Study Finds Super Bowl Ads Worth the Spend

SuperBowl

30-second advertising spots during the February 4th Super Bowl are selling for more than $5 million (40% of U.S. TV households will be watching), but a collaborative study between Stanford University and Humboldt University (Germany) found that Super Bowl advertisers continue to see meaningful post-game sales during other major sporting events (i.e. March Madness, World Series), within the same calendar year, indicating the spend is worth it. Those that built a social media presence or digital campaign to follow their Super Bowl ad, were successful in keeping their product(s) on the consumer’s mind through baseball season. Companies that were the sole advertiser within a specific product category received the greatest long-term value (see: BUD, PEP). Long-term advertisers received a boost in sales during Super Bowl week, despite the product being purchased before the event (i.e. the ad has yet to run).

Howie Long-Short: Just 10 Super Bowl ad spots remain, so the study is unlikely to impact ad sales (and NBC’s bottom line) for this year’s game. If there are going to be immediate beneficiaries, it’s going to be CBS (rights to ’19 SB) and FOXA (rights to ’20 SB); the rights holders of the next 2 Super Bowls. NBC Universal (CMCSA) said it expects to generate $500 million in Super Bowl ad revenue, a figure in line with the total generated for the last 2 years. Advertisers aren’t worried about the NFL’s declining attendance, that trend hasn’t translated to the Super Bowl; last year’s game drew 111.3 million viewers, the 5th most watched TV event of all-time.

Fan Marino: Mean Joe Greene and Joe Namath participated in iconic Super Bowl commercials, but a lesser known collegiate All-American starred in one of my all-time favorites; Terry Tate as “Office Linebacker”, installing workplace discipline in a 2003 Reebok spot. At 6’5, 300 pounds, with 4.3 40 (yard dash) speed and collegiate All-American (Morgan State) game tape, Lester Speight (his real name) should have been an NFL star; position changes and injuries derailed his promising career. He never played in a professional football game.

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NFL Remains TV’s Biggest Draw, Khalifa Draws Huge Audience for G-League Game

AdAge published their Top 50 most watched broadcasts of 2017 and despite a 9% YOY NFL ratings decline, 37 were NFL games; up from 28 in 2016 (Olympic year) and matching the league’s total from 2015. 9 of the Top 12 were NFL games and Super Bowl LI was the most watched program. 11 other playoff games made the list, as did 6 Sunday Night Football games, the season opener on NBC and 18 CBS and Fox Sunday afternoon windows. The highest rated non-NFL sporting event was Game 7 of the World Series (#13, 28.2 million); Game 5 of the NBA finals was the NBA’s highest rated game (#23, 24.5 million).

Howie Long-Short: On a network basis, Fox (FOXA) had the most sporting events in the Top 50 with 15; including the Super Bowl, 4 NFC playoff games and 2 World Series games. CBS and NBC (CMCSA) each had 13. ABC (DIS), which does not have regular season rights to the NFL, had just 5 of the Top 50 broadcasts. NFL ratings are down, but ad sale revenue is up 2%, makegoods are down and the average cost per spot is up 1% from the 2016 season.

Fan Marino: Former adult film star (and social media influencer) Mia Khalifa is building a name for herself within the sports world; co-hosting a show on Complex News’ YouTube channel with Gilbert Arenas and starting a Twitch channel to play NBA2K and NHL ‘17. Now she’s using the platform to call G-League games (watch her co-stream Grand Rapids vs. Fort Wayne, here). With 10 minutes to go in the 1st quarter of last night’s game, more than 3 million people had visited her Twitch page. It’s obviously not an apple to apples comparison, but just one NBA game this season had 3 million viewers (GSW vs. OKC on November 22nd). I may not ready to give up Mike Breen, Marv Albert and Ian Eagle for Khalifa; but it appears there is an audience who is and prefers a co-hosted stream to the traditional broadcast.

DESPITE ANOTHER RATINGS SLUMP, THE NFL REMAINS TV’S TOP DOG

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Amazon Takes on The Sports World; 25 Companies That Will Be Affected

Amazon has been credited with killing everything from book stores to electronics retailers since its 1994 launch. Now, with a market cap +/- $570 billion and $16 billion in annual operating cash flow, the company is taking aim at the sports world. In our final newsletter of 2017, we look at 4 of AMZN’s recent initiatives and the 25 companies most likely to be affected in 2018.

Amazon Expands Brand Registry Program, Now Includes Nike

In June, Nike (NKE) agreed to join Amazon’s brand registry program; seeking to curb counterfeiting and non-licensed selling within the e-commerce marketplace. The partnership also supports the athletic apparel and sneaker brand’s initiative to boost revenue through a shift to digital and DTC sales, relying less on struggling retailers. Competitors Adidas (ADDYY) and Under Armour (UAA) already have direct-sales deals in place with AMZN.

