Tuesday, November 10, 2009

Sports heaven or niche hell?(ultra-targeted sports channels).

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Ultra-targeted sports channels are rushing in to serve the 33 million-subscriber digital cable and satellite universe. But some argue that the fine-tuning of sports television may be overkill.

Stand back, ESPN. Karate, judo, jujitsu and tae kwon do might not seem broadly appealing enough to support a 24-hour cable channel, but the backers of Blackbelt TV are banking that come next spring their nascent network will do for martial arts what MTV did for the music video and the Food Network did for Emeril Lagasse.

Sporting a round-the-clock lineup of programming ranging from Thai kickboxing tournaments to reruns of The Karate Kid (Blackbelt TV says it has built the biggest library of martial arts movies and classic sporting events anywhere, amounting to more than 15,000 hours of programming), parent Threshold Entertainment expects to get the Los Angeles-based network into 6 million homes by April Fool's Day. Threshold, the company behind the Mortal Kombat movie and video game franchise, is bankrolling the channel.

Creating a new cable network: certainly no small feat in this business environment, even as the explosion in digital technology makes way for specialized networks, thanks to ever-expanding channel capacity. "People would say maybe it's not the best timing, starting a network in one of the worst advertising markets in years," concedes Blackbelt COO Wesley Hein, who earlier co-founded Enigma Digital, a radio station network eventually acquired by Clear Channel Communications. "But for us, it was the best time. If you look at cable right now and what viewers are faced with, they're saying, 'Hmm, look at all the neat channels coming out.' But most of those channels are recycled analog content."

Off the record, some pooh-pooh the prospects of Blackbelt TV, pointing out that its top executives--including chairman Larry Kasanoff, producer of the Mortal Kombat movies and a co-founder, with Titanic and Terminator director James Cameron, of Lightstorm Entertainment, and president Joshua Wexler, a Mortal Kombat producer--have impressive action-entertainment experience but have never before built a cable network. The next layer of management at the channel, however, includes several cable veterans, including senior vp/programming and acquisitions Paul Presburger, who helped launch Sony's action-adventure channel AXN at Columbia TriStar International Television. Still others question the viability of a network devoted to kickboxing, kung fu and the like.

Even though Blackbelt TV has yet to announce any distribution agreements, it already has secured commitments from such deep-pocketed advertisers as the U.S. Marines, General Motors and others hungry to reach the network's natural 18-to-34-year-old male constituency. As Hem explains: "Six million may seem small compared to 60 million, but that's a very valuable demographic."

BLACKBELT TV ISN'T THE ONLY newcomer making sales calls. It's just one in a flock of new sports cable channels aiming to take flight in the coming months. Others, in various stages of development, include the Tennis Channel, the Football Network, College Sports Television, the Ice Channel, a relaunched NBA TV, and a still-untitled network devoted to the basketball-soccer-hockey hybrid lacrosse. The rookies join already established players such as the Golf Channel, the Outdoor Channel and the Speed Channel, along with broader-based sports channels including ESPN and the regional network of Fox Sports Net channels.

Is the field getting too crowded? Hardly, says sports media veteran Neil Pilson, former president of CBS Sports and now a consultant whose clients include the International Olympic Committee, Nascar and the Ice Channel. "It's simply a case of the 'software' following the 'hardware'," explains Pilson. "We have the opportunity to go from 150 analog channels to 400 or 500 or 1,000 digital cable channels...and we have to come up with the 'software,' namely, programming."

As the broadcast nets have locked up rights to major sporting events, many wonder whether the new channels can ever be anything but ancillary--and whether advertisers will ever come to see them as an essential part of their media mix. One sports media buyer maintains the channels will never be a "first media buy." Unless they manage to attract an overwhelming stable of sporting-equipment manufacturers out of the gate, the buyer predicts, the services will have a rough time of it. "The Golf Channel is succeeding because 30 to 40 percent of its ad revenue comes from manufacturers of golf equipment, and that gives it a strong base," explains the buyer, who declined to speak for attribution. The Tennis Channel will need to get tennis racket makers and the like, who are not traditionally major advertisers, to fund the network It will be hard to get some of these companies to spend the money to make new TV spots just for a smaller digital network."

Despite the challenges of budget-conscious advertisers and unproven track records--one cable sports exec sniffed, "You have to distinguish between real businesses and press releases"--the newcomers, Pilson is convinced, have a fighting chance, even the most "nichey" ones. "If you reach 300,000 families who are avid figure skating nuts, your efficiencies are quite strong, even though you're not reaching a large total number," he contends. "You're reaching the committed."

One strong foundation for any sports-niche startup is original programming, especially sporting events. "You have to offer live, first-run and exclusive programming that people can't get anyplace else," says Jim Liberatore, president of the Charlotte, N.C.-based Speed Channel. First-run racing events make up some 20 percent of the channel's schedule. Liberatore predicts the newcomers will struggle to snag cable distribution, despite cable operators' increased capacity--industry estimates put total digital cable subs at 15.5 million, while digital satellite penetration stands at 18 million. "Distribution will be tough for some of these guys, because content is still king," he says.

