspire the kind of devotion that Bill O'Connor, 33, brings to the tube, whether he's watching the Final Four or the World Series.
"I don't watch much TV," admits O'Connor, "but I'm definitely sports-oriented. I couldn't tell you what shows are on TV tonight, but with sports, I look ahead to see what's on and plan my schedule to watch them."
Such devotion may seem surprising, given the knocks professional and amateur sports are taking in the media these days. The erosion of broadcast-TV ratings in recent years, coupled with the soaring fees networks are paying for the rights to broadcast games, have been picked over in excruciating detail. Not to mention the latest batch of fan-crushers -the NBA strike, the retirement of hoops icon Michael Jordan, and now, the festering International Olympic Committee scandal.
But it's easy to understand the abundance of doomsday scenarios about the end of the advertising bonanza that has characterized network sports for the past three decades. After all, the loss of a mere ratings point (representing some 994,000 television households) is a multimillion-dollar proposition-bad news for the networks, and bad news for advertisers hungry for sure-fire venues in which to reach consumers. Especially those hard-to-reach young male consumers, who have money to spend but who also typically watch less television overall than the rest of the population.
The good news is that men still watch more sports than other programming. Better yet, they watch it in a particular way. New research shows that sports fans watch TV differently-indeed, more intently-than the way most viewers watch non-sports programs. What's more, sports fans tend to be "appointment viewers" like Bill O'Connor. They may not have a lot of time to watch television, but sports is important enough that many men plan their off-time schedules around it. And when they watch a game, they watch all of it. Media buyers say that type of involvement with television is growing increasingly rare, making sports even more valuable in an age when viewers can hypersurf across hundreds of channels.
Viewers who are that loyal and attentive to programming are also more likely to see and be affected by the advertising that appears on those shows, according to studies by TN Media and Leo Burnett. That's why these and other advertising agencies have developed a variety of computerized media planning systems, known as "optimizers," to measure such factors and help them pick the shows they advertise in. Ratings may have dropped overall, but some industry analysts believe that the qualitative strengths of sports viewing is substantially offsetting the quantitative losses.
In fact, Nielsen Media Research just began offering a new service last month that enables subscribers to analyze a program's audience based on its composition of these loyal and attentive viewers. While much of this research is still new, ad agency executives say sports generally delivers a greater margin of such viewers. Male viewers. That finding has been corroborated by a series of studies by Statistical Research, Inc., entitled "How People Use TV."
While sports accounts for only 21 percent of all programming viewed by men 18 to 49-placing the program category just behind the number one genre, news, at 22 percent-it accounts for 48 percent of all programming that they "planned ahead" to watch (see chart, p. 64). By comparison, only 18 percent of men 18-to-49 said they planned ahead to watch all other forms of programming. In terms of attentiveness, SRI found that 75 percent of this same group of men kept their "eyes on" the TV screen three-quarters of the time they watched sports programming, versus 65 percent for all other forms of programming.
If you don't believe it, just ask Bill O'Connor. "I don't like to be interrupted when I'm watching sports," O'Connor says.
To the casual observer, all this fuss about loyalty and attentiveness and eyes on the screen might sound excessively esoteric. But there's an awful lot riding on whether or not the armchairs of American males are occupied on game day or night, and for how long. The changes impacting sports are affecting the entire economics of network TV.
In order to understand just how important sports-and the men who love them-have become in the television equation, one need only look back a year ago, when four of the six major networks-ABC, Fox, ESPN, and CBS (usurping NBC)-agreed to pay a record $17.6 billion for a new eight-year National Football League rights deal, an increase of $1.1 billion per season over the previous contract. At the time, it seemed to many observers that the network executives had finally lost their minds. Ratings for most sports shows had dropped dramatically during the past decade including the NFL games, whose regular-season ratings have fallen by 20 percent. Meanwhile, competition for viewers and ad dollars was rising from new upstart channels carrying an array of alternative sports, and average sports ratings were projected to continue their downward slide.
The NFL numbers just didn't seem add up. Even if advertisers agreed to pay what would be considered hefty price increases for regular NFL ad units, which can fetch as much as several hundred thousand dollars per 30-second spot, cynics of the deal predicted that the four nets would still take a bath on the investment.
TBS and jilted NFL network NBC didn't help matters by waging an effective PR campaign in the sports media describing the deal as voodoo economics, and announcing plans to develop their own alternative football league -more competition for players and viewers.
