NEW YORK — If you thought there were enough sports on TV, News Corp. is asking that you think — and pay — again.
After a year of reports and speculation, the official announcement of what News Corp. chief operating officer Chase Carey called the “worstkept secret” in media came on March 5 at a press conference for Fox Sports 1, followed by an upfront presentation to advertisers in New York.
The entry will be converted from the 85 million subscriber Speed and launch Aug. 17 in 90 million homes, the most ever for a sports cable-network debut.
FS1 comes armed with an impressive array of rights, including college football and basketball, UEFA Champions League and World Cup soccer, NASCAR racing and Ultimate Fighting. An expansive lineup of regular- and postseason rights to Major League Baseball will come into play in 2014.
At the outset, 55% of the FS1 lineup (some 4,800 hours of content) will be live, including events, originals and news. Fox Sports will establish a 24/7 news operation featuring Fox Sports Live on FS1; it will go head-to-head with ESPN’s signature SportsCenter at 11 p.m. (ET).
Fox’s push, a gambit to produce more affiliate and advertising revenue by leveraging recently secured game and match rights, takes aim at an ESPN empire stretching across myriad sports and platforms, as well as NBC and CBS. Each of those companies is trying to build the business and profile of its respective national cable service, NBC Sports Network and CBS Sports Network.
TV sports — which have drawn increasingly louder cries about escalating programming costs — also includes league-owned, national services from the National Football League, Major League Baseball, National Basketball Association and National Hockey League, plus regional sports networks.
During the presentation, Fox Sports touted its array of properties, including Super Bowl XLVIII in New Jersey, and trumpeted News Corp.’s upstart legacy. It extolled Fox’s entry into the three-broadcast- networks world of the 1980s and how Fox News Channel challenged and surpassed CNN in cable news a decade later.
The presentation noted that with the arrival of the national cable sports service, “Fox is ready to change the television landscape again.”
Fox Sports executives, including David Hill — who led Fox Sports when it launched 20 years ago and is helping co-presidents Randy Freer and Eric Shanks oversee the new channel — said FS1 has been in the works in “various degrees of seriousness for, I’d say, 15 years.
“Our hope is that we can be equally professional” with ESPN, Hill said. “It’s going to take us a while. We’re not expecting to knock ESPN off in the first week or two. It’s going to take two to three years. It will be a slog.”
Carey, speaking at the Deutsche Bank Media, Internet and Telecom conference in Palm Beach, Fla., on March 5, said FS1 could become a “cornerstone” for News Corp., while predicting losses for “a couple years” as “we ramp up the rate with it.” The net’s launch with national distribution, though, means the climb will be “nothing close to what it would be if we were trying to build a network from scratch,” he said.
ESPN spokesman Mike Soltys said: “We like our position. We’ve always had vigorous competition, so there is really nothing substantially new here. ”
While it won’t approach ESPN’s $5.26-plus monthly subscriber license fee (per SNL Kagan) the financial community also believes Fox’s play will hit fiscal paydirt for News Corp. over time. Noting that Fox Sports has already baked rights costs into its comprehensive media deals — and with the NBA’s TV deal the only major package on the horizon — analysts aver that FS1 will grow ad sales and command a license fee well above Speed’s current monthly levy.
“We expect new affiliate rates to be negotiated as renewals for Speed come up, but believe recent deals include higher rates,” Credit Suisse analyst Michael Senno wrote. “Thus, it could take a few years for the affiliate fee to grow from $0.22 to the $1 per subscriber we feel it could earn.”
Morgan Stanley analyst Benjamin Swinburne also saw significant potential.
“The incremental expenses here are the marketing and production costs, along with content costs at other networks such as FX to replace sports content moving to Fox Sports 1,” he wrote in a note. “Realistically, a five-year view, assuming a $1.50 monthly affiliate fee with industry average sports network margins and advertising revenues, suggests a $500 million EBITDA [earnings before interest, taxes, depreciation and amortization] stream and a $5 billion-plus asset.”
TV programming aside, FS1 will be an integral part of FSMG’s expanding digital and TV Everywhere presence. Fox Sports Go, an authenticated mobile sports service for iPhone, iPad, Android devices and the Web, will offer more than 1,000 games and events, plus scores, highlights, news, stats and analysis. Akin to Watch ESPN, subscribers to cable, satellite and telco affiliates will have access to the service.
Fox was still determining what would happen with the content that is available on broadband service Speed 2, with 35 million subscribers.
“We’re redesigning Fox Sports.com and relaunching all of our mobile apps as Fox Sports Go in April,” Shanks said after the press conference. “The authenticated video comes in August with college football. [Subcribers] will ... be able to watch up to 1,000 live events per year.”
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