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Events Continue to Careen Out of Control

When Lennox Lewis knocked out Hasim Rahman on Nov. 17 to regain the heavyweight boxing title, he ended another sub-par revenue year for big-ticket pay-per-view events.

While it's too early to surmise how many buys the Lewis-Rahman bout generated, it's safe to say that the fight will not rank among the top 10 PPV events of all time. In fact, none of the 2001 PPV offerings made a lot of revenue noise as the category continues to look for another 1-million-buy payday.

For sure, there were a number of surprising performers in 2001: The May 12 Felix Trinidad-William Joppy bout, the June 23 Oscar De La Hoya-Javier Castillejo fight and the Sept. 29 Trinidad-Bernard Hopkins event all pulled buy-rates that outpaced their initial projections.

For that matter, Showtime Event Television's Oct. 13 Mike Tyson-Brian Nielsen fight drew 40,000 PPV buys — even though it aired simultaneously on the Showtime premium channel.

World Wrestling Federation Entertainment Inc. continued to hold up the event category with its consistent monthly grappling performances. But even the WWFE had a difficult time surpassing the eye-opening PPV buy-rates of years past with some of its marquee 2001 cards.

Through three quarters, the industry was barely ahead of last year's PPV event revenue take — one of the worst in a half-decade. It's true that there haven't been many marquee fights or must-see concerts available to push PPV revenues to their late 1990s levels. But distributors also point to another problem that's eating away at the event category.

Cable's digital boom has benefited the PPV movie category by providing viewers with access to more movies at start times more convenient than ever before. Systems with video-on-demand and subscription VOD are giving subscribers unprecedented control over their PPV movie-viewing options.

As a result, digital movie PPV buy-rates are nearly triple those of traditional analog PPV. The category's revenues are also setting records on a near-monthly basis.

Seeing the benefits of digital near VOD and VOD, systems have aggressively promoted the option through print ads, on-air local avails and in some cases, barker channels. Consequently, the amount of advertising inventory targeted for PPV events has dwindled precipitously.

PPV-event performance can't be maximized without aggressive and adequate event marketing and promotion, event distributors said. And given the acquisition or production costs for quality, attractive events, some now wonder whether it's worth the effort.

Although cable operators will continue to get the higher-echelon boxing and wrestling events — as well as ultra-niche sports events like soccer, taped concerts and obscure entertainment shows — distributors say the midsized events that have been the industry's lifeblood are now on the critical list. PPV event providers say they can't justify paying millions of dollars for rights to such events without a reasonable expectation of operator support that would yield a discernible PPV return.

For their part, operators that need to recoup the costs of rolling digital technology out to consumers must aggressively promote high-end services like VOD and cable modems to generate revenue.

MSOs said they won't abandon the PPV-event category. In fact, they're asking distributors to provide more high-profile events to sell to consumers.

But operators won't break the bank to support such events. The DirecTV Inc.-WWFE contract battle proves that distributors will forgo valuable PPV revenue if they feel the rate card isn't fiscally sound.

The PPV event category should remain a major revenue source for cable and satellite providers in the future. Just how big should be determined by the extent to which providers and operators can work together to bring appealing events to the marketplace, and promote them.