Television Networks and Contracts with Professional Sports Leagues

By: Tom Malone

Professional sports leagues and major television networks depend on each other for increasing exposure and profit. The National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey League (NHL) dominate the professional sports market. These leagues deal with ABC, CBS, and NBC, as these networks are the major players in the national sports broadcasting oligopoly.

Professional sports leagues and more expensive cable networks like ESPN have made contractual agreements that some fear will take away from the potential for “free” sports viewing offered by the major three networks. Fans must pay an increased monthly fee for cable packages including ESPN and other sports channels in order to watch certain games.

Photo through FLDA.tv

The four major sports leagues created networks dedicated solely to the programming of league games, enhancing each league’s vertical integration. These channels require hefty cable package payments on top of basic cable fees. Pay-per-view channels increase a league’s potential for financial increase as well, forcing fans to amplify their payment.

Major “free” networks must pay more to compete with the cable networks that can charge fans for viewing potential, creating an interesting dynamic between leagues’ desire for profit and leagues’ necessity of a wide audience broadcast.

History of Network/League Contracts

In 1962, CBS paid $4.5 million per year to the NFL for broadcasting rights, opening the door for other networks to follow suit. NBC offered $42 million for a five-year deal with the American Football League before the two league merged through the NFL’s aspirations to increase horizontal integration. During the 1980s, the NFL received $2 billion from ABC, CBS, and NBC through contracted television broadcast rights. The three networks paid the MLB $1.1 billion through the decade after a six-year deal concluded. These “big money” deals gave major sports leagues complete control over each respective industry.

Legality behind Leagues

Several lawsuits and Supreme Court cases in the late 1980s to early 1990s defined the concept of a professional sports league in relation to corporate law, though the “hybrid” concept still features foggy details. Now, each team acts as a member of a league in accordance with the Sports Broadcasting Act. Each team sends a representative (usually an owner) to meetings where he or she acts as a member of the leagues’ “board of directors”.

NBA Commissioner David Stern talks with Dallas Mavericks owner Mark Cuban. Photo by LM Otero, AP

The league itself acts as a single entity with monopolistic tendencies. The Supreme Court ruled in favor of the United States Football League after the league filed a suit against the NFL, claiming the dominant league monopolized the professional football business. Each league that attempts to compete directly with one of the four major professional sports leagues either flops or merges with the dominant monopoly.

The league divides profits (mostly) equally among its teams. Copyright licenses generate billions of dollars for each respective individual club in the league. Revenues from the sale of broadcast rights are shared between the two teams playing in a contest and with the league as a whole.

Individual teams have some rights to make contractual agreements with networks in order to broadcast games that would not be shown through the league’s network contracts. Some teams based the legality of the decision around the individual intellectual property rights of each team.

For example, “The Chicago Bulls wanted to broadcast all its home games not shown as part of the NBA’s national television package on ‘superstation’ WGN based in Chicago, but telecast throughout the U.S. on cable networks.” After the Bulls’ four championships during the 1990s, the NBA taxed each game that the Bulls aired on WGN in order to equalize other teams’ profits.

Other Contracts

Professional sports leagues contract with other industries aside from television in order to diversify each league through synergy. EA Sports licensed the rights to use all NFL copyrighted material in the making of the company’s video games, taking away from ESPN’s sports video game profit potential.

Photo through EASports.com

To counteract this loss, ESPN made an agreement with EA that made the video game producer ESPN’s video game producer for 15 years as well.

The battle between professional sports leagues’ monopolistic attributes and the necessity of media corporations to broadcast games will continue to evolve, as new deals arise frequently. For now, fans lay at the mercy of ever-changing contracts between networks and leagues.

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U.S. Professional Clubs

Power Play: Sport, the Media, and Popular Culture

Sports Broadcasting and Pay-Per-View

Analysis of Sports League Contracts

The Elusive Fan

The Last Legal Monopoly

The Wall Street Journal

“EA Scores 15 Year Deal with ESPN”

“EA Gets Exclusive Rights to NFL”

“Dallas’ Head Cowboy Emerges in a Licensing Showdown with the N.F.L.”

ESPN: The Media Corporation

By: Tom Malone

SportsCenter‘s controlling corporation, ESPN, rules sports media, sports journalism, and the modern culture that arises from anything sports-related. ESPN, Inc. functions as its own corporation, though it’s controlled by a corporate parent that aims to keep its sports networks atop the ratings lists.

