ABC is the latest television network to subscribe to Nielsen’s (NLSN) out-of-home reporting service. As cord cutting increases, networks are looking to bars, restaurants and gyms (among many other places) for an audience lift. The incremental boost derived from out-of-home viewership helps networks during the media buying process, as it gives them more precise audience guarantees. ESPN (DIS), Fox Sports (FOXA), CNN and Turner (TWX) are already subscribers to the service and have seen a spike in viewership, with news programming and live sports the biggest beneficiaries.
ABC NETWORK SUBSCRIBES TO NIELSEN NATIONAL OUT-OF-HOME MEASUREMENT
Howie Long-Short: Early reports from NLSN shows that OOH figures could potentially increase total viewership numbers by as much as 20% for news and sports. So all those stories about the end of TV as we know it; yeah, they were all based on incomplete data.
Fan Marino: NLSN is just figuring out they should count bars & restaurants in their viewership numbers? Is it safe to assume execs haven’t left their house on a fall Sunday in 30 years?
NFL owners are prepared to give Commissioner Roger Goodell a 5-year extension through 2024, to keep him in his current role through the next round of labor and media (CBS, CMCSA, FOXA, DIS) negotiations. Terms of the deal have not been released, but the contract is expected to pay Goodell in the range of $35 million/year. The NFL players union has already threatened a work stoppage in ’21, so stability at the top remained the owners preference; and while Goodell has been a target of criticism for fans, the league has grown exponentially under his watch.
Staying Put For A While: NFL Close To Extending Goodell’s Contract Through ’24
Howie Long-Short: Goodell isn’t an owner, he’s an employee. How is it possible he made $150 million during his first 8 years as commissioner, while Tom Brady only made $99 million during that same period? Both work for Bob Kraft…
Fan Marino: Goodell says he’s going to be at Foxboro for the opener. Barstool is giving away 70,000 “clown” towels. This should end well.
The NFL saw an 8% decrease in TV viewership during the 2016 season and ad buyers are projecting additional losses during the 2017 season. A Variety survey of commercial ratings projections (taken from the 3 top media buying agencies) indicated that fewer people are expected to watch commercials live during NFL games and within the 7 day period following the broadcast, than last season. While some believe the NFL has peaked, its games still draw higher ratings than just about anything else on television.
Madison Avenue Predicts Football Viewership Will Drop Again This Year (EXCLUSIVE)
Howie Long Short: A drop in ratings means less ads to sell. Broadcasters promise ad buyers a number of impressions. If they fall short, they use future ads as “makegoods” to offset the difference. Needless to say, those are ads that can’t be sold to other buyers.
Fan Marino: For the first time in 25 years the NFL isn’t rapidly growing and the league’s owners are looking to give the Commissioner a 5 year contract extension through 2024. Why now? Who else is paying him $35 million/year?
Between 2013-2016, ESPN (DIS) has lost 9 million subscribers, dropping from 99 million subscribers to 90 million, and recent Nielsen figures indicate that the figure could now be as low as 87 million. At an estimated $7.50/subscriber, you can assess that DIS incurred a $1.08 billion deficit over that time frame, with the number still growing. DIS shareholders are hopeful that their recently announced OTT streaming service will offset the losses. It is difficult to project if that is going to be the case. The business model, price point and content to be included have yet to be announced.
Can Streaming ESPN Solve Disney (DIS) Stock’s Problems?
Howie Long-Short: The question is not even whether this nebulous minor-league streaming service can offset cable subscriber losses, but how much further losses to come they can stem. Without any details, it sounds like not enough–and not soon enough.
Fan Marino: I don’t see 12 million people signing up at $7.50/mo., to watch games that aren’t good enough to be broadcast on the mothership.
The Walt Disney Company (DIS), who just last year acquired 33% of digital media darling BAMTech for $1 billion, has reached a deal to become the majority stakeholder in the company that will provide the infrastructure behind the media giant’s shift in to streaming. DIS announced it has picked up an option to purchase an additional 42% of the MLB Advanced Media spinoff for $1.58 billion. The technology, which currently acts as the backbone behind WatchESPN, will power ESPN’s newly announced OTT service, along with Disney’s ambitions to compete with Netflix (NFLX) in the streaming space.
