Billions of minutes and thinking about the TV business

 

“At least everyone knows and can agree on what a minute is!” – Some Guy

Around this time 11 years ago in August of 2008 tvbythenumbers.com was still less than a year old. The Beijing Olympics had begun and NBC Sports PR had put out a release about ratings for the opening ceremonies that included streaming minutes. I don’t remember and could not easily dig up the specifics but to get to the spirit of what happened let’s say NBC Sports was celebrating “over a million minutes of streaming for the opening ceremonies!”

But that’s not right!

At the time there wasn’t much sports streaming going on and it sounded — and relative to the streaming field probably was — impressive. I’d posted something about it. Again, I’m going for the spirit not the letter, but someone left a comment of this gist:

Well actually, it’s probably not that impressive. Minutes ARE a great measure of engagement but consider that on TV the four-hour event averaged 34 million viewers per minute on NBC — that’s over 8 BILLION MINUTES and THAT IS VERY IMPRESSIVE engagement. But the 1 million streaming minutes?  That’s less than 20,000 people/minute. 

That was great context and I never forgot it. The person who left that comment was Fox Sports’ Michael Mulvihill. I’m not sure what his title was then but now he’s EVP and Head of Strategy & Analytics for Fox Sports.

But that’s not fair! (ESPN’s business model, that is!)

Mike is still a minutes man and the other day he tweeted this out:

That was really interesting but it raised more questions for me than it answered but the additional data (which I posted here) did answer my questions.

ESPN is not a broadcast network, and doesn’t have the same business model as the broadcast networks. 

Isn’t that special! ESPN’s business model truly is

ESPN’s business model is much (much!) better than everyone else’s! So much better that it should be talked about a lot more than it is. ESPN is fine with it just being a terrifically and fantastically great model that is leaps and bounds better than everyone else’s and not getting much attention for it.

I’m not! The specialness of ESPN’s business model is the most interesting thing to me in the entire TV landscape.

ESPN demands and receives relatively ginormously high affiliate fees, Affiliate fees are the amount Comcast, DirecTV, Spectrum, PS Vue etc pay to TV networks per subscriber. It’s widely reported based on SNL Kagan estimates that ESPN receives over $8/month/household just for the ESPN mothership. 

That $8+ dwarfs everything else, including the broadcast networks.  Some of the RSN’s have impressively outsized affiliate fees relative to everyone besides ESPN, but whatever the #s, the business model where ESPN makes much more money than the broadcast networks despite having (much!) less viewership than the broadcast networks is something to behold.

On the one hand I behold it in very high regard. Under Steve Bornstein’s and in particular under George Bodenheimer’s regime, ESPN out-sold and out-negotiated the competition. Period.

For the broadcast networks the legacy of the public airwaves and regulations played some role, but still, ESPN beat everyone else’s asses. Truly a beatdown. For any youngsters reading this: on the business front ESPN dragged the competition and is still dragging its competition to this day.

It really isn’t fair!

On the other hand, it triggers all my “that’s not fair!” programming and if unequal pay for equal work sets me off, imagine how enraged execs at CBS and Fox must be over generating far (far!) more viewership than ESPN while getting paid much less in monthly fees.

Yes, that’s just the way it is, but it’s still kind of exasperating. Also amazing. Amazing & exasperating all at the same time. Behold the power of ESPN!

If you can’t beat ‘em…

A decade ago I guessed what would happen was the overall pie needed to be and would be redistributed. Idealistically, that redistribution makes sense. 

I’m not saying CBS execs thought “idealism is for suckers!” but very clearly they were smarter and more pragmatic than I. CBS decided to get a fairer share  by growing the pie and relative to its broadcast network peers has been quite successful at it. I’ll leave it to the journalists who get paid for such investigative reporting to dig up those details but in some part that’s because CBS doesn’t have valuable cable properties it needs to negotiate for in addition to CBS. 

Further, CBS created CBS All Access, not so it could beat its chest over the relative few of its viewers who subscribe to it but so that during retransmission negotiations with the AT&Ts of the world it could say “we charge our direct customers $6 and quite a few of them are taking us up on it. We’re offering it to you for the low, low rate of $3! You should take it!”

For now, they are taking it. On the chin, perhaps, but still.

Sadly, there are far too many gullible people in the TV media who buy into CBS puffing out its chest over the tiny % of its viewers who subscribe to All Access. The only problem I have with that is that it disguises the thing CBS should actually be patted on the back for and puff out its chest over: using All Access very, very effectively as leverage in its retrans negotiations.

According to reports, at least in the case of CBS’s negotiations with AT&T, CBS was looking to raise its affiliate fee from around $2/mo/household to $3/mo/household.

$3 is a lot less than than $8! Aaaaaand, it’s kinda widely reported that Fox makes measurably less in retransmission fees than CBS.

A good way to make sense of what Fox did in unloading a lot of its assets to Disney was it’s now focusing exclusively on businesses with large scale that have a decent shot of growing their affiliate & retransmission fees.