ESPN’s Corporate Background

ESPN, Inc. rose to power in the sports media world quickly after its 1979 debut. ABC purchased the sports media corporation from Getty Oil Company in 1984. The Walt Disney Company now owns 80 percent of ESPN after its 1996 buyout of ABC, while Hearst Corporation owns 20 percent that it acquired in an early 1990s purchase from Nabisco for $170 million. ESPN, Inc. owns 50 business entities and media outlets that reach all seven continents, making it the most widespread and influential sports media corporation in the world.

Corporate Structure

Photo by Businessweek Magazine

As of Nov. 22, ESPN operates under CEO George Bodenheimer and John Skipper, President of ESPN, Inc. and ABC Sports and Co-Chairman of The Walt Disney Company. The Walt Disney Company’s 12-person Board of Directors controls ESPN. Board members also serve on boards for corporations such as Nike, Edison International, Starbucks, Boeing, and Apple.

According to Businessweek, ESPN acquires an estimated annual earning of “$5 billion, with operating earnings of nearly $2 billion, according to projections from various analysts. The revenues — about 60% from distribution fees and 40% from advertising — would represent about 15% of Disney’s total.”

Disney uses ESPN as an avenue for its own corporate advertising on many occasions. In an article published in  UCLA’s Mediascape journal, Sudeep Sharma said, “soon after the purchase in 1996, Whoopi Goldberg sat in as a guest host for a segment on SportsCenter. Goldberg was on air to promote her starring role in Eddie, a film about a limo driver/fan who becomes the coach of the New York Knicks, which was produced by Hollywood Pictures, a subsidiary of Disney.” Even the Jonas Brothers (signed to Disney’s Hollywood Records label) have anchored SportsCenter.

Diversification

Through Disney, ESPN, Inc. vertically integrates itself through production companies (Touchstone Pictures and Pixar Animation Studios), distributors (Walt Disney Pictures and Walt Disney Studios Home Entertainment), and Disney Consumer Products retail company.

Photo by ESPN

As an individual corporation, ESPN horizontally integrates itself across all media platforms. ESPN controls 47 international television outlets, like ESPN2, ESPN Deportes (the fastest growing network among the Latin American demographic), and ESPN on ABC. ESPN the Magazine covers the print media facet, while ESPN Radio covers audio broadcasts in eleven countries. The relatively new ESPN3 online streaming channel plays through ESPN.com, which expands the corporation’s integration into the Internet community. ESPN produces DVDs, video games, and specialized shows such as the ESPYs and 30 for 30 documentaries. Restaurants and merchandise further expand ESPN’s diversification efforts.

The corporation utilizes advertising as a source of income in its wide variety of media markets. Popular shows, like SportsCenter and College GameDay, draw millions of viewers, giving the corporation and advertisers a large target audience of young male sports enthusiasts.

Photo by Tom Malone

ESPN and the companies that advertise with it rely heavily on the image that it portrays to this audience. On-camera personalities present ESPN, Inc. as a “work-hard, play-hard” business entity. “It’s a tough business, but it’s a lot of fun,” said College GameDay football analyst Kirk Herbstreit in an original interview. Even a recent book about the history of ESPN is entitled These Guys Have All the Fun. ESPN, Inc. has diversified its sports media empire through the successful portrayal of this image.

Major Holdings and Mergers

In order to maintain and increase viewer potential, the sports media corporation holds contractual agreements with major sports leagues and shows. Recently, ESPN paid $2.4 billion for an eight-year contract with Major League Baseball and $8.8 billion for an eight-year Monday Night Football contract.

According to a 2004 article from The Wall Street Journal, “DirecTV right now pays Disney’s ESPN more than $300 million a year” to carry ESPN stations in its regular programming.

Even after its recent merger with NBC Universal, Comcast pays ESPN $5.8 billion to broadcast ESPN and its affiliated networks. Comcast presents ESPN with its first legitimate competition since its 1979 inception. According to Businessweek, Comcast Corporation is “the No. 1 U.S. cable operator. Looking to build a cable sports network to rival ESPN’s, Comcast is also ESPN’s biggest distributor, so its plans could aggravate what’s already a delicate relationship.”

Ultimately, Comcast or any other aspiring competitor faces a strong opponent in ESPN, a corporation that is deeply rooted in the stronghold of world sports media culture.

