Subway Teams with HTS to Increase National Reach Through Local MLB

Local MLB TV deals give brand national platform

By John Ourand, Staff Writer

Published June 11, 2012, Page 1

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 For Subway CMO Tony Pace, one of the most efficient ways to make a national media buy is to go hyperlocal. And the best way for Subway to go hyperlocal is to attach its brand to local telecasts of MLB teams.

That’s why Pace — through Subway’s media buying agency MediaCom — cut a deal with the Fox Sports-owned sales unit Home Team Sports to advertise in the local telecasts for all 29 U.S.-based MLB teams. HTS sells national ads around MLB, NBA and NHL games for most regional sports networks, whether they are operated by Fox or not.

The yearlong deal is valued in the mid-seven-figure range. Though the ads will appear locally, the spend comes out of Subway’s national budget.

Photo by: CATALYST

KEY DECISION-MAKERS

■ Tony Pace, CMO, Subway

■ Martin Blich, Managing Partner, MediaCom

■ Kyle Sherman, Executive Vice President, 
Home Team Sports

■ Stephen Ullman, Regional Vice President, 
Home Team Sports

“Many of our local markets buy their local team,” Pace said. “But we thought there was an opportunity to weave together all of those relationships by working with the folks at Fox across all of the team relationships that they have. We look at it as an unwired network.”

The campaign will feature in-game and postgame activation. Subway also will be presenting sponsor of the FSN series “The Boys in the Hall.”

“To us it delivers the kind of national audience size that we want and it complements what our local markets are already doing,” Pace said.

The deal represents an increase in media spending for Subway. The brand is not cutting back on its national budget and had a big presence, in particular, during the NBA playoffs on ESPN and TNT.

But the deal also shows how Fox is trying to use its local markets to create a broadcast-style national network by grouping together all of the regional sports networks. The HTS pitch to Subway is that a deal would give national reach, while tapping into the passions of the local fan bases.

“Most people who own a local franchise can’t afford to buy 150 Yankee games,” said Stephen Ullman, regional vice president of strategic partnerships with HTS. “If you own 10 Subways inside Pittsburgh and Subway has an ad running on the ESPN Yankees-Red Sox game, how does that help you? It doesn’t help you at all. The guys that come into your store may watch ESPN, but nowhere near the amount of people who are wearing Penguins and Pirates hats.”

HTS has sold similar seasonlong national schedules to brands like Aflac, AT&T, Geico and MillerCoors. But what makes the Subway deal unique is an online aspect that attaches Subway to a dedicated part of FoxSports.com centered on “The Boys in the Hall,” which features profiles of current and future hall of famers, polls and fan forums. Subway’s brand also will be attached to elements around the series on Facebook and Twitter.

KEY DEAL POINTS

■ Subway buys ad time in local telecasts for all 29 U.S.-based MLB teams.

■ Cost is in the mid-seven-figure range.

■ Campaign features in-game and postgame activation.

■ Subway messaging gets integrated into FoxSports.com’s “The Boys in the Hall” series.

“We think that’s a perfect fit for one of our marketing approaches, which is this notion of ‘Where Winners Eat,’” Pace said. “We wouldn’t have gotten those kinds of things done if we just did local deals in the local markets.”

Subway’s local franchisees often buy time in local sports telecasts. This buy will not stop that from happening. In fact, HTS says Subway opts not to run national spots in specific markets where local franchises already have bought time.

HTS also promised to hold some of the national messaging out of telecasts where local franchises have bought a lot of spots. Ullman described it in similar terms as a broadcast network working with affiliates.

“There’s always national and local working in tandem, particularly in broadcast networks,” Ullman said.

The deal is focused on baseball. Pace said he has looked into extending it to the NBA and the NHL locally but has not made any moves yet.

“There are some peculiarities about what makes sense for us from a seasonality standpoint,” he said. “During the summertime, it’s the sport’s Sahara Desert in terms of how you reach big numbers of people. This was a great way to do that.”

MLB Delays Decision on Nats TV Deal

MLB extends deliberations as MASN, Nationals said to be $70M apart on new rights deal

By John Ourand, Staff Writer

Published June 11, 2012, Page 4

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MASN and the Washington Nationals still are so far apart in their media rights fee dispute — there’s a $70 million annual difference between the two sides, sources say — that Major League Baseball has decided to extend its deliberations by a month.

Originally, the league planned to decide how much MASN should pay the Nationals for their media rights by the beginning of June. Now, MLB has told both sides not to expect a decision until July, sources said.

It’s not clear why MLB has held off on making a ruling, especially since the league originally heard testimony in April. But sources say the league has a concern that any decision will lead to a lawsuit from one side or the other.

Plus, other MLB teams are watching the dispute closely, fearful that a ruling in favor of MASN could set a new lower bar for local TV rights. In the past few years, the market for local baseball rights has been scalding hot, punctuated by deals like the Texas Rangers’ 20-year, $3 billion pact with Fox Sports Net and the San Diego Padres’ 20-year $1.2 billion deal, also with FSN.

Right now, the two sides are far apart, and there doesn’t appear to be much middle ground.

The Nationals have told MLB that they should receive an average of more than $100 million a year in media rights, a fee that would put the team on par with other teams in the top-10 media markets.

MASN said the fee should average about $35 million a year, citing the team’s low TV ratings and tepid fan base. Plus, MASN believes the fact that Baltimore Orioles games are carried in the Washington, D.C., market should depress the rights fee going to the Nationals. MASN’s offer represents a 20 percent increase over the $29 million a year it now pays the Nationals.

