Will live sports disappear from traditional TV ?

Streaming video platforms have attracted viewers watching scripted shows and movies, leaving live sports as the last bastion of traditional television.

Solid ratings for the NBA Finals on ABC and viewership growth for the NHL’s Stanley Cup on ESPN are further testament to these events’ resilience in the face of a fractured TV landscape. Live sport accounted for 75 of the 100 most-watched programs in 2021.

But how long can the old companies stay in the game?

That question took on new urgency last week when Apple made a significant statement to the media business with its deal to become the mainstay of Major League Soccer. The Cupertino, Calif.-based tech giant will guarantee the league about $200 million annually under the 10-year pact — far more than any TV network was willing to pay for the rights.

It follows Amazon’s deal to shell out $1 billion annually for the exclusive rights to NFL’s “Thursday Night Football” after the company shared it with TV networks for several years. Amazon paid many times what those networks were willing to shell out after losing hundreds of millions of dollars on the package over the past few years.

For media conglomerates that still depend on the large audiences that esports are delivering, the notion of deep-pocketed tech companies going after their most reliable content gives them pause. While it doesn’t pose an immediate threat to their business — the next NFL deal, which is still mostly on broadcast and cable — is 11 years from now — Apple and Amazon’s moves could be a glimpse into the future.

MLS is not one of the most popular American sports complexes. However, many industry insiders believe Apple will use it as a showcase to demonstrate its ability to present, grow and nurture the league. It could prove its worth as a media partner for other sports facilities.

The NBA’s current deal expires after the 2024-25 season, and the league is expected to triple its current annual revenue of $2.6 billion with Pac-12 college football games available in 2024.

Apple and Amazon are also expected to compete for the rights to the NFL’s Sunday Ticket subscription package, which gives fans access to out-of-print games, a product that has helped DirecTV’s business grow.

“It gives them the ability and opportunity to acquire other rights,” said Lee Berke, president of consulting firm LHB Sports, Entertainment & Media. “You have to work your way up the ladder. You have to be willing to take it upon yourself. You can’t go right after the NFL and pick up a whole package.

An executive at a sports television network, speaking on condition of anonymity, agreed that the MLS deal, along with Apple’s recent acquisition of a Friday night package of Major League Baseball games, is part of a long-term strategy.

“If they’re successful, they’re going to use it as a paradigm to take it to other sports to try and enforce the case later so other leagues give them car keys,” the manager said.

Tech firms have their reasons for paying more than older media companies see fit for sports real estate. Apple wants to win more users for its software and hardware products. For its part, Amazon is using Thursday Night Football, one of the most-watched programs on TV, as a gateway to more Prime memberships, giving users free shipping on retail purchases and access to its other video offerings.

Al Michaels, longtime voice for NBC's NFL coverage, will be in the booth for Amazon "Thursday night soccer."

Al Michaels, NBC’s longtime anchorman for NFL coverage, will be a guest on the booth of Amazon’s “Thursday Night Football.”

(Marcio Jose Sanchez/AP)

Berke said their goals follow the pattern of live sports helping to drive emerging technologies throughout history. “You want to sell hardware and software, the most effective strategy in 100 years is to buy sports real estate,” he said.

When radio took off in the 1920s, play-by-play of Major League Baseball games was used to increase the medium and encourage set sales, although some team owners feared the broadcasts would affect stadium-goers. Networks and transmitters were owned by companies like RCA and Westinghouse, which made radios.

The rise of the National Football League in the 1960s and ’70s became the basis for Network TV’s sports sections. When Fox acquired NFL rights in the mid-1990s, it placed the then-nascent network on a par with ABC, CBS, and NBC.

In its early years, cable consisted primarily of bringing broadcast signals to areas where adequate television reception was not available. Live sporting events were the first major source of original programming.

“That’s really grown the cable industry,” said Kay Koplovitz, founder of USA Network. “You had to offer something that you couldn’t get on your local TV station back then. It was the motivation for people to sign up for Cable.”

Koplovitz built her company, originally called the Madison Square Garden Network, in the 1970s and 1980s by signing deals to bring Major League Baseball, the NBA and National Hockey Leagues, the Masters golf tournament, and US Open tennis into one Time to wear when public knowledge was far more limited on the broadcast networks. ESPN soon followed, becoming the dominant provider of sports to cable audiences and charging the highest fees to subscribers.

Companies in the streaming business are on the formula. While original shows and movies have propelled streaming services like Netflix into the public eye, live sports are a far more predictable way to build an audience for a subscription product, thanks to built-in fanbases that span multiple generations.

“Once you get the rights, you know what you have,” Koplovitz said. “It’s unlike the Hollywood business, you pay a lot of money and you never know what you’ve got.”

Soccer is a sport that lends itself to streaming as its audience is younger and more used to streaming video on a device. Paramount Global’s Paramount+ streaming services broadcast the Champions League, which has helped attract new subscriptions and retain existing users.

These viewers are growing up without the habit of traditional television. But there are still more than 70 million homes with satellite and cable, and the leagues don’t want to give up audiences. Several TV sports execs have said the chance of putting a major sporting event fully on a streaming platform is at least five years away.

Meanwhile, sports leagues and organizations need to balance streaming and traditional television to maintain critical mass. When games switch exclusively from TV to streaming, viewership drops by 30% or more.

“If you eliminate all other platforms in favor of streaming, you might see some short-term financial gain, but you’re missing out on a lot of fans who are missing out on broadcast and pay-TV,” Berke said. “Your strategy going forward is that you want to be on every screen.”

But leagues and teams know where the journey is going. As cable cutting continues on pay-TV services, regional sports networks are beginning to offer their games as direct-to-consumer streaming subscriptions, available without cables.

NESN, which serves the Boston Red Sox and Boston Bruins in the New England area, was the first RSN to provide a stream for $29.99 per month.

ESPN — whose pay-TV subscriptions have dropped dramatically over the past decade due to cable cuts — is also poised for a post-cable future. Bob Chapek, chief executive of parent company Walt Disney Co., said on a recent conference call that there will come a time when the sports service can be streamed wirelessly. The only question is how soon.

https://www.latimes.com/entertainment-arts/business/story/2022-06-25/are-sports-going-to-disappear-from-traditional-tv Will live sports disappear from traditional TV ?

Emma Bowman

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