Last week, the NBA announced an extension of their TV rights deals with ESPN and Turner. Both entities will keep their package of games (Wednesday/Friday: ESPN, Thursday: TNT, Sunday: ABC) and will receive some added perks as well.
Turner will now have expanded digital rights for the Bleacher Report which means they can launch shows and video segments using NBA highlights. B/R will also stream all of TNT's games to authenticated viewers. TNT adds 12 extra games to it's schedule after the All-Star Game which will be flexed in, as well as, an end of the season awards show.
ESPN will add 750 new hours of NBA programming to it's schedule year-round, extends it's deal with the WNBA, increases the games it broadcasts internationally and adds D-League games as part of it's deal.
But, the biggest perk to ESPN's new deal is a brand new over-the-top network. The NBA will own an equity stake in the new network and has granted ESPN permission to broadcast "out of market" games. According to
Reuters:
ESPN offered the equity interest to the NBA as an incentive for the league to choose the streaming service - rather than a new programming partner such as Fox - for certain games, the sources said. The games being made available are those not already being shown on television ESPN and Turner as part of the rights renewal package, they said.
So basically, ESPN paid for three different packages of NBA games (ABC TV, ESPN TV and new OTT network). This portion of the deal also tells you how much the league trusts ESPN with their product.
The NBA chose to launch a brand new online television network with the Worldwide Leader rather than sell this package to a desperate bidder like Fox or NBC, who would've probably overpaid for the games and would've made the owners even MORE money.
ESPN and the NBA haven't released much information on this new network because they're also still working on it's framework. But here are some educated guesses/predictions about what this network will look like.
When and how many games will air on the OTT network?
The magic number might be 30 games since that was the
guestimate of games which many speculated Fox would be receiving if they bought their own set of games. 30 games would be enough to convince a cord-cutter/young person/internet TV watcher to become a subscriber without encroaching on local TV rights or ESPN and Turner's games. I would also have to guess that these games would air on the OTT network on a night which ESPN/Turner aren't on the air like Saturday or Monday.
Will the NBA games be exclusive to the OTT network?
They'll most likely be exclusively nationally to the OTT network meaning they wouldn't be available on League Pass, NBA TV, TNT or ESPN but I'm sure the local RSNs of the teams playing would be able to air the games based on how ESPN's previous deals with the NBA have worked.
How much say will the NBA have in this new OTT network?
It sounds like this will be 100% operated by ESPN. The NBA will have a vested interest financially-speaking but I doubt they'll be involved with editorial control of the network. I wouldn't be surprised to see NBA Entertainment co-produce a documentary and/or a talk show with ESPN for the network but I don't think they'll have much say in it's daily operations.
What will be the network's format?
ESPN has no idea at this time and neither do we. We might see some on-demand content surrounding the games or we might just see the games.
What do you hope the format of this network is?
I hope we see a mix with a little bit of everything. I hope this network has a library of documentaries, ESPN's talk shows, classic ESPN shows like "Dream Job" and "Stump the Schwab," instant classic replays and old ESPN Classic programming combined with a live feed of unique comedic talk shows aimed at a younger audience which supplements the live games.
Basically, if you were to combine ESPN Classic, Netflix's sports section, live sports games and funny live talk shows together; that would be my dream OTT network. I wouldn't be surprised if Grantland moved their video podcasts from YouTube to this network or if Jason Whitlock's new website produced longform video for it as well.
I would also expect a lot of league-specific programming which might not fit on TV schedules to appear on this network. My other ideas include:
- Live after-shows to some of ESPN's popular programs like "First Take"
- Video component to some of ESPN's most popular podcasts like "His and Hers"
- Reality sports shows which might not fit ESPN TV but could interest younger fans like a sports versions of "Pawn Stars," "Dancing with the Stars," "Parts Unknown," "Dirty Jobs," "Cribs," "Top Chef" etc.
- Alternative camera viewpoints during ESPN's sporting events such as All-22 during college football games (I doubt NFL would grant ESPN those rights for MNF games) or a coaches/stats alternative broadcast
- NBA edition of RedZone
What other sports do you expect to appear on this network?
The only things that pop up in my head are the ACC, Big Ten and MLS. ESPN could decide to move ESPN 3's free ACC games to this network in exchange for the ACC's own equity stake. The Worldwide Leader is also in negotiations with the Big Ten to renew their deal and a portion of games could be dedicated to this new network, although the chances of that are slim since the Big Ten has their own OTT network which they just launched
in conjunction with their TV network.
I'm almost 100% sure that ESPN will include MLS games on this network since they bought all digital rights to the league in their latest deal. Here's more from
Reuters:
ESPN is considering selling online access to live Major League Soccer games to consumers without pay TV subscriptions, an experiment that could help the sports network find ways to generate revenue outside the traditional pay television system.
Sounds a lot like ESPN's agreement with the NBA, right?
Will games be sold individually?
If ESPN did that, they would be diluting the OTT network's price.
Will the network have ESPN branding?
If I were them, I would pursue branding which differentiated the network from ESPN but still made it clear that ESPN was the kingmaker behind the network just like they do with Grantland/538.