Names to Watch: FINL, DKS, FL, HIBB, BGFV; LON: SPD, LON: JD

Howie Long-Short: Athletic apparel and sneaker retailers count on NKE (70% of FL business comes from NKE); but NKE launched its “Consumer Direct Offense” strategy in fiscal Q1 ’18, increasing e-commerce business 19% YOY. Mediocre retailers beware, the company is maintaining just a few dozen wholesale relationships as it looks to increase its e-commerce business (from 15% of revenue to 30% over the next 5 years).

Amazon Entering Private-Label Sportswear Business

In October, Amazon (AMZN) announced it was entering the private-label sportswear business and working with the same Taiwanese suppliers, Makalot Industrial Co. (TPE: 1477) and Eclat Textile Co. (TPE: 1476), that some of the world’s biggest athletic brands use. Elcat’s involvement is particularly noteworthy as the company manufactures high-performance sportswear for Nike (NKE), Lululemon Athletica (LULU) and Under Armour (UAA).

Names to Watch: NKE, UAA, ADDYY, LULU; TPE: 1476, TPE: 1477

Howie Long-ShortAMZN wants to be in the private-label clothing business because it pushes retailers to sell inventory on the e-commerce site. Should a retailer choose not to, AMZN will simply produce the item themselves and compete directly against the brand.

The Pursuit of Exclusive Broadcast Rights

In September, the company hired Brian Potter to lead its sports video business. In November, Jim DeLorenzo, head of sports, Amazon Video, said the company was pleased with viewership numbers, engagement and the reliability/quality of the cloud-based streaming service during its season long experiment streaming Thursday Night Football (10 games, $50 million); though it is too early to say if the company will pursue future exclusive sports broadcasting rights. The company has since done deals that will deliver Prime subscribers 37 ATP tour events (previously owned by SKYAY), the AVP Beach Volleyball tour each of the next 3 summers and docu-series on Michigan Football.

Names to Watch: CBS, DIS, FOXA, CMCSA, FB, GOOGL, NFLX, AAPL, SKYAY

Howie Long-Short: NFL Senior VP, Digital Media, Vishal Shah recently said “we continue to think some of the best days are ahead [for traditional TV partners] despite some shifts in the media landscape.” That doesn’t sound like linear television will be excluded in the next round of negotiations, but the NFL is encouraging interested media companies to bid on both television and streaming rights for the leagues TNF package; leaving the door ajar for the tech giants to receive exclusivity for the first time.

Twitch: The Future of Game Broadcasts?

Twitch, the live-streaming platform most often associated with video games, has agreed to stream up to 6 live G-League (Gatorade sponsored NBA minor league) games. Broadcasts will include interactive overlays (viewers can click a team name/logo for player, team, game and season stats), a loyalty program to reward viewer engagement during broadcasts (i.e. custom emotes for group chat) and the ability for users to provide their own live commentary (over the game feed) via the Twitch co-streaming feature.

Names to Watch: CBS, DIS, FOXA, CMCSA, TWX, RCI, MSGN

Fan Marino: NBA Commissioner Adam Silver has gone on record stating he’d like to see changes in the way sports broadcasts are presented; pointing out the lack of live stats and chatter surrounding the broadcast, that gamers have become accustomed to. I’m not ready to give up Mike Breen, Marv Albert and Ian Eagle for Towelliee; but it’s worth watching to see if anyone else is.

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NFL Sends Out RFP for Thursday Night Football, Open to Altering Package

The NFL is soliciting bids for its Thursday Night Football broadcast package, encouraging interested media companies to bid on both television and streaming rights. The RFP indicates the league is open to altering the package, with the number and dates of games (like TNF on Christmas Day) up for negotiation. Bids are due in early January. The league-owned NFL Network will continue to carry at least 7 games, per existing linear television affiliate agreements.

Howie Long-Short: Richard Sherman wrote a column on the Player’s Tribune entitled “Why I Hate Thursday Night Football”, citing injury, safety and quality of play concerns. Sherman isn’t the only player to feel that way (see: RoethlisbergerBrees), so why does the league insist on playing the games? The NFL made $500 million from its ’17 Thursday Night Football broadcast package; CBS and NBC (CMCSA) paid $450 million (each got 5 games) for television rights and Amazon (AMZN) paid $50 million to stream games 10 games. Oh, and people are still tuning in; the lowest rated TNF game drew 10.6 million viewers (3.3x the amount of the highest rated NBA game this season).

Fan Marino: Here’s a solution. CFB held its conference championship games on the weekend of December 2nd. Play Saturday triple headers (1p, 4p, 8p EST) the last 4 weeks of the season (no NCAA games) and add one on Christmas (in ’18 Christmas falls on Tuesday, so teams playing would get a bye the week prior). There’s no reason to concede that day to the NBA. That leaves 3 games; add 2nd MNF games (7p and 10p EST) to the last 3 weeks of September (there is already one in Week 1).