BAMTech valued at $3.75 billion following Disney deal
Howie Long-Short: No surprise here. It was clear from the start that DIS sees BAMTech as the foundation for their digital sports platform going forward. Sure wasn’t cheap, but Disney has deep pockets.
Fan Marino: Each of the 30 MLB teams put up $4 million to develop BAMTech. It returned $50 million/team and collectively MLB and its teams still own 15% of the company. Not a bad ROI.
In an effort to offset the steady decrease in television subscribers, Walt Disney Co. (DIS) will launch an independent ESPN OTT streaming service in 2018. The platform will provide subscription packages (some as small as a single game broadcast), consisting of content not airing on the ESPN television networks. ESPN anticipates the platform will provide access to an additional 10,000 live game broadcasts/year, including those from BAMTech partners, MLB, NHL & MLS. Viewers who want to watch the NFL, CFB & NBA action shown on ESPN’s linear television networks will still require a cable subscription.
What the ESPN streaming service will offer
Howie Long-Short: Disney is belatedly inching ESPN into the OTT world. But the real question is, how many digital subs will they be able to win when they feel it’s time to sell full stack ESPN OTT at $20-$30?
Fan Marino: How did I just get suckered into paying MORE for sports programming?
2017 hasn’t been kind to ESPN. In April, the company laid off 200+ employees and then in June reported their lowest rated second quarter in 4 years. ESPN’s struggles don’t seem to be hurting parent company Disney (DIS) as much as some may think. In April of 2017, DIS neared an all-time high of $120 (the stock is at $109 at the close on Aug. 2). Helping them soar are increased revenues from their theme parks, as well as the success of their Star Wars & Marvel franchises. Rumors of a possible acquisition by Verizon (VZ) are likely not hurting the stock either.
Disney: 30% Less Dependent On ESPN
Howie Long-Short: No doubt, ESPN is facing a tough task as it is overpriced and overdistributed. But Disney is still the premier media company out there. They will be fine.
David Price/Earnings: Disney continues to un-web their core business from ESPN. Definitely a wise decision based on recent stock performance.
Fan Marino: ESPN fired top notch reporters like Marc Stein and Jayson Stark, while keeping high priced carnival barkers like Steven A. Smith. Certainly seems like a Mickey Mouse organization to me.
Playstation Vue (SNE) has introduced a $10 add-on for the cord-cutting sports fan. The 13 channel package includes NFL RedZone, ESPN Goal Line, ESPN Classic and several regional networks including The Longhorn Network.
PlayStation Vue’s $10 sports add-on includes NFL RedZone
Howie Long-Short opines: It’s a start, and NFL Redzone has some appeal, but this is still far from a true, comprehensive sports bundle. I wouldn’t expect this to get too much traction.
Fan Marino says: I could do without Classic, but don’t even want to think of a life without Goal Line (DIS) on a fall Saturday.
The NFL’s 4 main broadcast partners: ESPN (DIS), NBC (CMCSA), CBS & FOX (FOXA), are bracing for a fall in advertising revenues for games during the 2017 season. A decline in TV ratings, the recent switch of advertisers from traditional TV to online media, the overabundance of games being shown on television and drastic spending cuts by the drug and auto companies, are all contributing to the poor ad performance. Even with an increase in price of spots for the 2017 season, total ad revenues are trending a few points below the 2016 season.
ESPN, Broadcasters Are Said to Confront Football Ad Slump
Fan Marino says: No one needs 9 hours of football on a Sunday, eliminate SNF. The short week kills the quality of play, eliminate TNF. No Saturday Games. 2 games on Sunday, 1 on Monday. Boom! Problem solved.
Howie Long-Short opines: Way too early to call a trend here r.e. ratings. Lot of horrible games last year, plus that whole election thing. For broadcasters like CBS and FOX, sports are still their safest bet for viewership. But with their over-reliance on advertising, an economic slowdown is the bigger risk.