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Espn brings a piece of its Bristol, Conn. headquarters to New York next week when its first "stadium" opens downtown.

Built on a 19-foot tower, the 5,000-square-foot booth emulates the atmosphere of a typical sports stadium and represents the first time ESPN has made a formal pitch to the ad community during TV's upfront sales period since 1990.

"We're bringing a little bit of `Bristol University' to New York and the advertising community," says Jeffrey Mahl, senior VP-ad sales at ESPN. "The last time we had a big event for the advertising community was when ESPN was only one television network."


Now, ESPN is four cable TV networks in the U.S., reaching more than 140 million homes in the U.S.; it has a Web site; radio network; magazine; and, soon, a chain of sports-themed entertainment retail establishments called ESPN Zone.

Yet it's not so much that ESPN is sweating shenanigans like ESPN Bristol Stadium so it can hang onto its chunk of ad pie in the face of competition from Turner Broadcasting Systems and Fox/Liberty Sports.

The heat is on ESPN and other cable broadcasters to convince advertisers to bail out on increasingly pricey and less effective broadcast programming to cheaper, more targeted cable alternatives.

"I think the small- to mid-sized broadcast spender working out their media plans this year will see that the cost of buying sports on broadcast television is excessive and that the alternative -- cable sports -- is more attractive," says Mark Lazarus, senior VP-sales, Turner Sports.


The cost of buying sports TV on both broadcast and cable is going up considerably. In January, ABC, CBS and Fox shelled out a combined $12.9 billion for National Football League TV rights. ESPN paid $4.8 billion for the NFL's cable package, more than doubling the previous pact. NBC renewed its National Basketball Association rights for $1.75 billion.

According to Nielsen Sports Marketing Service's research, advertisers spent in excess of $1.3 billion on cable sports programming last year. Advertisers spent well over $2.4 billion on broadcast network sports programming.

Cable TV sales executives are now on a mission to persuade advertisers that there are better values out there.


Armed with research and statistics, cable TV networks with sports programming are targeting advertisers that spent between $40 million to $60 million on TV sports last year: American Express Co., American Honda Motor Co., Chrysler Corp., Coors Brewing Co., Ford Motor Co.'s Lincoln Mercury Division, MCI Communications Corp., M&M/Mars, Pepsi-Cola Co., Procter & Gamble Co. and Toyota Motor Sales USA.

"Male viewers are continuing to be difficult to target in prime time," says Larry Goodman, president-news sales, Turner Broadcasting. "For concentrated male viewership, in general, you have to look at cable."

Indeed, cable already has won over many advertisers. Basic cable networks saw ad revenues reach $5.78 billion in '97, up 22% from '96. The six broadcast networks combined to post an increase of only 3%, from $14.7 billion in '96 to $15.2 billion in '97.


Who's winning the war for ad dollars among the cable sports players? Nobody's breaking out numbers, but it appears ESPN had the edge in 1997, while rivals are building infrastructure for future gains.

Last year's most-watched head-to-head clash -- ESPNews and Time Warner/Turner's CNN/SI, both 24-hour sports news services -- appears to be a draw. ESPNews is currently in 10 million homes, while CNN/SI is in 11 million homes.

ESPN sold ESPNews inventory separately and in packages containing other ESPN inventory. George Bodenheimer, ESPN's exec VP-sales and marketing, says the marketplace responded favorably.

Turner Sports did the same with CNN/SI, selling units in packages containing other Turner network inventory.


But selling CNN/SI spots separately proved more challenging. It wasn't until Turner started selling sponsorships to vignettes within programming that the marketplace truly warmed up to the network.

"It rapidly became apparent that many advertisers were looking for ways to separate and differentiate their commercial messages through sponsorships," says Mr. Goodman. "We didn't package it the way we should."

Already in '98, the strategy has landed 10 new ad deals for CNN/SI, boosting revenues by 40% over this time last year. For example, Coca-Cola Co. and Shell Oil Co. inked deals to split sponsorship of the "Nascar Minute."

Packaging is the name of the game in cable sports ad sales, whether it's lumping inventory together that includes units on other networks or in other mediums or creating compelling programming elements ripe for sponsorship.

Some of the most heated competition in the cable sports business is ancillary promotional and revenue-generating arms.


ESPN last year acquired Classic Sports Network, a nostalgia network in 10 million homes. On March 11, the network threw a gauntlet down before Time Warner's Sports Illustrated by launching ESPN The Magazine. Only ESPN, with its all-sports media empire, can offer a package of properties based exclusively on sports programming. Turner can create CNN/SI packages with units from CNN, CNN Headline News, Turner Network Television and Superstation TBS.


Fox/Liberty Networks sells packages built on units from its Fox Sports Net, an affiliation of cable sports networks reaching 58 million homes, united by a brand name and national programming. It also sells packages including programming from sister cable TV network f/x, which airs Major League Baseball games Saturday nights.

Fox Sports Net even has a sports news update that airs each night on f/x during episodes of "The X-Files" and "NYPD Blue"; it leverages that package in other sports sales.

Fox Sports Net is just now hitting its stride -- using a combination of packaging options. A year ago, Fox/Liberty Networks created the new brand by reorganizing and consolidating the sales structure of its patchwork network. It hired separate executives to head up spot, local and network sales; each reports to Lou LaTorre, president of ad sales for Fox/Liberty Networks.

"We can put any combination of inventory together in any form or configuration," says Mr. LaTorre.


The new structure is paying off, he says.

Network sales have tripled in '97 and are on track to double in '98, and spot business is outpacing '97 by 19%, he says. The addition of sports inventory to the f/x packages has boosted that network's ad sales by 120% over this time last year, he adds.

In the showdown between ESPN's "SportsCenter" and Fox Sports Net's "Fox Sports News," Mr. LaTorre says his network is making gains. "Fox Sports News" generates about 70% of the revenues "SportsCenter" brings in for ESPN, he claims.

The evolving ESPN/Fox Sports Net battle will be one to watch in 1998. Later this year, ESPN will enter the regional sports network fray with ESPN West in Southern California, taking on Fox Sports West and Fox Sports West 2. ESPN West will be anchored by the National Hockey League's Mighty Ducks and Major League Baseball's Anaheim Angels -- teams owned by ESPN parent, Walt Disney Co.

Fox recently helped to protect its cable presence in the market by purchasing MLB's Los Angeles Dodgers.

In a growing trend, cable sports entities are getting into the content-creation business. ESPN owns and markets the X Games.


Turner Sports owns and markets the Goodwill Games. Recently, Turner Sports and NBC announced their intention to create, own and operate a rival to the National Football League.

In the battle for ad dollars, only the best brand names with the best programming will survive.

When Turner Network Television lost its half of the NFL package to ESPN earlier this year, many saw the loss as a blow to the Turner Sports brand. Turner executives disagree, saying losing the NFL only cost the network 5% of its total sports programming. Instead, it sees the NBA as its key property.

"The NFL is package of events; the NBA provides sales and promotional continuity over a much longer period of time," says Mr. Lazarus.

"Would we like to have the NFL? Yes. But we weren't sure we could cover it through ad sales. Passing the costs along to cable operators wasn't something we were prepared to do."


ESPN's contracts with cable operators reportedly allows a 30% NFL surcharge on top of the license fees.

Mr. Bodenheimer says the high fees being paid for NFL programming will drive up ad rates on all TV sports programming. Of course, he says, advertisers won't be pleased. "But advertisers recognize and pay for quality and value. They know the NFL is the preeminent vehicle to teach young men," says Mr. Bodenheimer. "Our brand will help it go further. Will advertisers be scared away by the prices? Hard to say. But we're bullish."

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