What goes up must come down, unless you’re talking about sports rights fees.
Looking at the future of sports on television, former Turner Sports and Turner Broadcasting President David Levy told Barrett Media that as more games move to streaming, it’s inevitable that rights fees rise.
“Fees will continue to go up, absolutely. I don’t see how they’re not,” Levy said.
Levy knows a bit about TV sports. At Turner, he helped launch Inside the NBA on TNT, brought March Madness to cable in partnership with CBS and staged The Match with Tiger Woods and Phil Mickelson. Now he’s co-founder of Horizon Sports & Experiences, which has produced events including the Pickleball Slam, which appeared on ESPN and the Shark Beauty Women’s Championships on Fox.
Like cable networks before them, streamers are finding they need sports to add and keep subscribers, Levy says.
It is a lot easier to unsubscribe from a streaming service than it used to be to drop cable. That’s good for consumers but it makes churn a big problem in streaming.
Consumers can sign up to watch Yellowstone and then drop out. When you have sports content that lasts over six to seven months, people tend to subscribe and then stay. They may stay longer if they like the entertainment content. It eliminates the churn,” Levy says.
At the same time, with all the eyeballs going to streaming services, “you have to fish where the flash are and you have to build a new generation of fans, so if you’re a sports league, you have to figure out how to put your brand there.”
And guess who can afford to pay big rights fees. “These streaming services have better balance sheets and better cash flow in order to pay for these rights,” Levy added.
Levy believes that leagues will continue to want some of their games on broadcast. The NFL’s current deal has most games on broadcast because that still has the most reach. . At the same time, while the new NBA deal puts more games on Amazon Prime Video and Peacock, it also gives the league two nights per week on NBC, in addition to games, including the Finals, on ABC.
As for cable, if Levy had still been there, he would have loved to have kept the NBA on TNT. But he thinks the business decision made by WBD CEO David Zaslav could still work out. “He didn’t get dropped from Charter. He didn’t get dropped from Comcast. He maintained those subscribers and he maintained, for now, the rate” the cable operators were paying for TNT.
Levy noted that TNT is sill strongly in the sports business, with the NHL, MLB, March Madness, NASCAR and college sports, not to mention Unrivaled, the new three-on-three women’s basketball league being launched by Levy’s HS&E..
And as long as ESPN exists, sports will have a home on cable, even as ESPN evolves and puts more of its programming on streaming.
Losing the NBA put the Hall of Fame studio show Inside the NBA in jeopardy. WBD made a deal under which TNT Sports will continue to produce the show, but it will appear on ESPN.
Levy, who has been involved with Inside the NBA–bringing in Shaquille O’Neal and keeping Charles Barkley from retiring–for 30 years, hopes the show will continue.
“Does Shaq need to continue to do this? Does Charles get a big paycheck if he goes somewhere else? Do Ernie and Kenny still want to do it? I think there are a lot of question marks, but from a pure fan perspective I obviously love that show. I hope they all figure it out how have it go on ESPN,” Levy said.
Having TNT produce the show, rather than ESPN should keep the vibe that Turner execs Tim Kiely and Craig Berry have built over the years, so that might be the right model, he said. “But just like M.A.S.H. and Seinfeld and all the great shows that eventually ended, they end. And you know, maybe this is where [Inside the NBA] ends, maybe this is where it doesn’t end.”
Looking ahead, Levy says that if he was in his old seat as a network exec, “I would be investing heavily in women’s sports right now,” Rights fees are still cost-efficient and WNBA games out-delivered NBA games. “That’s a pretty bold statement. I would never have thought in my lifetime that the Women’s Final Four would out-deliver the men’s.”
In his current role at HS&E, Levy just oversaw the inaugural Shark Beauty Women’s Women’s Champions Classic at the Barclays Center in Brooklyn. He said 11,000 people turns out, merchandise sold out and the event turned a profit. A priority was getting a sponsor in the beauty category, and Shark Beauty had a dry bar on the premises that girls and their mothers packed.
The launch of Unrivaled is coming in January and Levy is trying to get a women’s volleyball event going.
Levy is also keeping his eyes on a couple of upcoming events for more clues about the future of sports on TV.
He wonders whether the streamers who have gotten into the sports market will build or buy their own production facilities? Where will UFC’s rights land? How will NIL and players being paid affect college sports? Will players get their fair share of revenue under the WNBA’s new collective bargaining agreement.? And will the NFL opt out of its long-term rights deals later in the decade?
Levy remember when sports shifted to cable. And he also saw sports shifting to streaming–a process that has taken longer than he thought it would, he said. Revenue has flowed from linear to digital. Now he wonders, is live the next digital. Now he wonders if live is going to be the next digital
“Now you’re going to see a lot of brands shift their money into live content and sports is live,” he said.
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Jon Lafayette is the Sports Editor for Barrett Media. His focus is on the business of sports, including revenue-generating activities, executive intrigue and on-air and behind the scenes talent. Jon previously covered big stories in the media industry as business editor of Broadcasting+Cable. Before B+C, Jon covered the TV and advertising industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago. He can be reached by email at Jon@BarrettMedia.com.