That was indeed the dire scenario facing the new NFL networks as they began selling the 1998 season to marketers last spring. The desperation was particularly evident at CBS's sales presentation to advertisers. One of the posh annual New York events thrown by the networks to entice marketers and ad agency executives to buy time on new and returning primetime shows, past CBS presentations had included appearances by such big-gun celebrities as Bill Cosby and Ted Danson. But this time, CBS opted to cast the NFL in the limelight, giving it billing over ratings-grabbers like 60 Minutes, Everybody Loves Raymond, and Touched By An Angel.
And as the 1998 season got under way, it seemed the cynics might indeed be proven right. Average overall sports ratings continued to plummet during the first several weeks. Especially troubling was the dramatic early decline of ABC's Monday Night Football. ABC had shelled out the greatest increase of any of the NFL incumbents and its primetime revenue picture had grown extremely dependent on the NFL telecasts.
But by the time the Denver Broncos faced the Atlanta Falcons at the Super Bowl on January 31, the NFL networks appeared to have been vindicated, at least after year one of the new contract. The initial drop in ABC's Monday night ratings, due in part to an earlier start-time, was ultimately offset by the addition of a pre-game show, which boosted ratings for the night and generated the highest advertising rates ABC has ever seen for Mondays at 8 pm.
Moreover, average ratings had leveled off and remained relatively stable, and playoff games on the broadcast networks were up 11 percent over last year, a major accomplishment when you consider that network primetime ratings had slipped more than 5 percent during the fall 1998 TV season.
"The truth is that sports overall, and the NFL in particular, have actually held up quite well in light of what's happening to everything else on television," says Steve Grubbs, senior vice president-director of national broadcasting and programming at ad agency BBDO. According to Grubbs, sports' real problem is one of perception and the fact that many people continue to hold it up to standards of a bygone era of TV, when three networks had a lock on viewers regardless of what they turned on.
A recent study by media agency SFM Media Corp. confirms Grubbs' view. The study compares the performance of sports to primetime programming on the Big Four networks so far this decade. Between the 1990-91 season and the 1997-98 season, the average primetime rating on the Big Four networks fell by 2.2 rating points to an 11.2, while the average sports programming rating fell only 1.4 points to a 6.6 rating. And while averages sometimes can be misleading, SFM notes that the relative performance of top sports programming has also held up better than the primetime average. Back in 1991, only one regular sports program -ABC's Monday Night Football-ranked among the top 20 shows airing on the Big Four. By 1998, seven of the top 20 shows were sports programs. "Relatively speaking, sports is still a very valuable option for most advertisers-especially if you need to reach men," says Frank Campisi, senior vice president for broadcast research at SFM.
There have also been incredible come-back stories. Only a couple of seasons ago, people were saying that Major League Baseball would never recover from the strike that killed the World Series in 1995. But then along came the thrilling home-run derby between Mark McGwire and Sammy Sosa, and New York's record-setting Yankees. The 1998 season reenergized the sport for diamond fans.
Winning and losing is what sports is all about, and fans say that unpredictability is exactly what attracts and holds their attention. "If I watch a regular TV show like a sitcom or drama, nine times out of ten I can predict what's going to happen," explains armchair quarterback, Paul Arbor, a 41-year-old sales manager who lives in Jersey City, New Jersey. "The thing I like about sports is there is no rhyme or reason to it. It's like they say: 'On any given Sunday, anything can happen.'"
That's why people say that the value of sports is increasing to advertisers and agencies, not diminishing, as others claim. "If you look at the current broadcast network schedules, there are only a handful of shows like ER that can be considered appointment viewing programming," observes SFM's Campisi. "There's no question that sports does represent appointment viewing. And that's becoming more of a value for advertisers," especially as the number of programming options increase.
Sport fanatics like Arbor are the reason why. "Sports is inspirational," he says. "When I'm engrossed in a game, I don't want to be interrupted unless it's an emergency."
Analysts are also taking a closer look at sports' other hidden values, as the TV industry begins to redefine the notion of viewing in an expanded digital media environment. As the number of TV sets in typical households has grown, for example, so has solitary viewing. But unlike sitcoms, dramas, and news, sports tends to inspire people to come together. Whether it's in bars, college dorms, hotels, or at house parties, people like to watch sports with other people. In fact, Nielsen custom research studies have shown that network sports reaps some of the highest levels of viewing outside of homes. While such out-of-home locations are not currently measured as part of Nielsen's regular ratings, discussions are under way to incorporate them in the future.
