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February 6, 2023

The CW-LIV Golf Deal Shows Media Distribution Marketplace is Expanding

LIV Golf (LIV) recently announced an exclusive, multi-year partnership with The CW Network (The CW). It is LIV’s first U.S. television and streaming agreement. Financial terms of the deal were not disclosed.

The CW, ‘America’s fifth major broadcast network’, is not known for carrying sports content. In fact, the 17 year-old channel has never served as the exclusive broadcast home for a live mainstream sporting event. 

While the tie-up may seem unconventional, it is the latest indication that the media distribution marketplace is expanding.

“It turns out the zero-sum narrative between established distribution, broadcast and cable, and streaming was wrong. Neither is sufficiently flexible to distribute all the different forms of sports content,” Patrick Crakes (principal, Crakes Media) said. “There needs to be additional paths for successful distribution and this deal suggests large station groups with strategic, near national reach can be among them.” 

LIV tournaments will air live on The CW and The CW App on Saturdays and Sundays. Friday rounds will be exclusive to the free streaming app. 

Rights owners across the industry are struggling to find a fit for all their content within the established system. Limited shelf space, conflicts of interest and tight budgets mean there is no longer room for every package being carved out.

The streamers aren’t interested in taking them all, either. Several are owned by established media companies (so the same conflicts exist) and the ones that aren’t, like Apple and Amazon, have been strategic in their rights acquisitions. 

That has created an opportunity for large local station groups, like Nexstar Media Group, Sinclair Broadcast Group, Scripps and Gray Television, or a national broadcast network, to capture select packages. 

The ability to reach a mass audience is a powerful selling point for these entities as the cable universe continues to shrink and the streaming environment remains fractionalized. 

While a rights owner would likely have to take a cut on fees to work with them, the uncanny reach and activation gained could result in upside elsewhere within the business helping to offset the loss.

Of course, some rights owners might not have a choice. Diamond Sports is reportedly headed towards bankruptcy.

If the station group model sounds familiar, it is because we’ve seen an iteration of it before. “20, 30, 40 years ago, there were regional and national sports syndication models all over broadcast television outside of network-controlled time,” Crakes said (think: Raycom). 

The move towards putting sports content back on broadcast started up again roughly a decade ago when some of the large media companies realized pay TV distributors would pay up, via retransmission fees, for an increased amount of high-quality content on the national broadcast networks. 

Over the last ten years, we’ve seen premium sports content increasingly shift from pay TV channels, like ESPN and FS1, to the broadcast TV networks. Even Monday Night Football, which moved to ESPN in 2006 to take advantage of growing cable fees, is now simulcast on ABC.   

The large stations groups referenced emerged to capitalize on those same lucrative retransmission fees. But in the process of acquiring broadcast affiliates across the country, they have for all intents and purposes created platforms capable of replicating the distribution and economic heft of a national broadcast network.

Enter Nexstar, which now also controls an actual broadcast network (The CW). 

A tie-up with The CW seems like best-case scenario for LIV. The challenger league, which was unable to find distribution within the established or new systems last year, now has a television partner with near national distribution.

While The CW pulls a fraction of the audience that ABC, NBC, CBS and FOX do, it is the next largest domestic broadcast network and still attracts more viewers on a per minute average than any of the sports streamers.

The big money in golf is tied to sponsorships. So, reach is critically important for the tour and its players. “And the prices for advertising on broadcast are typically much better than they are on pay-TV,” Crakes said.

The CW is also a measured network, meaning the challenger golf property will gain access to the metrics it needs to transact in the marketplace. That should convert into incremental revenues for LIV, even if event viewership starts out small.

But LIV isn’t the only winner in this deal.  

Nexstar Media Group closed on its purchase of The CW in October. It acquired the broadcast network to try and make its affiliates more valuable. Acquiring LIV rights is another step in that direction.

Historically speaking, The CW’s programming skewed towards young girls. Nexstar has been working to alter that paradigm since the acquisition, cutting some of the network's scripted shows.

LIV is expected to fill some of the holes in the programming lineup. It will also help The CW to expand its advertiser base, particularly amongst major brands, and aid Nexstar in better monetizing time on the affiliates. 

Carrying the golf property could be useful in future negotiations too. “The station groups only exist today the way they do because of retransmission fees, and to keep that going, or to continue to show value, they need to give advertisers and distributors more programming of different varieties,” Crakes said.

Live golf certainly qualifies. 

Partnering with LIV is a low-risk, high-reward experiment for The CW. The network is not paying a rights fee and the tour is handling all the production costs. 

In a worst-case scenario, The CW gains brand recognition and a more mature, monetizable audience. 

Should affiliates in large markets clear golf on the station and viewers end up tuning in en masse, Nexstar should be able to drive incremental sponsorship revenue and will gain a bargaining chip that helps it to grow, or at least preserve, retransmission fees.

Because Nexstar owns The CW, it would not have to share any part of a retransmission fee raise with an outside network.

Other station groups would almost certainly quickly follow with their own sports programming strategy. 

We recently wrote about

Scripps’ plan

to pursue local sports rights in select markets. 

The local rights that currently reside on RSNs would be an obvious target for station groups as they become available. But any niche property looking for a window on broadcast could also be a possibility. 

All will be eagerly watching The CW-LIV tied-up to see how it plays out.