ESPN Corporate

New York Times: Hearst & ESPN

The Walt Disney Company

Businessweek

They Rule

Original interview with Kirk Herbstreit

The Wall Street Journal

Mediascape

Two Views of ESPN

ESPN Deportes

Ad Targets

Those Guys Have All the Fun: Inside the World of ESPN, James Andrew Miller and Tom Shales

ESPN.com

History of Sports Media

By: Tom Malone

Sports media as we know has not always existed. Modern-day sports journalism evolved with American social trends and profit-hungry businesspeople that changed the shape of news in general.

Early History

Before William Porter’s Spirit of the Times coverage of horse racing (and lower class boxing), most upper class citizens viewed sports as a vulgar hobby. The Industrial Revolution of the 1850s drew waves of immigrants to large American cities and expanded the lower class audience, eventually giving Spirit of the Times 100,000 readers.

Photo by MLB.com

According to sports author Tracy Everbach, “Flamboyant sports writing in the era of yellow journalism attracted newspaper readers and contributed to building a worldwide image of the United States as an economic, political, and athletic power.”

After the Civil War, baseball rose in popularity. The newly established Major League Baseball players created a players’ union in 1885. In congruence with late 1800s labor unions, the players went on strike in 1889, calling for higher salaries.

The 1920s ushered in the daily sports page. Sports author Lawrence Wenner said, “A 1930s survey revealed that fully 80% of all male newspaper readers read some portion of the sports page on a frequent basis.” The Associated Press added a sports department during this era in accordance with the growing trend.

Photo through ChampionsoftheRing.com

Advertisement and promotional facilitators caught on to the money-making potential that the new found dual product media market for sports provided. Evidence of payoffs by boxing promoters to sports writers and editors existed. Wenner said, “The close interaction between sports promoters and sportswriters was at times so corrupt that it led more than one sportswriter to quit” (58).

The relationship between sports writers and promoters essentially created famous publicity events such as the MLB All-Star Game.

Shift from Print to Radio

By 1929, one-third of American homes had a radio, which provided opportunity for sports publicity. Graham McNamee became the first official sports broadcaster in the 1920s with his error-filled blow-by-blow boxing commentary.

Photo by DevelopmentalIdealism.org

NBC and CBS dominated the radio scene after finding profit in selling advertisement space during radio shows. Wenner stated, “Advertisers soon began to purchase the right to broadcast major sports events” (59). In 1934, the Ford Motor Company paid $100,000 to sponsor the World Series on radio.

Transition from Radio to Television

Television allowed sports media to grow exponentially. The National Football League became American’s leading spectator sport due to its almost made-for-television excitement.  “In 1958, [NFL Commissioner Bert] Bell permitted ‘television time-outs’ to increase the amount of revenue each game could generate,” said Wenner (62).

CBS followed in 1962 when the corporation paid the NFL $4.5 million for broadcasting rights, which increased its Nielson ratings by 50 percent.

Photo through SportsLogos.net

ABC’s deal with the new American Football League in 1960 established the organization, but NBC’s $42 million, five-year deal solidified its future. The NFL and AFL merged in 1970 in a deal that guaranteed NBC and CBS equal coverage.

ABC fought back with 1961’s Wide World of Sports, 1970’s Monday Night Football, and legal rights to broadcast the Olympic Games. ABC Sports enhanced the entertainment value of televised football through the perfection of instant replay, slow-motion, and highlight reels.

Between 1974 and 1984, network programming hours dedicated solely to sports doubled.

Sports broadcasters became celebrities who could control rating through their entertainment value, thus earning big-name broadcasters annual seven-figure checks.

Ad dollars essentially promoted and funded the creation of new sports leagues, lengthened schedules, and various championship games (college football bowl games being the most notorious). Today, there are 79 sports networks devoting over 41,000 yearly network hours to sports coverage.

New Media and Beyond

Sports news coverage found new facets of distribution with online media. From the casual blogger to legitimate corporate websites, anyone with an Internet connection can participate in the discussion through spatialization.

The sports industry has grown exponentially due to its use as a media marketing goldmine. Sports author Raymond Boyle said, “The sports industry now regularly involves major media and financial institutions as well as government intervention.”

After The Getty Oil Company sponsored the inception of ESPN, the sports media force reached 75 million homes faster than any other network, insinuating that sports journalism as an institution is here to stay.

Photo from The Hollywood Reporter

According to Those Guys Have All the Fun, ESPN diversified and launched a magazine to directly compete with the domineering Sports Illustrated.