Even though ESPN pays a boatload of money to the NBA, you don't want to give off the impression that the league has major influence over ESPN's operations. By branding this NBA co-owned ESPN OTT network with ESPN's name, that's the perception which may emanate.
ESPN is also the king of cable and the reason cable bills are so high. By branding this network as a cheaper ESPN, the Worldwide Leader would make it's core business vulnerable to a subscription drop which would certainly make pay TV providers like Comcast and DirecTV extremely unhappy.
Which name would you use?
The Ocho.
Who is hurt most by this new network?
120 Sports and NFL Now. 120 Sports was planning to launch a subscription service in their 2nd year of operation (when ESPN/NBA's OTT network will likely launch) while NFL Now already has a subscription service available for $2.99.
Both networks have rights to sports highlights (120 Sports: NBA, NHL, PGA and MLB; NFL Now: NFL). But that's it. Why would I pay for either service when I can get sports highlights on ESPN.com, Twitter/Vine, YouTube or one of the league-owned websites?
If I were 120 Sports (co-owned by SI, NHL, MLB, PGA, Silver Chalice), I would try to negotiate for a couple of NHL and MLB games which aren't covered by television deals. It may involve both league's TV partners paying less for their rights or asking for extra perks but it would be worth it because the leagues would be building for the future.
I'm sure the leagues would like to start developing direct-to-consumer relationships before TV rights run out in ten years and by building 120 Sports into a must-have app for sports fans, you're doing just that.
Maybe 120 Sports and NFL Now should merge together or offer a joint subscription package? They both need each other. NFL Now won't be a destination for viewers once the off-season begins because there are so many other options available for fans to get their NFL off-season fix. 120 Sports, on the other hand, needs highlights to America's most beloved game in order to sustain itself for the future.
In my opinion, both entities should use the highlights rights they have to their advantage. There's a bunch of different shows which can be launched based around highlights with themes such as: wackiest plays, best plays, breakdowns of how teams won or lost, coaches' shows, players' shows, stats shows etc. You could start shows based on all those formats around each team in each league and maybe someone will see the value of understanding sports from an analytical standpoint and decide to willingly pay money for a subscription.
How much will ESPN charge for this OTT network?
It depends on whether it'll be advertiser-supported or not. If there's no commercials, I would expect it to be more expensive and vice versa. Hopefully it's around $10-$20 but it could also range between $40-80 depending on whether ESPN can sell this new network as a non-threat to cable/satellite providers.
Will the OTT network sublicense programming from other content providers?
I wouldn't be shocked to see this network sublicense games from other networks who have excessive rights to a sporting event (Fox recently sublicensed some Champions League games to ESPN).
I also wouldn't be shocked if documentaries/shows were also sublicensed from a TV network. ESPN and HBO have a history and HBO hasn't been afraid to sell online rights in the past (Amazon deal) so I wonder if HBO would consider selling Costas Now/Real Sports/24-7/Boxing and documentary archives to ESPN's new network.
Maybe Epix, which just signed a deal to produce documentaries for the NHL, signs a distribution deal with ESPN through this new OTT network?
Or maybe a Dan Patrick reunion with "Sports Jeopardy" (
which has been streamed 1 million times) coming back to it's former home.
Will this OTT network use it's own talent or use ESPN talent?
It all depends on their programming strategy. If they're trying to make this distinct from ESPN, then you'll see mostly brand new talent. I predict it'll be a mix of new talent and ESPN's talent.
Why is ESPN doing this?
ESPN wants to kill all alternative outlets before they can launch. They want to own all anti-ESPNs. This is why they've invested heavily in ESPN2's programming schedule, Grantland, 30 for 30, 538 and now this new OTT network.
By investing in ESPN2, you provide a loudmouth Fox News-type alternative to ESPN; Grantland serves sports fans who dally into pop culture; 30 for 30 serves the sports fan who love documentaries; 538 serves sports fans who love statistics and this OTT network prevents the Google's/Apple's/Netflix's of the world from entering sports television.
ESPN has become the main source of consumption for sports fans and has taken over all of the niches which could've possibly been Fox or NBC's mantras for their own respective networks.
Peter Kafka says it best:
ESPN loves its position as king of the pay TV bundle, and it doesn’t want to do anything to weaken its status — or the long-term distribution deals it has locked up with the pay TV guys, which generally run for seven to ten years.
BUT as John Skipper told Kafka at a media conference.....
“We think about, are there sports events we could offer, where the consumer would pay us directly”
Who knows if cable TV will exist 10 years from now? If it does, ESPN will continue to dominate the scene. If it doesn't, ESPN wants to be ready to broadcast sports on whatever new online technology takes precedent as the main way Americans watch television. Even if cable TV and online TV do co-exist 10 years from now, it's better for ESPN to dominate both mediums than to cede power on an emerging medium to a rival.
Where will this subscription channel be hosted?
Most likely on ESPN's website but I think it would be interesting to see whether Disney tries to build up their Maker.tv site and places the network there or if ESPN teams up with Verizon to launch a TV service which includes other non-sports cable channels
as WSJ suggests.
