NEW YORK: Has televising sports lost its sheen? Several US broadcasters claim that an ad slump has made televising sports a money-losing venture and they don't mind ceding the games to cable TV rather than paying more to keep them.
A Chicago Tribune report says that advertising revenue at the largest networks fell 10 per cent from 2000 to 2001; and regular-season ratings for the four major sports dropped an average of about 18 per cent from 1997 to 2001.
This is a far cry from the 'hey' days in the 1990s and early 2000s! The TV Bureau of Advertising, an industry association based in the US, says that Viacom Inc.'s CBS, General Electric Co.'s NBC, Walt Disney Co.'s ABC and News Corp.'s Fox generated a record $15.8 billion in 2000 ( 60 per cent more than in 1990).
The NBA led the decline, plummeting 38 per cent, according to research compiled by Fox Sports. Advertising revenue from sports at CBS, NBC and ABC was $633 million in 1Q2003, down 49 per cent from the same time last year, according to the Broadcast Cable Financial Management Association. Even compared with 2001, a non-Olympic year, the drop-off was 28 per cent.
CBS President Les Moonves, who agreed to pay $6 billion over 11 years to show the NCAA men's basketball championship beginning this season was quoted as saying in a Chicago Tribune report that the days of networks paying ever-escalating rights fees were over. CBS paid $1.7 billion to air the tournament from 1996 to 2003.
The National Football League, the National Basketball Association, Major League Baseball and NASCAR shared in the prosperity, demanding and winning higher fees to broadcast their events. In 1998, for instance, NBC paid the NBA an average of $350 million a year for the rights, more than double its annual fee in 1990.
Time Warner Cable executive VP Fred Dressler was quoted as saying that the current sports model is on "life support."
Fox was the biggest network spender on sports, signing a $4.4 billion, seven-year contract with the NFL in 1998; a $2.5 billion, five-year contract with Major League Baseball in 2001; and a $1.6 billion, seven-year contract with NASCAR in 2001. The company has said it didn't get its money's worth.
In February, Fox took a charge against earnings, reporting that it expected to lose $909 million on the contracts because of a "severe downturn in sports-related advertising" and an "industrywide reduction of projected long-term advertising growth rates."
CBS, the second-biggest spender, agreed in 1998 to pay $4 billion over seven years to join Fox in broadcasting the NFL. NBC has stopped airing major professional sports. The network surrendered NFL rights in 1998, refusing to match a bid from Fox, and walked away from basketball last year, citing losses of $150 million annually. It got out of baseball in 2000.
NBC would have lost $400 million a year had it retained those contracts, NBC Sports president Ken Schanzer was quoted as saying.
The National Hockey League will be the first major professional league to test the networks' avowed parsimony. Hockey's five-year, $600 million contract with ABC and ESPN expires after next season, and many experts said the NHL won't get as much next time.
NBC broadcasts the Wimbledon and French Open tennis tournaments, University of Notre Dame football, golf's US Open and Ryder Cup, horse racing's Triple Crown and so-called niche sports such as the Arena Football League, which doesn't require a rights fee.
The network also has agreed to pay $1.51 billion for the rights to the 2006 and 2008 Olympics, which may be the only sporting event that can trigger a bidding war, TV executives said. The 2002 Winter Games in Salt Lake City drew 2.1 billion viewers worldwide.