Sports continue to run on a path of commercialization and commodification. Brand exposure crosses various facets of sports media: print, broadcasting, and online production.

What does the rapid rise of sports media mean? Wenner said, “As one part of the social world robs people of meaning and emotional gratification, another part offers it to them in the form of commodified spectacles.”

Media, Sports, and Society

Those Guys Have All the Fun: Inside the World of ESPN, James Andrew Miller and Tom Shales

Spirit of the Times

Journalism, 1908: Birth of a Profession

Sports in American History: From Colonization to Globalization

STL Today

A History of Sports Highlights: Replayed Plays from Edison to ESPN

American Journalism Review

Sports Journalism: An Introduction to Writing and Reporting

Sports Journalism: Context and Issues

ESPN Corporate

Power Play: Sports, Media, and Popular Culture

SportsCenter: The Media Commodity

By: Tom Malone

Then and Now

In 1979, SportsCenter aired on the soon-to-be worldwide sports journalism juggernaut, ESPN. According to Those Guys Have All the Fun by James Andrew Miller and Tom Shales, “An estimated 30,000 viewers saw that first night of programming” (45).

The show originally covered obscure sports, such as Australian football and the World Series of slow-pitch softball. After signing a contract with the NCAA, ESPN received permission to cover college basketball. The Connecticut-based network found a following with University of Connecticut basketball fans immediately. Its ratings skyrocketed and ESPN never looked back (Miller 44).

Today, SportsCenter outshines every competitor and claims the number-one spot in sports journalism broadcasts by reaching 115 million viewers per month . Through spatialization and an enhanced global reach, there are now “thirteen local versions of SportsCenter produced in eight languages: Spanish, Portuguese, English, French, Hindi, Cantonese, Mandarin, and Japanese” (Miller Photo Index).

The Walt Disney Company (WDC) owns ESPN , thus controlling the production and distribution of SportsCenter. Comcast provides most basic cable packages with ESPN and ESPN 2, while its internet users can view ESPN 3 and other networks that are horizontally integrated by WDC. The FCC acknowledges ESPN as a major network, though it has received some leeway from the governing media body.

Audience and Advertising

SportsCenter’s target consumer audience includes males ages 18 to 34. It has been commodified in content through audience viewership and has been branded as a “cool” form of news. ESPN hired Wieden + Kennedy to produce commercials for SportsCenter, which further added to the show’s reputation. Disney’s Donald Duck makes a subtle appearance as Puddles in this example:

Other corporations use SportsCenter as a medium to market to advertise commodities to the target audience. Commodities like Budweiser (ESPN’s first sponsor) and Miller Lite produce ad campaigns geared directly toward the sports fan audience that ESPN’s premier show targets. These commodities “sponsor” certain segments of the show, blending the images of the respective product with the cool factor of SportsCenter.

Expansion and Synergy

In recent years, SportsCenter has enhanced its commodification efforts through synergy. ESPN produced a child home activity center called Gamestation, which coincidentally won Disney’s Toy of the Year award in 2004.  ESPN offers SportsCenter t-shirts and Christmas ornaments as well, further commodifying the show’s brand through the popularization of slogans. The network reaches commodity fetishism through SportsCenter.

ESPN also launched a SportsCenter iPad app. “When ESPN introduced a SportsCenter iPad app in 2010, it was quickly downloaded by ten million users, 95 percent of whom personally customized it” (Miller 727). The iPad is made by Apple, formerly owned by the late Steve Jobs, who sat on The Walt Disney Company board of directors.

Disney further promotes itself and its shows on SportsCenter through guest appearances in sports discussions. University of Oregon alum Ty Burrell of ABC’s Modern Family made a guest appearance during the Duck’s run for the BCS Championship.

In the Anchorman DVD special features (distributed by Dreamworks, a direct Disney competitor created by a former Disney employee), Will Ferrell’s character playfully auditions for a spot on SportsCenter.

As of 2010, SportsCenter and ESPN produced “over $8 billion of revenue and still had the best ratings of any basic cable network” (Miller 727). SportsCenter continues to grow in popularity and shows no signs of slowing down since no other congruent network show can compete.

ESPN Corporate

Free Press: The Big Six

Federal Communications Commission

Oregon Public Broadcasting

The New York Times

Disney’s Family Fun

ESPN Shop

Disney Board of Directors

SportsCenter

Those Guys Have All the Fun: Inside the World of ESPN, James Andrew Miller and Tom Shales

Dreamworks: Anchorman

Sports Journalism: Who Runs It?

