Commentary

If Sports TV Holds Pay TV Biz Together, What Happens When Ads, Viewers Decline?

by Wayne Friedman , Staff Writer, September 30, 2020

For weeks, we have been told sports TV is the only thing holding up the TV industry -- the live, linear TV industry -- in terms of viewership, advertising sales, and, oh yes, traditional pay TV service subscriptions.

What if that weren’t the case -- or perhaps just less so?

Some evidence to the contrary may be found in looking at sports viewership of the big TV-based sports leagues: NFL, NBA and Major League Baseball. And what it means to consumers.

These leagues, along with NHL, NASCAR and others, have been competing for viewers, as these sports have been airing in the same August-September periods -- although admittedly, not always competing directly head-to-head, time-period versus time-period.

“We can only imagine that TV reps have been patiently waiting for the return of live sports, and [we] would say buyers and sellers are both disappointed,” writes Michael Levine, media analyst at Pivotal Research Group. “We think the ratings weakness is one of the factors driving an incremental to online.”

The NFL, for example, is down 7% in viewing after two weeks or so -- which is concerning, but still a modest decline from the more alarming 12% to 15% early-season drops a few years ago. On the flip side, consider that as the season builds, NFL ratings typically rise.

Why the drop? Analysts believe it is due to the lack of excitement -- that is, in-stadium fan excitement. Pandemic concerns have eliminated stadium/arena paying fans. “Empty stands just are not the same,” says Levine.

Sports leagues did their best, adding ambient crowd sounds -- cheering and otherwise -- and cardboard fan cutouts.

Sports TV -- in addition to TV news programming, due to the presidential election -- is having to carry much of TV viewing fortunes currently, given the lack of fresh prime-time entertainment programming. While many broadcast TV networks have slowly gone back to TV production, the traditional fall-to-spring TV season looks to start, in large part, in November.

To no one’s surprise, TV entertainment viewing/usage has been rising on Netflix, Disney+, Hulu, Peacock and others.

All this comes as the process over TV’s upfront advertising market lumbers along, as TV advertisers and TV networks find a way to complete negotiations.

The bigger question: Is sports TV holding together what remains of the pay TV business? That business has been sinking now at a second-quarter rate of 8% -- now at around 81.5 million U.S. subscriptions.

While TV ratings are in question, big rising sports-right fees to TV networks are already starting to have a wide-ranging effect.

Turner just paid $3.75 billion in a seven-year deal -- $535 million per season, a 65% increase from its previous contract. This, in turn, will mean pay TV providers -- cable, satellite, and telco -- will need to pay more to carry Turner networks. And, in turn, pay TV providers will charge consumers more.

Long-term, without sports, does pay TV have a chance to survive?

sports, tv

4 comments about "If Sports TV Holds Pay TV Biz Together, What Happens When Ads, Viewers Decline?".

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Ed Papazian from Media Dynamics Inc, September 30, 2020 at 12:39 p.m.
Wayne, TV sports are not used by advertisers as the only way to reach mostly male sports fans. There are plenty of much cheaper ways to do that via TV. If sports ratings continue their decline---just as all TV show types are garnering reduced ratings due to audience fragmentation--- the advertisers will---for the time being, at least---pony up their dollars---even accepting huge CPM hikes due to increased fee demands by the leagues. The reasons are the nature of the content --imagry---plus its merchandisability, plus the fact that many of these advertisers are wedded to sports and sports personalities as key aspects of their overall promoitional strategies, including star endorsements. The same point applies to news. Again, it's not so much audience size nor demos---most newscasts reach mainly old folks---it's the editorial content and its image, merchandiseability, etc. Here' too, recent gains due to concerns about COVID-19, notwithstanding--ratings are eroding. But not to worry. Advertisers who prefer to be associated with news will continue to buy---at higher CPMs.

I think that there is much too much emphasis on the ratings in evaluating the value of TV sports and news, and not nearly enough about the intangibles. I guess that's because the intangibles are not so easy to quantify.
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David Scardino from TV & Film Content Development, September 30, 2020 at 1:30 p.m.

Wayne, I think one reason for the NFL ratings decline is that the quality of play is basically akin to pre-season games and probably will be for at least one week. That said, I think the league gets credit for an almost-normal schedule as opposed to MLB, NBA and NHL with their mini-seasons.

David Scardino from TV & Film Content Development replied, September 30, 2020 at 1:31 p.m.

Ah, that should be "one more week..."

David Mountain from Marketing and Advertising Direction, September 30, 2020 at 2:08 p.m.

Speaking as a life long sports fan, the six months off didn't hurt as much as I thought it would. Breaking the habit is a powerful thing. I still watch now, but not nearly as much or with the same focus.