Crazy Like a You Know What

It’s the worst-kept secret in sports media. And while News Corp. still isn’t prepared to talk up its nascent Fox Sports 1 network, everyone from ESPN to the garrulous guy at the sports bar knows that it’s in the works. Set to replace the motorsports hub Speed on your cable lineup, Fox Sports 1 represents the only genuine threat to ESPN’s unwavering dominance over the sports-media landscape. That said, it’s the other pretenders to the throne, particularly NBC Sports Network and CBS Sports Network, that probably should be sleeping with one eye open. Fox has the requisite rights deals, programming chops and reach—Speed is distributed to 81 million U.S. households, giving it a foothold in four-fifths of the pay-TV universe—to challenge the intestinal fortitude of the rest of the TV sports field, but analysts believe there’s still room for another newcomer. RBC Capital Markets analyst David Bank said that while Fox Sports 1 is unlikely to outpunch ESPN in the near term, “success” is a relative value. “For the venture to be a success, the channel does not need to reach such heights (especially on a going-forward basis), considering that many of the sports rights have already been acquired,” Bank explained. Per RBC’s estimates, FS1’s portfolio of Major League Baseball, Nascar, FIFA and NCAA Division I (Pac-12, Big 12) holdings should give Fox the leverage to boost the current affiliate fee from 22 cents a sub per month to $1 a pop. Factor in the requisite inflated CPM and carriage in an additional 9 million homes and FS1 could in short order draw an additional $1.2 billion in revenue to News Corp.’s coffers. Because Fox is keeping mum about FS1, the launch date is a matter of speculation. Based on conversations with employees who have been approached by Fox, ESPN president John Skipper believes the channel will go live in August. But its robust MLB package and word that a late Q1 upfront is in the works suggests that FS1 could arrive as early as April. Per the terms of its new eight-year, $4.2 billion rights deal with MLB, Fox Sports obtained the rights to carry 40 Saturday afternoon regular season games on a nationally distributed cable network. Given that baseball is a much higher-profile property than NBCSN’s NHL and CBS SN’s lower-echelon college football package, FS1 could find itself leading off with a solid stand-up double. “FS1 will be a good start, but it’s unlikely to make a material dent to ESPN’s business for the investable time horizon,” said Nomura Equity Research analyst Michael Nathanson, who added that ESPN is protected through 2022, thanks to its long-term affiliate deals and rights packages. “Given its war chest … ESPN will be able to control its own destiny.”

Convergent TV

Crazy Like a You Know What

Fox Sports 1 is poised to become a cable heavyweight; CBS, NBC properties expected to take a hit

Anthony Crupi

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Anthony Crupi