Is Fox Sports Better Placed For Cable's Future Than ESPN?

FOX Sports launched FS1 to challenge ESPN. That rise has not been without hiccups. But, the network’s mission is starting to take form. Recent hires, completed or speculated, suggest FS1 will try to be a personality driven “FOX News” to ESPN’s CNN.

Those programming machinations, of course, are more interesting within the media. Studio programming is window dressing for a sports network. It’s all about the live events.

ESPN has an outstanding array of live sports rights. It is perceived to have an overwhelming advantage. But, those rights deals are expensive. ESPN will depend on a core of “national” sports fans to pay a lot for them.

The question is how many sports fans are “national” vs. “regional.” If fans truly care about their local teams, that could leave FOX Sports better placed with TV rights moving forward.

We know the cable model will change. We don’t know the scale, the mechanism, or what precisely will replace it.

Change could come through the market. Change could come through new regulations or legislation. Apple, Google, or another company could opt for the ultimate “disruption” and offer cheaper, faster Internet access. At the very least, getting rid of the set top box monopoly should cut costs, for most users, and open competition.

The idea of a “network” may be outmoded in the coming era. Having multiple networks makes sense to extort a third party for carriage fees. ESPN and FOX Sports may be selling direct to consumer. What we may be looking at are more like apps, offering access to live and on demand content.

ESPN’s strategy, amidst uncertainty, has been clear. Lock down live sports rights, even at a premium, through the next decade. Whatever happens, make ESPN indispensable for the sports fan, year round.

Football is the biggest sport. ESPN paid billions for Monday Night Football. ESPN owns the rights to the bulk of regular season college football, bowl exhibitions, and the college football playoff. Many have asserted ESPN overpaid for the NBA. The cost nearly tripled. The MLB rights weren’t cheap either.

But, in concert, those deals provide strong year-round content. They become imperative if ESPN is selling monthly subscriptions, rather than being carried by cable providers.

ESPN must generate billions to cover those fees. Even the recent, relatively modest cable subscriber declines for ESPN have had significant consequences. ESPN has laid off workers. ESPN has been outbid for talent. ESPN has been outbid for television rights.

Without spreading ESPN’s cost over a broad cable subscriber base, sports fans bear that burden. A fee approaching $40 per month, more than Netflix and Amazon Prime combined, is not an outrageous estimate.

That’s a hefty price, just for ESPN. It’s hefty enough to have the “sports fan” reevaluating his/her consumption. That’s where “national” vs. “regional” fans comes into play.

We’ll use Detroit as an example. A FOX regional package for Detroit would include content presently found on FS1/FS2, BTN, and FOX Sports Detroit. It’s not clear how much that would cost. But, it would be less than ESPN. Let’s look at what a Detroit sports fan would get with the FOX package and a TV antenna.

FOX Sports Detroit has almost every Tigers, Red Wings, and Pistons game. Twelve of the Lions’ 16 regular season games in 2016 are on FOX. Three more are available over the air on CBS. Between BTN and FOX buying at least half the first-tier rights, the majority of Michigan and Michigan State football and basketball games would be included as well.

We can toss in a casual soccer fandom. FOX has the Champions League, the World Cup, and the bulk of USMNT and USWNT matches over the next decade.

John Q. Casual Sports Fan in Detroit may shell out for ESPN. But, he will need the FOX package to follow the teams he cares about. If you take a cruise through the FOX regional affiliates, Detroit is hardly the only market where that would be the case.

ESPN will depend on national, omnivorous sports fans. The ESPN subscriber will be the fan in Detroit who must watch a random SEC football game at noon or revolves his/her evening around Stephen Curry. That fan is a product of cable. Cable makes doing that accessible and cheap. Without cable that sports fan may become an endangered species.

Roger A. National Fan with cable unbundled is buying the ESPN package and the FOX package at a minimum. Can’t do without a significant portion of the NBA, the NCAA Tournament, or the MLB playoffs? That means buying the Turner package too. Started following an EPL club? Add NBC Sports to the bill. Individual league networks? The cost keeps rising, especially if you’re not in the sports media and can’t tax deduct it.

Every entertainment genre is becoming niche and fragmented. Adding in the financial pressure, sports likely goes the same way. Sports fandom becomes an active choice. Fans will pay for what they want. If that’s their local teams, that will favor FOX in many markets.

Moreover, FOX Sports may be able to pair its sports content with FOX News content in a FOX app to bring in other subscribers. There’s no Disney/ABC News network for ESPN. Would a horde of History Channel, Lifetime, and Freeform diehards add to the subscriber base?

ESPN has thrived under the present cable model. It built sports coverage into a monolithic, national industry. But, that model is under existential threat. Even if ESPN remains the “Worldwide Leader,” it’s easy to see FOX making major inroads with regional audiences.