THE FIRST OF THE NEW networks expected to hit the court: the Tennis Channel, which is now prepping for an end-of-year launch (postponed from its originally planned summer launch). The fledgling service had the good fortune to land Frank Biondi, CEO of Universal, Viacom, HBO and Columbia Pictures, as its lead investor. Tennis stars Pete Sampras and Andre Agassi also have bought equity in the network and agreed to on-air roles. The Los Angeles-based net already is far beyond other channels in the works, having inked its first distribution deal, a 15-year pact with Time Warner Cable, whose markets include New York, Los Angeles and Houston. The Tennis Channel also has secured deals with sports agent IMG and cable channel Comedy Central, which is handling its affiliate-relations deals with operators and lending marketing support. Wilson Sporting Goods and equipment manufacturer Prince have signed up as charter advertisers.

On the programming front, the network--which will devote 40 percent of its schedule to tournaments, 40 percent to instructional programs and 20 percent to news and personality-oriented shows--has secured more than 1,000 hours of U.S. tournaments. Tennis might not have the U.S. Open and Wimbledon, but viewers can catch such events as the Kroger St. Jude and Acura Classic, as well as classic matches (think McEnroe, King and Navratilova). Tennis also has announced its first original series, No Strings, which promises an "intimate look at the glamorous lifestyles of pro tennis players off the court." Sampras, all-time Grand Slam champ and Tennis Channel investor, is the subject of the first installment.

David Meister, longtime cable executive and Tennis Channel chairman/CEO, says the idea for a tennis-based cable network first started getting tossed around some 20 years ago, when he was senior vp at HBO in its earliest days, in charge of developing new channels for the network (Meister established HBO Sports and Cinemax, was president of Financial News Network and then had a hand in creating The Sundance Channel for Showtime Networks and Robert Redford). "It was clear to me at that point that a tennis channel, such as it might be, was inappropriate for that day and age. The channels we now take for granted--ESPN, CNN, MTV--were only a year or two old and there was still a need to build out the cable plant," he explains.

When the Golf Channel was launched in 1995, Meister said, the idea of a tennis-focused network was revisited once again, but it still seemed a premature concept. "Cable operators were squeezing additional channels and hadn't yet evolved to the digital world. As a business proposition, they didn't appear to be a strategic partner." The exec says patience is the key to building any successful cable franchise. "The tennis industry is behind us, and it's also great timing for the cable industry, which needs broadly appealing channels to help drive digital."

Meister, like his counterparts at other sports startups, insists his is a coveted constituency, reeling off stats like, "Twenty-six percent of tennis watchers earn over $100,000". And like his counterparts, he doesn't think all emerging sports networks ought to be painted with the same brush, insisting that each has its own unique place, and its own prospects. "A couple will make it and a couple won't," he says. Amazingly, many execs deny that their networks are "niche," preferring instead to sell their mass appeal. "Never have you had a talent pool cross into the mainstream media like this--tennis players are like pop stars," says Steve Bellamy, Tennis Channel founder and president, a coach, promoter, tennis-center entrepreneur and singer-songwriter.

Even a channel as narrowly focused as Blackbelt TV takes issue with the "niche" label. "The action-entertainment enthusiast may or may not be a fight fan--they may not be into martial arts, but they love The Matrix and Charlie's Angels," says Hein.

THERE'S NO DENYING the massive following for college athletics--just flip on the broadcast and cable nets any given weekend during football or basketball season. Still, some 10 years ago, when the idea of a cable channel devoted to 24/7 coverage of more than two-dozen college sports was presented to College Sports Television co-founder/CEO Brian Bedol, who in the mid-1990s co-founded Classic Sports Network, now ESPN Classic, he rolled his eyes. But the more the channel's idea man Chris Bevilacqua, co-founder/executive vp of New York-based CSTV, talked about the idea, the more excited Bedol became. "It struck me that college sports had all the qualities that define a successful network, from available and inexpensive programming to a very well-defined audience to an extremely focused programming mission," Bedol says.

Echoing the Tennis Channel's Meister, Bedol says that until three years ago, the timing for such a channel wasn't right. "The Internet bubble was still intact," recalls Bedol. "Lots of people were chasing rights to everything and paying so much silly money. We felt we couldn't compete with people who were paying a million dollars for streaming rights to some track-and-field event."

But now the ball is rolling. College Sports Television, which plans to go live from its 20,000-sq.-ft., street-level base in Manhattan's mammoth sports and production facility Chelsea Piers on Feb. 23, has secured agreements with more than 23 college athletic conferences, including the Big Ten, Big East and America East. Bedol is mum about CSTV's distribution and advertising deals ("We don't want to be out there selling vapor," he says), nor will he talk targets, except to say the network aims to reach 10 million homes by the end of its first year.