NFL RFP Suggests League Is Open To Changing “TNF” Package

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AXS Audience Growing for WWE Competitor, Beating MMA “On Some Nights”

AXS TV is investing heavily in its partnership with New Japan Pro Wrestling (NJPW); acquiring expensive broadcast rights to Wrestle Kingdom 12. AXS will air the top 3 Title matches from the event in primetime on Saturday January 6th, with the balance playing out over the next 6 Friday nights during their regularly scheduled weekly program. Language barriers prevent NJPW stars from connecting with the audience through gimmicks, so NJPW focuses on the action; targeting wrestling purists while distinguishing itself from the WWE. Chairman Mark Cuban said that weekly viewership numbers continue to increase and that NJPW beats MMA on some nights; predicting a future with “more NJPW and less MMA” on the network.

Howie Long-Short: NJPW is privately held, but you can play the wrestling outfit through AXS as CBS took stake in the company back in 2013. You can also invest in the TV Asahi Corporation, the distributor for NJPW and the company responsible for produce the English television broadcast of Wrestle Kingdom 12. TV Asahi Holdings Corp. trades on the Tokyo Stock Exchange under the symbol 9409. If NJPW is beating MMA on some nights, the UFC is unlikely to find the $450 million/year it’s seeking. Current rights holder FOXA has already low-balled them ($200 million), seeing the WWE as a viable replacement programming (rights expire in ’19). The WWE is the safer bet. Wrestling is scripted, with fans tuning in weekly for the story lines; MMA’s top fighters are showcased in PPV events, resulting in depressed ratings for weekly programming. There are simply too many variables (injuries, steroid use/testing, time off required between fights etc.) for MMA to consistently draw ratings.

Fan Marino: WWE fans will be excited to learn that Hall of Fame announcer and color commentator Jim Ross is the voice of NJPW. Ross’ finest work came during an Undertaker/Mankind match at 1998’s Hell in a Cell. Skip to the 1:46 mark to listen to the legendary call.

Mark Cuban on Vince McMahon and New Japan Pro Wrestling

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Facebook Hiring “Head of Sports Programming” To Bid on Rights

Facebook has announced it is looking to hire a “top level executive” to oversee sports rights acquisitions. The “head of sports programming”, will have a budget of “a few billion dollars” to buy broadcast rights on a global basis. The social network does not intend to produce sports broadcasts; it would like to stream events, partnering with leagues or broadcasters that have linear television distribution in place.

Howie Long-Short: Back in May, Zuckerberg said “the long-term goal is actually not to be paying for specific content like that” and that he would prefer to pursue a “revenue share model”; but those comments were made under the presumption FB would be producing the broadcasts. If the plan is simply to stream events and FB isn’t pursuing exclusivity, the up-front cash outlay becomes significantly more palpable (AMZN paid $5 million per NFL game, CBS/NBC (CMCSA) paid $45 million/game for TNF). EPL rights expire in ’18, with MLB and the NFL coming up shortly thereafter (’21 and ’22, respectively). Look for linear distribution rights to increase (again) with total broadcast rights skyrocketing, as the tech giants bid on streaming rights. I do not expect FAANG to receive any exclusivity in the next round of negotiations.

Fan Marino: Whistle Sports recently announced that it was creating its first exclusive show for FB Watch, the “Next Trickshot Superstar”; a 10-episode series, hosted by Chad Johnson that features trickshot artists competing for $25,000. As a video content creator, with a following of 375 million followers/subscribers (and growing 2.5 million/week), Whistle Sports has raised $80.5 million to date; TGNA, NBC Sports and CBS Sports all participated in the company’s $29 million Series C round, announced in January 2017.

Facebook reportedly seeking an executive whose job will be negotiating sports rights

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NFL Fans in NY, LA, DAL and CHI Could Miss NFL Action on Thanksgiving

More than 2 million Dish Network (DISH) subscribers will miss out on Thanksgiving Day NFL football (and SEC football on Friday and Saturday) if a pricing dispute with CBS isn’t solved within the next 24 hours. DISH dropped CBS Corp. (CBS) channels in 18 major markets after the 2 sides were unable to agree on a new carriage deal by Monday evening’s deadline. CBS is reportedly asking for the same terms it receives from its other distributors and believes it deserves a retransmission fee increase as CBS is the most watched DISH channel. DISH has balked at the demands; arguing CBS is asking for an increase on programming with declining viewership or that can be found free over the air.

Howie Long-Short: DISH reported Q3 revenue declined 5% YOY (to $3.58 billion), attributing the loss to a one-time removal of 145,000 subscribers in Puerto Rico and U.S. Virgin Islands (related to Hurricane Maria). The company added 16,000 subs during the quarter, offsetting losses in pay TV subscribers with the addition of an estimated (by Evercore analysts) 224,000-264,000 Sling TV streaming service subscribers. DISH shares are down 14% YTD.

Fan Marino: Cowboys and Chargers fans may want to consider taking DISH up on their proposed solution. Fans can drop their local channels in exchange for a $10 reduction on their monthly bill and have DISH install an antenna, at the company’s expense. It’s a slight inconvenience, but it beats missing the game.

Dish Network Drops Some CBS Channels Ahead of Thanksgiving Football Weekend

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