This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fox, Disney Talk Entertainment, Rely on Sports

Stocks in this article: DIS NWSA CBS

"Our competitive advantage starts with our long-term carriage agreements," ESPN President John Skipper told the audience, referencing the agreements with pay-TV operators who pay the Disney network more than any other channel on the dial. "Live sports rights represents the most valuable opportunity in media these days."

And doesn't Disney know it. ESPN was the main driver behind a 7.7% profit gain to $1.9 billion at Disney's media networks in the first quarter as sales jumped 5.6% to $4.96 billion. Contrast that with Disney's ABC network where profit tumbled 40% and you have an idea about the pressure on the big broadcasters which include CBS (CBS) and Comcast 's (CMCSA) NBC.

It's little wonder then that News Corp.'s Fox is planning to start its own 24-hour national sports channel, to be called Fox Sports 1. Fox wants to sell more advertising, but more importantly the network wants to tap into the much larger cable affiliate fees that popular channels get from pay-TV operators such as Time Warner Cable (TWC) and Comcast.

Fox doesn't have the breadth of long-term deals to compete with ESPN but it does have the World Series and NFL Football.

Troy Aikman, the former Cowboys quarterback and star announcer and easily the most comfortable presenter at the Fox Upfront, talked up Fox's NFL schedule, emphasizing that its Game of the Week kickoff show has been the No. 1 rated show on television for 19 years. There's nothing fickle about football fans, or the eagerness of advertisers to sell their products during time-outs.

Broadly, though, television advertising is in the midst of a long trend downward. Ad sales at the networks -led by ABC, NBC, CBS and Fox - are expected to drop 2% this year to $16.9 billion, according to ZenithOptimedia, a division of Publicis Group SA. Ad sales at all television outlets including pay-TV channels are forecast to increase 2.8% in 2013 to reach $63.9 billion but that's a far slower pace than last year when the pie grew 7.1%.

ESPN gets an average of $5.54 per subscriber per month from pay-TV operators, whereas the broadcasters can expect to get $1 to $2 per subscriber in 2013 and 2014, Robin Flynn, an analyst at SNL Kagan, a consultancy based in Monterey, Calif. said in an e-mail. By comparison, Time Warner Inc.'s TNT network gets $1.24 while TBS brings in 59 cents per subscriber, Flynn said.

ESPN's preeminence and the value of sports programming has never been more important to large media companies. Sports remains the bedrock of the pay-TV bundle, requiring consumers to pay upwards of $50 per month just to get ESPN. It's the reason the networks are so worried about upstarts such as Aereo, the would-be television disruptor, and anxious to satisfy consumer demands for TV Anywhere.

Broadcasters like to claim they're the only place that still captures a really large national audience. But that's becoming less true. All sorts of cable-TV channels are producing hits. AMC Networks has done fine with Breaking Bad. But watching sports remains an integral part of the life of millions of U.S. households. There's nothing fickle about the sports viewer.

"One of the big rocks that preserve the status quo in television is sports," Michael McGuire, a media analyst at Gartner said in an interview from Redwood City, Calif. "People pay for premium packages because of sports. We're starting to see consumer choice exerting its influence on the incumbent TV industry, but when it comes to sports, the networks are holding firm to control that access."

So, Ichabod Crane or the NFL. Dads or the Final Four. The smart money is on sports.

Written by Leon Lazaroff in New York

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs