MLB, Tencent Partner to Grow Sport of Baseball in China


MLB has partnered with Tencent (TCEHY) to grow the sport of baseball in China. As the Official Digital Broadcasting Partner of MLB within the country, TCEHY will live stream 125 games (including the All-Star Game and every game of the Postseason/World Series) exclusively on Tencent PC, Mobile and OTT platforms. The technology giant has also committed to broadcasting a series of MLB highlight shows and supporting/broadcasting youth baseball and developmental events. Super Baseball Week (April 4-8) will kick off the new partnership; 5 straight days of games featuring the league’s biggest stars (see: Trout, Judge, Bryant).

Howie Long-Short: Tencent Holdings Limited (TCEHY), one of 50 constituent stocks making up the Hang Seng Index (largest companies on HKSE, represent +/- 58% of HKSE cap), is a leading provider of comprehensive internet services in China. The company’s social messaging app WeChat has more than 1 billion users. TCEHY was recently named China’s most valuable brand for a 4th straight year, with WPP and Kantar Millward Brown assessing its brand value (how a brand powers business) at $132.2 billion (+25% YoY). Just how big of a global player is Tencent? The company’s market cap is $496 billion, $30 billion more than Facebook (FB).

Fun Fact: Just one sports related brand made the Top 100 most valuable Chinese brand of 2018 rankings, Anta Sportswear (ANPDY) at #78.

Fan Marino: MLB opened an office in China in 2007 and has maintained 3 Development Centers within the country (Wuxi, Changzhou and Nanjing) since. The fruits of those labors have started to pay off. 3 players have graduated and gone on to sign MLB contracts (“Itchy” Guiyan – O’s, Hai-Cheng Gong – Pirates and Justin Qiangba – Red Sox) and another 12 are currently playing professionally in China. The success can’t just be measured by players on the pro level, though. Since 2014, 36 players have graduated from the program and gone on to play collegiate baseball.

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Endeavor Acquires Digital Video Broadcasting Company


Endeavor has acquired the digital video streaming provider NeuLion, Inc. (NLN) for $250 million ($.84/share) in an all-cash deal; a 112% premium on the share price at last Friday’s close. NLN, which specializes in digital video broadcasting, distribution and monetization, will become a privately held subsidiary of Endeavor (formerly WME-IMG) upon the Q2 ’18 close of the sale. The announcement comes just months after NeuLion announced “it was selling some non-core assets to an affiliate of Fortress Investment group for $41.5 million”. NLN has struggled to replace the revenue lost following its loss of the NHL as a client to competitor MLBAM in August ‘15; revenue declined 8% YOY in Q4 ’17.

Howie Long-Short: You can’t invest in Endeavor (despite a long-rumored IPO), but with publicly traded rights holders valuing the technology that enables them to reach their consumers directly; there are several other was to invest in OTT service providers. Disney (DIS) owns 75% of BAMTech, NBCUniversal (CMCSA) developed PlayMaker Media and Turner Broadcasting System (TWX) owns “a majority stake” in iStreamPlanet. Don’t forget, you can also play Delatre via WPP; an investor in Bruin Sports Capital.

Fan Marino: Endeavor (which owns the UFC) worked with NLN on the dissemination of last summer’s McGregor/Mayweather mega-fight and while the fight had the 2nd most buys in PPV history (4.3 million), it was also marred by widespread technical difficulties. While that experience may not have gone perfectly for some viewers, it gave Endeavor the opportunity to see the platform’s upside; and with the UFC struggling to find the $450 million/year annually it seeks in TV money, retaining their own rights and going DTC may be the company’s best option.

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Two Circles Uses Data to help Rights Holders Grow Revenue Streams

Two Circles was the BT Sport Industry Agency of the Year in 2017 (a big deal in the industry). The data-driven (they analyze billions of fans, customers and audiences across transactional, web, social, mobile and digital campaigns) sports marketing agency is well known in London (they work with Formula 1, a number of EPL clubs, Wimbledon), but just started taking on U.S. rights holders in 2016. I had a chance to speak with SVP Mark Thompson, and ask him a few questions about changing consumer viewing habits, experiential marketing and Amazon/Facebook’s impact on the future of sports sponsorships.

JWS: How are changing consumer viewing habits impacting the sports sponsorship market?

Mark: Sports sponsorship is in a state of flux. The top of the market remains relatively robust but changes in consumption habits have lead brands to Google, Facebook etc. who can offer specific audiences and a more robust evaluation process. Rights-holders must work to sell to one-to-one relationships that are owned versus relying on top line media and social footprint numbers. Demonstrating an understanding of fan demographics will not be enough without the same level of comprehension of attitudinal and behavioral data. We expect to see digital assets will become an increasingly important part of the partnership asset mix and rights-holders and brands will increasingly work together to track their return on investment.

JWS: Experiential marketing is more popular than ever. Why are brands moving in that direction as opposed to traditional sports sponsorship model (i.e. in stadium signage)?

Mark: Sponsorship has always been most frequently employed as a marketing tool to assist at the early stages of the customer life cycle (e.g. awareness) and been largely tracked by media equivalency for signage and surveying sentiment to assess the overall impact. Brands are increasingly investing a higher proportion of spend into experiences designed at the purchase stage for new buyers or upselling existing ones. The opulent sponsored premium areas in the new stadia speak to this. This has been made possible as brands and rights-holders use data better to identify, reach and engage high spending individuals/corporations and assess the impact. If you want to show-off a new high-end car as part of your partnership with a sports team, getting a small number of the right buyers engaged with a unique experience can be a better investment than getting a lot of visibility from people unlikely to actually buy your car.

JWS: You see stories daily about Amazon or Facebook acquiring sports rights. How does their ability to collect data/use data alter the future of sports sponsorships?

Mark: Amazon’s investment in broadcasting is a game-changer for B2C sports sponsors and advertisers.They will be able to slice and dice specific audiences for brands and thus increase the value of each viewer for the rights-holder. Don’t want to advert to anyone over 45, or a specific geography? No problem, as someone else will and will pay good money to. In addition, they will be able to monitor, record and communicate the effect that advert has had on consumption in the short and medium term on a channel taking up an increasingly high proportion of our daily spend. The availability and insight driven from data will transform sport’s ability to compete with other sources of marketing dollars. The ability to track web behavior on Google after viewing a piece of sponsored content on YouTube demonstrates value of the sponsorship not previously quantified.

Howie: Two Circles is a part of Group M, a WPP company (WPP). WPP is a London based multinational advertising and PR firm, traded on the NYSE. In late October, the company cut its 2017 earnings projections down to 0, while reporting a 1.1% drop in Q3 ’17 net sales. The company will report on Q4 and full year ’17, on March 2nd.

Fan Marino: Two Circles has built an impressive client base in the U.K., but I was more interested in hearing the names of some clients they’re working with on this side of the pond (the website, currently under redevelopment, doesn’t identify them). Can you name U.S. rights holders that you’re currently working with?

Mark: Sure, the NFL (and some individual teams), MLS, the Association of Volleyball Professionals Tour and the United States’ 2026 World Cup bid.

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