Why didn’t Fox keep the RSNs? The simplest explanation for me is those RSNs don’t have the scale Fox was looking for to use as leverage in national negotiations. Sure YES Network has some leverage, but Fox Sports Tennessee doesn’t so, they were willing to give up on a few babies to cut bait on the bathwater.

So, I totally understand Mulvihill putting stuff like that out there in a “Well, would you look at that!?” fashion.

But that too triggers my “that’s not fair” programming because while on the Fox broadcast network “live events” is pretty much all Fox Sports does (other than pre and post-game coverage) that is NOT all ESPN does on ESPN.

The comparison, framed only in that way just seems silly to me. I do understand it, but I can’t condone it! Sorry not sorry, Mike.

Silent conquerers: All’s fair in love, war and business

George Bodenheimer isn’t as famous as Alexander the Great or Genghis Khan and in the broad world, I’m down with that. But in the TV circles not so much. He’s not as famous as Eisner, Iger, Moonves or even John Skipper. It’s possible he’s not even as famous as Jimmy Pitaro (talk about triggering my “that’s not fair!” programming!) despite being the greatest conquerer of the whole bunch when it comes to producing a crazy, crazy good business model. 

Sure, if you’re an idealist, it’s definitely not fair how it worked out, but it’s still crazy and impressively good. And like some significant chunk of the few who’ll read this, I do take some pleasure in Murdoch & Moonves getting beaten down so badly by someone most people have never heard of.

I’ve never spoken to Mr. Bodenheimer but I get the sense he’s fine with not getting the fame and adulation he deserves which makes me like him even more.

Along those lines….

Here’s to you, Sean McManus

So many awards in the sports media but if there’s an award for being extremely effective while seemingly not seeking any attention for it… Bodenheimer gets my “all time” award, but for the current era, I’m here to celebrate Sean McManus and CBS Sports.

Not included in Mulvihill’s tweet were the minutes of airtime used up to generate those billions of minutes. Especially relative to cable networks Fox was extremely efficient, but not as efficient as CBS.

CBS only burned up 33,043 minutes out of the possible 525,600 on-air minutes in the July 1, 2018-June 30, 2019 year measured in Mulvihill’s tweet.  Of course, CBS had the Super Bowl which on its own accounted for nearly 21 billion minutes and easily over 21 billion if you include pre/post game coverage.

I’ll let that sink in for a minute.

I do love me some Tony Romo and that influences me, and so does McManus and his team not beating their chests like some Fox folks (or even their own brethren at CBS All Access!).

Also, it works out, at least so far as what gets in front of me, that CBS hasn’t enabled and celebrated nearly as many shitty on-air personalities as Fox. I really am biased to liking CBS more than Fox as a result. Bias disclosed! But Fox Sports’ results on Fox broadcast network are still impressive.

Enjoy the inexpensive TV packages while they last!

When AT&T’s U-Verse dumped NFL Network and its solution was “get DirecTV!” That wasn’t for me, so I not only dumped U-Verse TV and Internet, I dumped an AT&T Mobile account I’d had since June 29, 2007, the day the iPhone was released.

I switched to Verizon for mobile (bonus, it works in my house without wi-fi assist), switched to Spectrum for Internet and PS Vue for TV.

Ending all business with AT&T did save me some money, but in fairness sticking with Vue, if I do, isn’t about cost cutting — Spectrum offers a similarly priced TV package for pretty much the same stuff, but with Spectrum I can’t watch DVRd shows on my phone and that’s something I value very highly, especially for all the PTI, Around the Horn, Highly Questionable and High Noon stuff.

Sure, I could access those shows via the ESPN app if I had Spectrum, but not necessarily *when* I wanted to watch them. Also, in case you missed it, the versions of those shows on the ESPN app are inferior due to the fact that there are many highlights ESPN somehow doesn’t have the rights to distribute via streaming.

Anyway, the current low pricing is being subsidized through a combination of investors and companies setting money on fire as the TV landscape shakes out. I hope I’m wrong in thinking “that can’t last forever” but w/CBS and Fox trying to grow retransmission, while ESPN, TNT, etc. try to grow affiliate fees…it can’t last forever.

I plan to enjoy these good and highly-affordable times while they last.

Here’s the post with the numbers

This article has 2 Comments

  1. You fail to mention the visionaries that empowered George B (certainly not Bornstein). John Malone, Amos Hostetter, Chuck Dolan, Ralph Roberts, etc. The people that changed the BUSINESS of the industry and developed a platform that has still not been surpassed. They knew what it meant to their subscription model to have not just sports but THE sports that mattered the most.

    1. @Glen S: More Saturday blog post than book so I’m sure I failed to mention a lot more than I mentioned. But I would love a book focused specifically on how those folks feel about empowering George B. Anecdotally, just based on public comments from Malone I’ve heard over the past ~5 years, I get the sense he’s very conflicted about it.

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