Wednesday, March 6, 2013

Competition for ESPN is Good for Sports Industry

ESPN has been the clear front-runner in sports media for many years. Its dominance is even at the heart of the tagline "the worldwide leader in sports." ESPN has built a media business that includes cable TV networks, websites, a radio network, a magazine, and live events. Now, ESPN's dominance will be challenged by Fox Broadcasting Company. Fox plans to launch an all-sports network, Fox Sports 1, on August 17. The announcement of a sports network launch has been expected from Fox for some time. The company is hardly a newcomer to the sports entertainment category as it has TV rights to the NFL, MLB, NASCAR, college football, UFC, and international soccer. In addition to being a TV broadcast rights holder for these sports, Fox has interests in niche cable channels (Fox Soccer Channel and Speed TV), regional sports networks, a sports radio network, and sports websites. But, the missing piece in Fox's portfolio has been a cable network dedicated to a wide variety of sports programming comparable to ESPN.

The launch of Fox Sports 1 marks the most significant challenge yet to ESPN's market dominance. In contrast to last year's rebranding of Versus as the NBC Sports Network, Fox Sports 1 has more marquee live events to broadcast and a larger audience at launch (estimated to be around 90 million subscribers). And, FS1 will be part of a global media empire that has abundant resources to make a run at ESPN. No need to feel sorry for ESPN, however. It has sizable head start in terms of audience and its product portfolio.

Is the potential competition between ESPN and Fox Sports 1 a good thing for the sports industry? The answer is a resounding "yes." Competition will be beneficial for the following reasons:

  • The emergence of a strong competitor will force existing players (e.g., ESPN and NBC) to continue to innovate and position itself as better alternatives than the new FS1.
  • The demand for sports programming should increase as FS1 looks to fill a significant portion of the programming day with live events (one estimate puts FS1's plan at 55% live programming). The result will be more rights fees being paid to properties, more exposure that will aid in building a fan base for properties, and greater choice for live sports consumption.
  • Niche sports will have opportunities to gain exposure. While higher profile properties stand to gain in terms of higher rights fees, sports with smaller audiences could benefit if the additional live programming aired by FS1 leads to interest in having their sport picked up for broadcast.

The planned of launch of Fox Sports 1 will make Fox Sports stronger. It should also make ESPN, NBC Sports Network, and any other sports media brand stronger, too, as they step up their efforts to deliver great products. What is unclear is how well the market can support three all-sports TV networks and their associated brands in the long run. The answer to that question will begin to emerge on August 17.

Adweek - "Fox Sports 1 to Launch Aug. 17"

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