What ESPN's Winning of Bowl Championship Series Means

Fox Gives Up Games That Yielded $178 Million in '08 Ad Spending

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NEW YORK (AdAge.com) -- ESPN's high-profile $500 million bid for the exclusive rights to the Bowl Championship Series is a major coup for a network that already claimed "College Football Lives Here" as a slogan. But can the cable network recoup the investment on its latest big-budget broadcast sports property?
ESPN sibling ABC will broacast the Rose Bowl.
ESPN sibling ABC will broacast the Rose Bowl.

Starting January 2011 and continuing through January 2014, ESPN will have exclusive TV, radio, digital, international and marketing rights for the 15 BCS games, which include the Fiesta, Orange and Sugar bowls as well as the BCS National Championship Game, in 2011, 2012 and 2013.

ESPN's sibling, Walt Disney-owned broadcast network ABC, will retain its rights to broadcast the other main BCS game, the Rose Bowl, suggesting in recent press reports that the broadcast may also shift to ESPN come 2011.

The BCS's current broadcast distributor, Fox, has the rights to the Fiesta, Orange and Sugar bowls, and the BCS championship, through 2010, but declined to raise its bid beyond $400 million for the next four years.

Price tag justifiable?
Lou D'Ermilio, a spokesman for Fox Sports, said, "With the economic uncertainties we're currently experiencing, I think we made a very competitive bid to keep broadcasting the BCS games in every home in America." But with a rights-fee increase as high as 50%, the price tag became harder for the network to justify. "We paid what we think was as much as any over-the-air network could responsibly risk," he said.

Larry Novenstern, exec VP-director of national broadcast at Optimedia, said ESPN has a bit more cash to spend as a cable network because of its dual revenue streams of advertising and cable subscriber fees. "ESPN is kind of like the Yankees in that sense," he said.

The four main games -- the BCS Championship, Fiesta, Orange and Sugar bowls -- have become a nice source of income for Fox, even as ratings declined a combined 13% year over year in 2008, according to Nielsen. The four games together brought in $178.15 million in ad spending for Fox the week of Jan. 1, 2008, an increase from $155.7 million in 2007, according to TNS Media Intelligence. If ESPN matched Fox's $178.15 million all four years of its contract, the network could take in $712.6 million in ad spending.

Even ESPN's "Monday Night Football" broadcasts this season have started to steal away some of the 18- to 49-year-old males who used to watch shows such as NBC's "Heroes," which is down 17% over last season among the demo.

Live-audience generator
In fact, NBC, more than any other broadcast network, is increasingly finding that sports is perhaps the last genre of programming still guaranteed to attract a mass audience on a live basis. The August coverage of the Olympics accumulated what is hyped as the largest audience for any TV event ever -- 214 million viewers over 17 days -- while its "Sunday Night Football" routinely delivers ratings higher than any of its scripted series.

Even the network's upcoming Super Bowl has enough clout among some advertisers that they're willing to spend a record $3 million on 30-second spots.

Brad Adgate, senior VP-research at Horizon Media, remains bullish on sports' status as the most DVR-proof genre of entertainment on TV, especially with a cable network such as ESPN in a less-flexible position to stream live games online than its broadcast counterparts because of complicated cable subscription contracts. "Forecasting where ad dollars and sports marketing are going to be in three-plus years is pretty tough, but I'm thinking they can clearly make a profit [on the BCS games], or at the very least make them one of the premier sporting events on TV," he said.

Appealing buys
Indeed, the multiple platforms the company will put against the games -- ESPN, ESPN Radio, ESPN.com, ESPN360.com, ESPN International, ESPNU and ESPN Classic among them -- make multiplatform ad buys all the more appealing to advertisers. As John Swofford, BCS coordinator and Atlantic Coast commissioner, said in a statement, "With the continued growth of technology and the depth of coverage that ESPN gives to college football on all its platforms during the regular season, this post-season partnership is a natural fit."

"The synergy of everything always helps," said Mr. Novenstern. "It's kind of like when eight years ago Nascar went to two or three [networks.] Before that you were like, 'Where's the race going to be?'"

But as with any move from broadcast to cable, the potential audience is decreased slightly based on the pay-TV carriage in major markets. In the case of BCS's college markets, key cities such as Salt Like City and Boise, Idaho, are more than 10% below the 88% national average of homes with paid TV subscriptions.

The BCS' switch from free broadcast to "pay TV" is one that has left some sports fans with tied hands over their lack of cable subscriptions. In response to Salon's King Kaufman blog post about the ESPN deal, a commenter named "loc8net" wrote, "I've always known I was an oddity to my friends (no cable, never purchased a TV -- always given one), but now I guess I am insignificant as well. ... If cable were a la carte, then maybe I would pay for that but if the cost of getting ESPN means I also have to get MTV and Fox News, then it is too much."

Not everyone happy
Some TV columnists in top college markets, however, liked the continuity of seeing the BCS bowls on the same network that counts "College Football Lives Here" as one of its slogans. "After a long season, I want to listen to the same guys who bring me the games all year (unless that includes Bob Griese)," wrote Molly Willow, a TV columnist for the Columbus Dispatch in Columbus, Ohio. "There's just something odd about hearing three unfamiliar voices calling the biggest college football games."

ESPN, which is currently available in 98 million homes, has proven its ability to match and even exceed its broadcast competitors with its exclusive rights to "Monday Night Football," which has surpassed even the World Series this season in the ratings.

Mr. Adgate acknowledged that cable is catching up to broadcast sports -- citing TBS's coverage of the Major League Baseball playoffs as another example -- but the lines have yet to blur completely. "What happens is they just attain record audience levels for the network or even for that sport on cable, but I don't think they are to a point where they approach the broadcast networks," he said. "It's getting closer. The gap is getting smaller between the audience levels."

Although terms of sponsorship packages for the BCS at ESPN are still in the very early stages, Ed Erhardt, ESPN's president-customer sales and marketing, said, "We're very excited about the opportunity to bring advertisers value from the opening kick of college football. It'll enable us to drive the creative juices of not only us but our advertisers around college football."

Mr. Erhardt also doesn't foresee any confusion about the move from broadcast to cable on either side of the BCS transition. "Whether it's a TV or a mobile device, to the consumer they're just various screens," he said. "The more we can help advertisers understand how to utilize these various screens, the better we're going to be able to provide value to those advertisers. We see it as bigger than broadcast vs. cable."

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CORRECTION: An earlier version of this story incorrectly stated that TNS data reflected ad revenue. In fact, it measures ad spending.
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