#Sportsbiz Recap — August 14, 2016

Disney Completes $1B Deal For Stake In BAM Tech; ESPN-Branded OTT Net Coming Soon

Excerpts:

  • Disney acquires 33% stake in BAM Tech for $1B (paid in 2 installments) with future option for majority control.
  • BAM Tech currently services wide array of clients including NHL, HBO, PGA Tour and WWE.
  • ESPN, BAM Tech will collaborate on new OTT multisport network due to debut before end of the year. No new content rights will be acquired, they will instead leverage existing content rights held by ESPN and BAM Tech, including MLB, NHL, college football and basketball, tennis, rugby and cricket.
  • NHL will acquire percentage of newly formed BAM Tech, due to partnership with MLBAM last winter.

ESPN’s subscriber numbers continue to fall, and are reportedly as low as 88.8 million U.S. homes. In order to combat this, ESPN continues to look for a way to monetize on their digital assets. At the moment, ESPN’s live digital offerings are all ‘cable authenticated’ and their VOD content is available free of charge. Utilizing the BAM Tech infrastructure, Disney as a whole will look to further monetize through additional OTT platforms. Disney will be able to use this infrastructure for ESPN, ABC and movies related content in an effort to compete with Netflix, Hulu, Amazon etc. The direct-to-consumer OTT platform will present many challenges for ESPN, first and foremost figuring out the content they will place on the platform along with the price point.

Manny Pacquiao to come out of retirement for Jessie Vargas fight by Dan Rafael

Excerpts:

  • Pacquiao to fight Nov. 5 against Jessie Vargas at the Thomas & Mack Center in Las Vegas
  • HBO already contracted to put on Nov. 19 PPV between Kovalev and Ward.
  • Pacquaio will continue to handle his Phillipines’ senate duties after vowing to not allow boxing to interfere with his political career any further.
  • Pacquiao also conceded that his ring return is financially motivated, even though he has earned hundreds of millions in his career
  • If HBO makes Pacquaio a free agent, potential for him to go to rival CBS/Showtime.

Unbelievable to think that after earning $150m in his loss to Mayweather that Manny Pacquaio would need to fight again for money. It’s crazy to imagine that HBO won’t televise this fight, even as they have been resistant to put two PPV’s in one month. Some type of agreement will come through for this fight and even as I have no care for the result of the fight, the financial implications of another Pacquaio fight will be interesting to follow. Kovalev vs Ward will be the fight of the year for boxing purists’ but Pacquaio’s return to the ring will open the purse strings of many and get the media chattering about a potential rematch and the return of Mayweather. Floyd ‘Money’ Mayweather has been out of the limelight for a few years now and with another chance at a big money payout, will he give in and return to the ring?

NEWS ACCESS RULES APPLICABLE FOR THE BROADCAST OF THE GAMES OF THE XXXI OLYMPIAD, RIO DE JANEIRO, 5-21 AUGUST 2016

Excerpts:

  • Only RHBs may have the right to Broadcast and Exhibit the Olympic Games.
  • Six Minutes per Day for non-RHBs. May not appear in more than (3) news program per day, any news program may use no more than (2) minutes of Olympic Material and programs must be separated by a period of at least (3) hours. They may only be used for a period of forty-eight hours following the completion of the Olympic event.
  • Similar restrictions are in place on digital platforms such as websites and social media platforms.

Olympics rights are thoroughly protected for the exclusive use of the rights holders (which in the United States is NBC). NBC has come towards agreements for expanded use of digital highlights with several platforms in arrangements that have redirected traffic towards NBC’s cable-authenticated streams of the events. NBC terminated their digital partnership with ESPN due to a disagreement on the presence of advertisements on the same web page as the video, in order to protect the premium price paid by their own advertisers. NBC/IOC have been criticized by many other outlets and individuals for their protection of these rights that have left many shows to display still images of the events and the victors on non-NBC platforms.

A bigger Big 12? Maybe … by Michael Smith & John Ourand

Excerpts:

  • Bowlsby assured network partners that expansion was not imminent.
  • Need to re-negotiate media deal that runs 9 more years in order to stay competitive, especially as network partners recently told Big 12 that conference network would not be viable for the 10-team league.
  • Current deal is 13 year, $2.6B, supposed to expand pro rata for any additional schools. Network partners looking to trim costs do not agree that potential new schools will add value to the conference package.
  • Most insiders do not think Texas & Oklahoma would expand length of current deal past 2025 due to questions about the league’s future.

I believe that network partners will end up reaching an agreement with the Big 12 that will see them increasing pay-outs to existing members in order to keep the league from expanding and to remove the pro rata clause from their deal. Michael Smith & John Ourand of SBJ/SBD do a great job of outlining the other possible outcomes in this subscriber protected piece. If you do not subscribe I highly recommend it.

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