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Sports Programming The Hot New Digital Media Commodity

Original Post by, David Bloom Contributor,

It took less than 24 hours after AT&T’s massive restructuring of its $85 billion WarnerMedia investment for one of the surviving top executive to point where his part of this empire may be heading next: sports rights.

WarnerMedia “will certainly continue to be a significant player in the sports-rights arena,” said CNN chief Jeff Zucker in a Variety interview. “WarnerMedia will continue to be aggressive when appropriate and strategic.”

(Photo by Michael Loccisano/Getty Images for CNN )
(Photo by Michael Loccisano/Getty Images for CNN )

Zucker – who will preside over an expanded empire of news and sports that will include fan-driven site Bleacher Report as well as Turner’s sports operations and more, is returning to his TV roots at NBC Sports. Sports broadcast rights will start expiring as soon as next year, and likely will set off serious bidding wars among traditional networks and digital newcomers such as Amazon, Twitter and Facebook that have done a series of pricey streaming deals with Major League Baseball, the NFL and NBA in recent years.

But live-broadcast/-video rights just part of one of digital media’s hottest areas right now. Venture capital is flowing into a number of sports-focused online sites, in contrast to most other digital media operations, as investors bet on increased legal gambling and the power of live to command viewer attention and higher ad rates.

Subscription models are being tried out too, most notably with Disney’s ESPN+ video-on-demand service. In its most recent earnings announcement, Disney said the service had doubled its subscriber base to 2 million in five months. But the service, and Disney’s broader streaming efforts so far, are still losing money. Given the rapid drop in subs for mother ship ESPN, long a key part of Disney’s profitability, however, the service’s success is essential to Disney’s long-term health.

Zucker may play a similarly vital role for AT&T as chairman of WarnerMedia’s news and sports operations, which positions him as the King of Live for the company. He won’t have direct control over sports operations at other parts of AT&T, most notably the NFL deal with DirecTV for its hugely popular and strategically vital Sunday Ticket package. AT&T and WME/ICM share an esports initiative, and it shares  broadcast rights to the NCAA’s Final Four basketball championship with CBS.

“News and sports continue to be the only two types of programs whose viewership is increasing in television, and so I think there is a lot to be said for putting them together and managing them together,” along with the digital outlets associated with them, Zucker told Variety. “Live programming remains the least impacted by the new forms of distribution and the way people consume today.”

Zucker said he’ll be focusing more on the digital side in the near term, including New York-based Bleacher Report, which has been part of Turner and has built a range of cross-platform products for ardent fans. Last fall, I sat down with Howard Mittman, a Condé Nast veteran who is now BR’s CEO. Mittman told me BR occupies an unusual place in the sports universe.

Its writers cover sports and have access to game video and highlights from top leagues, thanks to that DirecTV deal with the NFL and particularly Turner’s tight relationship with the NBA. More recently, BR launched a streaming service, has a significant social media presence, and  can directly draw millions of visitors a month to its site, cutting out the digital “tax” exacted by the big platforms while retaining more data about its audiences.

“I don’t pretend that we have their scale or the capabilities, frankly,” Mittman said of the major social media platforms. “But I do think we sit in this interesting, messy middle space that allows us the connectivity that you get and the brand trust that you get as a premium publisher, but with the data and direct connection that you get from being a platform. And so, when we think about the world, we think about it differently than either the platforms do or the premium publishers do, because we’re kind of straddling both lines.

“Mittman’s team can pull from a vast pool of data, thanks to all those other corporate cousins in the AT&T universe, with access to big distribution audiences, live TV rights and lots more customer information and brand relationships. All that will prove even more valuable as legal gambling becomes more widely available nationally.

“I’m not a casino, I have no interest in being a casino,” Mittman said.”But  we’re  focused  on  broadly  socializing  and  normalizing the  information  in  and  around gambling, because  it  is  pertinent  to sports fans, even  those  who  are  not  betting.” 

As in, if a star player on your favorite team gets injured, even if you’re not betting on the game, you want to know that player will be out of commission. Following a recent U.S. Supreme Court decision, a handful of states have already legalized sports gambling, and as many as 20 more are expected to join them in coming months.

That’s helped drive VC interest in the sports media space, as well as companies such as Sinclair Broadcasting Group, whose CEO Chris Ripley said the company believes it has opportunities in local sports through its TV stations and its STIRR service, and in its Tennis Channel and possible acquisitions in regional sports networks now in the market.

One beneficiary of the growing access to legalized gambling is Action Network, which announced $17.5 million in Series B fundraising in late February. Action Network, as its name suggests, provides betting lines, tips, background stories and more for gamblerslooking to put money down on all kinds of sports. Here in late winter, that means bets on pro and college basketball, a bit of Europe’s Champions League soccer, and even whether undersized Heisman Trophy winner Kyler Murray will be one of the NFL’s top two draft picks.

These sites don’t have the resources to jump into battles over streaming or broadcast rights for the big leagues, but there’s plenty of interest in different sports, different competitive levels of popular sports and even different kinds of content about all of those contests, teams and personalities. For publishers too often hoist on the petard of Facebook and YouTube, the singular attraction of sports content is the way it can help reduce their potentially fatal Duopoly dependence.

Overtime, for instance, claims more than 550 million views across its own site and social media each month. Overtime just announced it has raised $23 million from big VCs such as Andreessen Horowitz and Spark Capital, the New York media company MSG Networks, and NBA stars Victor Oladipo, Carmelo Anthony and Baron Davis, among others.

The plan, wrote cofounder Dan Porter in a recent letter to users, is to build a “next-generation sports network,” moving beyond the highlight-reel videos from high school and college events that the company gathers through a phalanx of 1,000 paid stringers. Overtime recently expanded into women’s basketball and also sponsors its own Fortnite esports team, whose games provide even more content.

Mars Reels, which competes with Overtime for highlights from its own stringer network, also just raised money, $4.7 million, from its own big-name roster, including NBA star LeBron James, singer Drake and, there they are again, AT&T.

And then there’s the two-year-old subscription service The Athletic,whose new fundraising brought in $40 million from Comcast Ventures, the Chernin Group (which formerly partnered with AT&T on Otter Media), and Courtside Entertainment Group, which belongs to Westwood One sports-radio pioneer Norm Pattiz, among a large group of major VCs.

The Athletic’s 300 employees include an all-star team’s worth of sports journalists, including former ESPN, network and newspaper notables such as David Aldridge, Jay Glazer, Ken Rosenthal, and Stewart Mandel. That team has allowed it to run a subscription business at a time when many other sites don’t.