The network also has been somewhat vague about programming details, announcing only that it plans to carry a mix of sporting events, studio-based news and talk shows, and documentaries. Although the channel will cover a range of sports, Bedol says some will get more attention than others. "Like the Olympics, there will be a hierarchy," he says, noting the "huge fan base" of football and basketball. He adds that he and his colleagues, along with many fans, consider a number of sports--including baseball, lacrosse, soccer and ice hockey--to be "underexposed," and that CSTV is determined to finally give them their due.

Meanwhile, the estimated 150 million U.S. gridiron fans who suffer withdrawal every off-season are salivating at the prospect of the Football Network (TFN), which is working toward a September 2003 launch. TFN president and veteran sports marketer Jerry Solomon envisions the channel as "the one place fans can get their year-round football fix."

Solomon, who is married to Olympic ice skater Nancy Kerrigan, isn't bothered that the broadcast networks have secured carriage rights to important games. Pie sees TFN rather as a companion to the big boys. "Unlike all the other networks, which do a tremendous job covering the games, we will start where everybody else ends," notes Solomon. Furthermore, TEN won't be "beholden to any league"--a reference to the National Basketball Association's revamped NBA TV

While TFN is still nearly a year from its target debut, it already has some productions under its belt. This season it is producing Atlantic 10 conference games, and the channel produced an hourlong special on the 2002 College Football Hall of Fame induction, which aired on USA Network over the Thanksgiving holiday weekend. The Hall of Fame special, Echoes of Glory, lined up ad support from the likes of videogame maker XBox, Mazda, Geico Insurance and Arm & Hammer. Solomon is confident about the channel's ad prospects as well. "Football has such a strong following, people have to take us seriously," he says. TFN also has a relationship with legendary sports announcer Pat Summerall.

Just as CSTV's Bedol thinks certain college sports are overlooked, Solomon says his network, aside from featuring such expected programming as games, news and talk shows, documentaries and movies, will pay attention to often-slighted amusements such as arena football, women's football and fantasy football. "About 15 million people play fantasy football, but there's not a national TV show devoted to it," Solomon says.

Terry Kassel, TFN vp/sales and former head of TV sales for Major League Baseball, says she was so intrigued by the idea of a football-focused net that she came out of retirement to work on it. Kassel says the channel even plans to run high school football, giving time back to cable operators to air regional games. While the network's core demo is men 18-49, Solomon says women won't be overlooked; contrary to popular perception, he says, they make up 43 percent of football's fan base.

WHILE MOST OF THESE CHANNELS likely will have an overwhelmingly male following, at least one, the Ice Channel, will cater mainly to women. One estimate has women accounting for 65 percent of skating viewers aged 18-49. Aiming to launch next fall in time for the start of the 2003-2004 figure skating season, the Ice Channel is just four months in the planning and therefore the least-developed of the new nets. Although it's still searching for investors and distribution, its backers say they have little doubt they can attract some of the same advertisers that have been so loyal to ice skating broadcasts for years, including Visa, Campbell's Soup and Chevrolet.

At first glance, a channel devoted to ice skating might seem to have limited appeal, until one considers that 77 million Americans tuned in to see the ladies figure-skating finals at the Salt Lake City Olympics earlier this year. "This is not something so niche that you wonder whether it will work on TV--we know it works on TV," says Ice Channel executive vp/chief operating officer Jay Rosenstein, a former vp/programming at CBS Sports. Rosenstein says the channel will even focus on some of the more tawdry elements of the sport, pointing to the Salt Lake Olympics judging scandal and the Tonya Harding-Nancy Kerrigan soap opera (he'll have to talk to colleague Solomon to line up any new interviews with Kerrigan). "The more controversy, the more interesting the sport becomes," Rosenstein maintains. "I'm not condoning thuggery or violence, but it happens."

It remains to be seen whether the Ice Channel or any of the arrivistes can come close to matching the success of such veteran niche networks as the Golf Channel. Nearly eight years after its launch, the Orlando, Fla.-based net this year surpassed the critical 50 million-home point, both cable and satellite. More than 80 percent of subscribers get the Golf Channel as part of a basic package, and the network expects even greater reach as digital blasts off.

The network's president, David Manougian, says the sudden wealth of sports networks shouldn't come as a surprise. "This onslaught, if you will, is what everybody has always talked about," he says. "It's just taken longer to materialize than people expected."

What are their prospects in this uncertain media environment? "These are not the easiest market conditions to [launch a channel]," the exec admits. "But its not easy on existing businesses either. It's a tough, competitive marketplace out there."

Source Citation
Case, Tony. "Sports heaven or niche hell?(ultra-targeted sports channels)." MEDIAWEEK 12.44 (2002): 20+. General OneFile. Web. 10 Nov. 2009. .

Gale Document Number:A94984217

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