Murdoch isn't playing games with ESPN
The News Corp. CEO will need to spend big to take on the 'Worldwide Leader in Sports.'
During its fourth-quarter earnings conference call, Disney CEO Bob Iger attributed ESPN's viewership decline to the National Basketball Association lockout. Unfortunately, the problem goes beyond one sport. For instance, ratings for "Monday Night Football" were down almost 10% this year, the sixth year the network broadcast the program -- though it remains the most-watched show on cable. Ratings for the BCS National Championship Game were the second-most watched in the history of cable television but were nonetheless down 8% from the previous year.
The ratings decline isn't endemic to ESPN. People are watching less TV overall. As The Wall Street Journal recently noted, "So far this year, the average audience for 11 of the 15 most-watched cable channels at any time of day has fallen from a year earlier." News Corp. also faces rivals such as Comcast's (CMCSA) NBC Universal and CBS (CBS), which are both trying to increase their footholds in sports programming.
Of course, ESPN -- the "Worldwide Leader in Sports" -- remains a formidable competitor. The network, which first aired in 1979, attracts more than 1.3 million viewers in prime time and was nominated this year for 52 Sports Emmy Awards. It will take Murdoch's empire several years to catch up to ESPN, if it can be done at all.
Nonetheless, News Corp., which owns 20 regional sports networks, puts its money where its mouth is when it comes to sports. It has secured the TV rights to the World Cup in 2018 and 2033, along with the Pac-12 Conference and Big-12 Conference games. The company's Fox network broadcasts National Football League and Major League Baseball games. It also owns Speed, a motor sports channel, and Fox Soccer Channel.
Along with its formidable assets, News Corp. also employs top-notch talent such as the baseball commentator Ken Rosenthal. But as Bloomberg News, which broke the story Wednesday, notes, Murdoch's sports empire lags ESPN in affiliate fees, a huge money-maker for media companies. ESPN gets about $5.06 per subscriber per month this year, according to SNL Kagan data cited by Bloomberg. That's the most of any cable network.
Whether Murdoch's sports ambitions will be realized is an open question. Murdoch, though, is especially dangerous for ESPN because he has been known to pay more for assets than people think they are worth -- and he's willing to wait years for his investments to pay off.
If Murdoch is willing to make bets on newspapers, which experts argue are dying a slow death, and on a business cable channel that few demanded, taking on the ESPN colossus should be a piece of cake.
Jonathan Berr doesn't own shares of the companies discussed here.
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The NBA star could receive as much as $300 million in the 10-year deal, according to reports.
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