Look out ABC/ESPN. If Comcast acquires NBC Universal from GE, it could become the dominant player in the cable-sports business
1. What a Comcast Buyout of NBC would Mean for Sports
If Comcast's (CMCSA) high-profile bid to take control of General Electric's (GE) NBC Universal goes through, the new network could, seemingly overnight, present a true rival to Walt Disney (DIS) ABC/ESPN juggernaut for the hearts and minds of sports fans everywhere.
According to sources cited by The Wall Street Journal, Comcast and GE officials "see the creation of a combined sports business as a key benefit" of a merger of Comcast's cable channels with the NBC network and Universal's many other entertainment properties. At an industry conference in June, Comcast Programming Executive Jeff Shell stated that expanding the sports business at his cable networks was 'top of our list over the next five years.'" Owning sports and entertainment content has long been a part of the Comcast strategy; the company owns E! Entertainment, 11 regional sports networks, and other sports properties including Golf Channel and Versus (home of $ports Take program).
The new broadcast entity would combine the companies' rights to golf, hockey, and college football with NBC's rights to Sunday Night Football games through 2013 (for which it pays $600 million a year) and the Olympic Games through 2012 ($2 billion). Additionally, it would give NBC Sports a conduit to cable subscription revenues, such as the approximately $400 million that the Golf Channel and Versus currently enjoy. All told, cable-TV subscriptions accounted for more than $17.7 billion of revenue in the first half of 2008 alone. The company has 24 million cable customers (one out of five TV households), and 15.3 million high-speed Internet accounts.
Moreover, the strong platform the new entity would provide would likely give Comcast more leverage when negotiating carriage fees with ESPN. Comcast and other cable companies are paying approximately $5.8 billion to carry ESPN's seven domestic networks this year, according to the Journal.
Comcast better act fast—on Friday, it was rumored that Liberty Media (LMDIB) Chairman John Malone and News Corp. (NWS) Chief Executive Rupert Murdoch were said to be interested in the deal.
2. Rush, Flushed
Na na na na. Na na na na. Hey, hey, hey. Good-bye.
The group bidding to buy the St. Louis Rams, led by Real Salt Lake owner Dave Checketts, has severed ties with conservative talk-radio personality Rush Limbaugh, likely making the group more worthy in the eyes of NFL owners and officials and vaulting them close to the top of the list. Checketts issued his first public statement on the matter Thursday, saying: "It has become clear that [Limbaugh's] involvement in our group has become a complication and a distraction.…As such, we have decided to move forward without him."
A livid Limbaugh took to the airwaves on Friday—and followed up with an incendiary opinion piece in the The Wall Street Journal the next day—blaming the situation on ongoing attacks on political conservatism by the left. He claimed that he had warned Checketts about the "firestorm" that was likely to ensue when his participation was made public, but that Checketts had assured him he had "cleared [Limbaugh's] involvement with people at the highest levels." Limbaugh also said he told Checketts that he refused to withdraw, saying "you go public and you fire me." Apparently, he didn't have to tell Checketts twice.
NFL sources were also cited as saying that Limbaugh's role meant the bid had "zero chance" of being approved by a necessary three-quarter majority of the league's 32 owners. While most owners remained silent on the topic, Colts owner Jim Irsay said: "Sometimes privileges in life do get lost. …I've met Rush only once, and he seemed like a nice guy. But when you see the comments that are out there, I would not be comfortable." Miami Dolphins wide receiver Greg Camarillo summed it up well. "The NFL is obviously a diverse workplace," he said, "and you've got to be pretty sensitive to everybody's needs. You can't alienate any group."
Despite the uproar over Limbaugh, the Rams may not even be for sale. Rams President John Shaw said it was "premature" to discuss an ownership change, telling NFL owners meeting in Boston that Chip Rosenbloom and his sister, Lucia Rodriguez, who inherited the team from their mother, Georgia Frontiere, had not even committed to sell. Regardless, six parties have expressed interest, including Checketts' group.
3. LPGA: Trying to Keep Sponsors on Course
The swath of destruction to the LPGA Tour left by former Commissioner Carolyn Bivens is pretty wide. Under her watch, the number of official money events dropped from 34 in 2008 to 28 this year, and still more tournaments are struggling to replace key sponsors. The latest casualty is Samsung, the namesake of the LPGA Tour's Samsung World Championship since 1995, which pulled out as that tournament's title sponsor, despite "indications during tournament week to the contrary," according to a memo to players from LPGA Acting Commissioner Marty Evans immediately after the tournament was concluded on the South Course at Torrey Pines in San Diego.
Luckily, the Samsung announcement came a day after State Farm renewed its contract for the LPGA State Farm Classic for two more years. That event will continue through 2011 and maintain its $1.7 million purse. State Farm Insurance has hosted the event since 1993; next year's tournament is scheduled for June 10-13 at Panther Creek Country Club in Springfield, Ill.
In its latest step to stem the tide of defecting sponsors, last Wednesday the LPGA hosted its 2009 New York Agency Summit at Chelsea Piers. Guests who attended the LPGA-themed evening included current corporate partners and a variety of media/marketing agency and corporate representatives. Evans was on hand, along with golfers Cristie Kerr and Brittany Lincicome, who provided golf tips and mingled with guests. A sports property sponsorship panel discussion moderated by SportsBusiness Journal's Terry Lefton included Tony Ponturo (Ponturo Management Group), Tom McGovern (Optimum Sports), and Tony Pace (Subway).
Additionally, Thursday night's episode of YES Network's SportsMoney profiled golfer Anna Rawson as an example of a sports brand trying to diversify revenue streams. Rawson, who earns in the neighborhood of $3 million annually from endorsement and licensing deals, said that when other golfers ask her for advice, she tells them: "You've got to have a great story. That's the start of everything…and that's what you're selling."
Let's hope Evans and current LPGA leadership were watching.
4. Busted Nose, Muscular Legs, Sweaty Finish?
We've seen wine labels from the likes of Mike Ditka and race car drivers Mario Andretti and Richard Childress. Dick Vermeil and Ernie Els have their own private vintages, and Annika Sorenstam just added a release of her own.
Not World Wrestling Entertainment (WWE) honcho Vince McMahon. In fact, his reaction to the vino is downright threatening. McMahon and WWE have informed the American Wine Foundation property, the Wine School of Philadelphia, that the organization is infringing on WWE's copyright by naming one of its wine classes "Sommelier Smackdown." In a letter to the school, the WWE called out the use of "smackdown" as "likely to create consumer confusion as to WWE's affiliation, sponsorship and/or approval of the class." The WWE claims it pursued the American Wine Foundation only after the foundation filed a trademark application for "Sommelier Smackdown," and insists its actions are legitimate attempts to protect a valuable trademark and not just sour grapes.
After all, the only place where it makes sense for wrestling fans and wine snobs to comingle is at a good old-fashioned grape stomping, a highlight of the Crush.