"It's something you do with your buddies," says Long Island fan O'Connor. "Whether you're going to the stadium or watching it in your living room, sports is definitely a group experience."
Media buyers are also beginning to assign a new value to sports based on its unique ability to deliver reach in "real-time." As TV viewing-as well as overall media usage-increasingly becomes time-shifted, or on-demand, advertising executives believe the live-action, in-the-moment nature of sports may do a better job of delivering reach in real-time than other forms of programming content.
Perhaps the most dramatic illustration of the draw of live sporting events is the Super Bowl, which has experienced no perceptible ratings erosion in 33 years. Super Bowls have consistently ranked among the highest-rated programs of all time, and are among the few programs guaranteed to deliver nearly half of all TV viewers on game day. Based on this track record, Myers Consulting Group recently forecasted that Super Bowl household ratings may decline marginally, but the game will still deliver about 42 percent of all TV households by the year 2006. Because such mass reach will become increasingly rare, Myers projects that the average cost per 30-second commercial in the Super Bowl will rise from $1.6 million this year to a stunning $4.5 million by 2006.
Of course, most sports on television cannot be measured by such event standards. In fact, the real growth in sports programming is coming from secondary and niche sports, ranging from women's WNBA basketball on Lifetime Television to the resurgence of roller-derby on TNN. But while these niches are contributing to the decline of average sports ratings, they are also increasing the amount of time people spend watching sports. According to an annual tracking study compiled by ad agency TN Media, the average TV household has gone from watching 160 hours of sports per year during the 1984-85 season to 193 hours per year during the 1996-97 season (excluding the Olympics).
Still, though the overall picture for TV sports remains vital, the economics have definitely changed, particularly for the major networks and sports franchises. In addition to the costly NFL rights renegotiation, the NBA's new pact with NBC and TBS doubles the rights fees beginning with the delayed season. And NBC committed an unprecedented $3.6 billion for the rights to televise five consecutive summer and winter Olympic Games, beginning with Sydney in 2000.
Given such sums, it's difficult to imagine these networks recouping their investments solely from the national advertising marketplace; even network insiders acknowledge they will not. Instead, the way these deals are being evaluated is based on the overall impact the sports rights have overall, including owned and affiliated stations and the promotional value of advertising other shows carried by the networks during sports programming.
CBS's bid for the NFL is a good example. While CBS corporate will not see any profits from its $500 million-per-year NFL rights payments, NFL games will be packaged to prop up the price of other, less-lucrative programming. As a result, CBS's 14 owned-and-operated stations will generate stronger advertising revenues-particularly in the local markets where their package competes. But most importantly, the NFL provides Black Rock with something it lost in 1994, when Fox stole the NFC rights away from it: circulation among young men.
While it is not the only reason, the loss of the NFL coincided with a ratings downturn for CBS that lasted until the start of the 1998-99 season. The most significant change since then is that CBS regained the NFL, and an estimated 6 billion male impressions that it has used effectively this season to promote its primetime and other programming. As a result, CBS has had the most stable ratings of the Big Four networks so far this season. And NBC, which lost NFL coverage this season, has experienced the most primetime erosion.
"I wouldn't tell you that the NFL is the only reason in either instance, but it is a contributing factor for CBS's resurgence and NBC's declines this season," says Neil Pilson, former president of CBS Sports and now head of Pilson Communications, a sports consultancy. Pilson says the shift in the two network's fortunes is a perfect example of the new economics of TV sports, where rights fees are no longer amortized against network profits and losses, but across broader parent company criteria, ranging from short-term shareholder value to long-term global media strategies.
"Sports is a business that is driven by scarcity. The fact that there are only so many unique properties available can have an impact on globally competitive media companies," Pilson explains. "This is not just an issue of ratings, but of momentum and competition and infighting between media companies that are competing on a worldwide basis."
Of course, the other way of looking at it is that an awful lot is riding on the backs of those armchair quarterbacks, pitchers, and point guards-young American male sports fans. Still, some observers are fairly sanguine about the prospects. "For men, this relationship with sports has always been there," says veteran Sports Illustrated contributing writer Frank Deford. "Men have an identity with sports that some people have compared to war. It's that intense."
Deford says that is a level of intensity not likely to be found with most other media options. "The term sports fan is a misnomer," he says. "People are really baseball fans, or hockey fans, or boxing fans. And the more sports that are on television, the more people will be watching sports."