By: Tom Malone

Sports journalism: the practice and profession of writing about sporting events and athletes for periodicals. Third-grade boys, college students, and old men live and die by the information and opinions produced by on-air experts. Sports and politics have exploded onto the scene in recent years as a primary source for stories from all over the world.

Babe Ruth's MLB debut in 1914 as member of the Boston Red Sox

According to the late sports journalist/professor Leonard Koppett, the rawest form of modern sports journalism came about between the Civil War and World War I. Newspapers printed athletic stories, though hard news remained the newspaper juggernaut.

The explosion of broadcast news gave sports journalists a new facet for expressing their message. On-air talent, such as Howard Cosell, became household names after landmark programs like Monday Night Football took the stage in the 1970s. Every major broadcasting company has its own form of sports news and nearly each local news affiliate incorporates some form of sports talk into their regular newscast.

An early ESPN Sportscenter production

In fall 1979, ESPN debuted by airing the first episode of SportsCenter, now a commodity. The Getty Oil Company provided funding for the soon-to-be corporation’s inception. In 1984, ABC, Inc. acquired control of ESPN and quickly sold 20 percent of its ownership to The Hearst Corporation.

Eleven years later, The Walt Disney Company bought ABC, Inc. for $19 billion in the second-largest corporate buyout in history at the time, thus giving Disney control of ESPN and the popular ABC Sports programming.

Two sports broadcasting giants combine forces

ABC Sports and ESPN essentially combined forces to claim the broadcast sports journalism throne, cementing their self-proclaimed title as the “Worldwide Leader in Sports.” The sports broadcasting company continues to expand, having recently acquired the Big 12 Network.

Comcast entered the sports journalism scene with Comcast Sports Network, which geared its content towards a regional audience. Its quality did not match ESPN, but its media power grew stronger in recent years.

NBC's rights to the London 2012 Olympics

Comcast recently bought NBC from General Electric (though GE still owns 49 percent). NBC Sports claimed the rights to broadcast the 2012 Olympic Games with a $2 billion bid and ownership of the new Pac-12 Network.

As the primary provider of cable television, Comcast now provides the cable pathway for media to reach television screens and a significant amount television content. A Comcast representative said, “Mr. [Ralph] Roberts founded Comcast in 1963 with the purchase of a 1,700 subscriber cable service in Tupelo, Mississippi. From those humble beginnings, Comcast has grown into a media giant, with 21.5 million subscribers in 35 states, and has changed America’s T.V. viewing habits.”  The corporation has instituted an effective media vertical integration program while rapidly extending its reach as a media stronghold.

Fox Sports has expanded its journalistic coverage in recent years. The company created Fox Soccer, Speed, and found a niche in the local sports broadcasting market with FSN that caters to local markets (like CSN). This year, its primary movie channel, FX, added NCAA football to its television schedule.

Media mogul Rupurt Murdoch on the cover of Time magazine

Media mogul and diversification enthusiast Rupert Murdoch owns News Corp., which controls Fox and its affiliates. He bought Twentieth Century Fox in 1985 and established Fox News shortly afterward. Murdoch appeared in news headlines multiple times this summer after an ethical debacle involving illegal phone hacking with his News of the World staff.

Viacom owned CBS and CBS Sports until the companies split in 2006. Sumner Redstone possesses a controlling share in both Viacom and CBS Corporation (the current ruling party of CBS). After signing a deal with Microsoft, CBS began using the computer giant’s video software for broadcasting.

Sports journalism has and will continue to evolve as journalists and corporations delve into the intricacies of the subject.

While discussing the individual sports writer’s relationship with sports journalism, renowned sports writer Dave Zirin said, “By speaking out for the political soul of the sports we love, we do more than just build a fighting left that stands for social justice. We also begin to impose our own ideas on the world of sports…”

Definition of…

Toward a Radical Sports Journalism

Sports Illusion, Sports Reality

Howard CosellProfile

ESPN Corporate

New York Times on Disney/ABC Merger

New york Times on NBC Olympics Contract

Big 12

ESPN on Pac-12 Network

Comcast Corporate

Museum of Broadcast Communications

Sports Business Journal

Carl Bernstein on Rupert Murdoch

Sumner Redstone profile

CBS/ Viacom Split