News Corp's plans to launch a national sports network to directly compete with Walt Disney's ESPN sent shockwaves through the media industry on Wednesday.
The company is considering switching either its Fuel or Speed television network into an all-sports television channel, according to Sports Business Daily's John Ourand. Rupert Murdoch's company is reportedly quite interested in launching the network, but is unlikely to do so in the next year.
News Corp. has already tried competing with ESPN in the 1990s with Fox Sports Net, but the national network eventually devolved into a collection of regional networks. The company currently owns and operates 20 regional sports networks around the country in addition to Fuel and Speed.
If News Corp. does decide to put together another run at ESPN for national sports dominance, it would be just another major conglomerate entering an extremely competitive market place. Comcast Corp's NBC Sports and Viacom's CBS Sports have both recently launched all-sports television channels meant to challenge ESPN.
NBC rebranded Versus to NBC Sports and hoped that its combination of live programming with the NHL and a series of television talk shows could make a dent in ESPN's commanding lead, but it has seen little success thus far. NBC Sports' television ratings have been dismal, but NBC Sports Chairman Mark Lazarus has publicly reiterated that it takes time to build and that he is encouraged by the progress thus far.
CBS Sports is the other big network trying to get in on the action. The network recently snagged radio/television host Jim Rome from ESPN and has heavily marketed him during the NCAA Tournament. The CBS Sports channel faces issues with amount of homes it reaches and channel placement, but is making some heavy investments in its future.
The addition of another competitor to the market place would likely drive up television rights even more than their already astronomical levels. Fox has been active in acquiring the rights to college football -- it signed huge deals with the Pac-12 and Big 12 -- but would likely seek even more live programming to mount a serious challenge at ESPN. Fox Sports has also locked up the U.S. broadcasting rights to the 2018 and 2022 World Cup games, which would be good for any fledging network but are a long way away.
Fox would need more than just Pac-12 and Big 12 football games and would likely spend a lot of money to acquire additional programming. This will take the multi-billion dollar deals of the biggest sports to record highs, which will ultimately trickle down to the customer. These huge sports networks are willing to spend astounding amounts of money in order to make themselves more attractive to cable companies for higher carriage fees.
For instance ESPN charges carrier companies such as Cablevision and Time Warner Cable $5.07 per subscriber, according to SNL Kagan. For the average person that means that $5.06 of his or her cable bill is headed straight to ESPN. Cable subscribers currently pay minimal amounts for NBC Sports and CBS Sports, but if those networks can land some major sports, they will likely be able to demand higher carriage fees from cable providers.
The addition of a national sports network such as the one Fox is considering could up the quality of programming for all sports networks, but could very likely mean a bigger dent in the wallet for the average cable subscriber.
That also doesn't even factor in the growing threat of Apple or Google entering the market for sports television rights. Google's YouTube has already edged into the market with specially designed sports channels, but hasn't made a serious run at any major sport television rights. It certainly has the deep pockets to make a run at any sport it wants, but it has mostly stayed on the sidelines.
Apple is another company that could be a huge threat to the current status quo. It has a stunning amount of money on hand -- more than $100 billion -- and has the ecosystem in place to make it a worthwhile purchase. The company has resisted purchasing companies such as Hulu in the past, but might be more willing to pair up with Google in the future if it launches Apple TV.