The rising cost of sports programming is a major topic of discussion this year at Allen & Co.’s annual gathering of dealmakers in Sun Valley, said John Skipper, president of Walt Disney Co. (DIS)’s ESPN.
This year’s conference includes team owners, agents and league commissioners, Skipper said yesterday as he arrived at the mountain resort in Idaho. This week’s event marks the second year of attendance for Skipper, whose ESPN sports-cable network is Disney’s most profitable operation.
“It speaks to the ascendance of sports as a valuable media entity and sort of central to the culture,” Skipper said of the many sports attendees at the conference, held for 30 years by the New York-based investment bank.
Rupert Murdoch’s 21st Century Fox Inc. (FOXA) begins airing a new national sports channel, Fox Sports 1, on Aug. 17, marking the emergence of a new bidder for rights. TV and cable networks have increased their spending on sports as audience ratings for live events prove resilient in competition with delayed viewing on DVRs and newer options like Netflix Inc. (NFLX)
ESPN tries to reduce programming costs “in every negotiation we do,” Skipper said. Ultimately, it’s up to media networks to determine the price.
“They’re worth what somebody will pay for them,” Skipper said. “It’s up to us. We can choose not to buy the rights.”
The commissioners of the big U.S. sports, including the National Football League’s Roger Goodell, the National Hockey League’s Gary Bettman and Major League Baseball’s Allan “Bud” Selig spoke on a panel at the conference today.
Other sports figures invited this year include Chicago Bulls and Chicago White Sox owner Jerry Reinsdorf, National Basketball Association Commissioner David Stern and sports agent Casey Wasserman.
The rising value of sports was on display in January when Time Warner Cable Inc. (TWC) agreed to pay more than $7 billion to broadcast Los Angeles Dodgers games for 25 years, starting with the 2014 baseball season. Rupert Murdoch’s 21st Century Fox Inc. last year purchased a 49 percent stake in the New York Yankees’ Yes Network, giving the channel a $3 billion valuation.
Goldman Sachs Group Inc. downgraded Disney to neutral from buy on June 20 and removed it from its “conviction buy” list because of competition and the rising cost of sports. Cable-network margins will probably compress and operating income growth will slow to 4 percent in fiscal 2015 from 12 percent this year, Goldman analyst Drew Borst estimated.
Disney, based in Burbank, California, closed little changed at $64.91 in New York. The shares reached an all-time closing high of $67.67. on May 15.
Skipper said ratings for the men’s final at the Wimbledon tennis tournament fell from a year ago because the matchup between winner Andy Murray and runner-up Novak Djokovic, wasn’t as compelling to viewers as last year’s pairing of Murray against Roger Federer. “They’re not as sexy,” Skipper said of Djokovic and Murray.
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