Sports Media Rights
In the early 2010s, the rapid appreciation of sports media rights’ value drove explosive growth for the broader sports industry. As scripted and general entertainment programming migrated out of the traditional Pay-TV bundle, sports became the linchpin of the highly lucrative legacy media business. Fierce competition between television networks drove up the price of live sports rights, as programmers sought differentiated, exclusive rights that would enable them to charge higher subscription fees. Ad rates for live sports also increased, as time shifted viewing, the rise of ad free streaming services, and fragmentation of audiences reduced the supply of premium video advertising opportunities.
While growth generally continued, the second half of the decade saw media companies challenged by cord cutting and changing viewer habits, making it more difficult for rights holders to achieve the same revenue increases. These trends only accelerated amid the COVID-19 pandemic, as Pay-TV households fell by more than 5 million subscribers in 2020. Projections vary as to how quickly subscriber numbers will continue to fall and at what level they may stabilize.
In the meantime, the landscape will be marked by continued volatility as media companies navigate the transition to more digital, direct-to-consumer distribution. The NFL’s most recent media agreements demonstrate that while traditional broadcast and cable models do not face imminent obsolescence, sports organizations, networks, and technology companies need to build flexibility into long term distribution deals. As major media and technology companies look to drive subscribers to direct-to-consumer streaming services, those services will continue to feature prominently in upcoming media rights negotiations.
Perhaps nowhere is the impact of the media industry’s evolution more apparent than in college sports. Amid the growth of cable television in the early 2010s, longstanding college conference affiliations saw dramatic changes that were designed to create the most lucrative offerings for television network partners. Conferences expanded with the goal of optimizing their geographic footprint for a conference-branded cable network, which was seen as the best way to keep pace financially with competitors. In 2021, college sports once again look poised for a highly disruptive round of conference realignment, as conferences and individual schools look to best position themselves for the upcoming round of media rights negotiations. However, the media industry’s shift from cable to streaming reduces the emphasis on geography. Instead, early indications suggest that nationally recognized brands with large, passionate fan bases that can drive streaming subscriptions will be in the greatest demand.
Regardless of how business models evolve, live sports rights are expected to remain highly valuable relative to other genres and forms of entertainment. In the face of such uncertainty, it is critical that leaders in the sports industry understand the changes taking place in the media and technology sectors to maximize the value of their media rights.
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