In addition to the rights fee, the Nationals hold a 13 percent equity stake in the regional sports network, adding 1 percentage point annually until it peaks at 33 percent.

Complicating matters is a parity clause in MASN’s contract requiring that the Orioles receive exactly as much in rights fees as the Nationals. That means if the Nationals wind up with a new deal worth $100 million a year, the Orioles also would get $100 million a year.

Cable industry sources have questioned whether MASN could afford both contracts, given the long-term carriage deals they already have signed with cable and satellite operators. MASN gets about $2.14 a subscriber per month, according to figures from SNL Kagan. That’s higher than only a handful of RSNs.

Plus, MASN has run into trouble expanding its footprint in North Carolina, where Time Warner Cable has refused to give it basic tier carriage. Just last month, a federal appeals court upheld a Federal Communications Commission decision that allowed Time Warner Cable to keep MASN off of its basic tier, according to published reports.

MLB created an ad hoc committee of owners from the New York Mets, Pittsburgh Pirates and Tampa Bay Rays to come to a decision. Rob Manfred, MLB executive vice president for labor relations and human resources, is leading the committee.

As part of their MASN deal, the Nationals can reopen their media rights deal every five years. The two sides have been negotiating since the end of last season. As part of the contract, if the two sides can’t reach an agreement, MLB would settle the matter via an arbitration-like process.

Fox In Line for Coliseum Rights

USC sees Fox Sports as likely candidate for Coliseum’s advertising, sponsor inventory

By Michael Smith, Staff Writer

Published June 11, 2012, Page 10

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Fox Sports could pick up all of the permanent advertising and sponsorship inventory in the Los Angeles Memorial Coliseum as part of a new agreement with the University of Southern California.

It was nearly a month ago that the Coliseum Commission, the public group charged with overseeing the 88-year-old stadium, turned over day-to-day control to USC as part of a long-term lease that runs through 2054.

Fox already represents the Trojans’ multimedia rights, which include all temporary signage inside the Coliseum. But USC’s lease now gives it control over all permanent inventory in the stadium for all events, and the school expects to be looking to outsource those rights as well.

“It would make sense to go with Fox because they’re already representing the brand and our athletics department in the marketplace,” said Kristina Raspe, a USC vice president in charge of real estate development and asset management.

The lease takes effect July 1, so the school won’t be in a position to outsource those rights officially until then. USC is looking to hire a general manager and a chief financial officer for the stadium and the Los Angeles Sports Arena, which is included in the lease as well.

If Fox expands its rights at the Coliseum as part of a new arrangement with USC, it would likely be separate from its multimedia rights deal with the athletic department.

Fox’s inventory in the Coliseum now essentially is limited to what temporary signs it can create on football game days for the Trojans. That includes mostly wraps around the sideline walls, green spaces, goal posts, field-goal nets and part of the signage on the back of the video board.

When the Coliseum is the site for other events, such as international soccer matches, Fox currently has no rights.

But the new lease agreement puts all of that inventory into USC’s hands and, potentially, could land with Fox, giving the media giant access to all of the inventory in the stadium, including venue naming rights and potentially the ability to sell founding partnerships.

USC’s Raspe said the school doesn’t expect the new inventory to be a big revenue producer, but it would help offset some of the considerable investment the school plans to put into the stadium.

“The Coliseum represents the heart and soul of USC athletics, it represents the USC brand,” Raspe said. “There has been some negative publicity associated with the Coliseum over the years and our goal is to restore the Coliseum to its glory years. Right now, it doesn’t reflect USC, our campus, our academics or our athletics.”

Much of the $70 million USC has budgeted for the Coliseum will go toward maintenance items that have been put off over the years.

“We’re talking about falling concrete, concession areas, locker rooms,” Raspe said.

Raspe said the school will issue a request for proposal soon after July 1 for an architect to take the lead on the improvements to the Coliseum.

Reds On Pace for Highest-Rated Season Ever on FOX Sports Ohio

The Cincinnati Reds got back to winning baseball after a 2 game schneid and elevated a game over their 2^nd place rival with their win over the Pittsburgh Pirates. Airing on FOX Sports Ohio, this was the top program during primetime with a 9.8 HH Rtg. (#2 total day). This rating marks the 21^st time the Reds have garnered a 9 HH or better. This compares to last season in which for the full season, the Reds reached that number 28 times. Through 50 games this season on FOX Sports Ohio, the Reds are up 6%. If this pace continues, the Reds would have their highest rated season ever on FS Ohio. 

(Thanks to Brian Traynor, HTS Research, for the write up.)

B&C Honors Women in the Game

Championing some extraordinary executives who are scoring big time in the world of sports TV

-- Broadcasting & Cable, 6/4/2012 12:01:00 AM

There is a common thread among the talented producers, execs, strategists and researchers, investors, and operations and business affairs execs who populate the 2012 B&C/MCN Women in the Game honorees. It is this: In a sports TV world for which the word "exploding" remains an understatement, these women are the consummate multitaskers. They're not just busy keeping the TV world chock full of exciting action; they are often balancing several plates in the air, inspiring creativity or fostering fertile environments where great sports TV ideas can happen. When it comes to making sure viewers can always watch the best and the most, these women are ultimate fighting champions. And that's what truly makes this a list of industry All-Stars.

Karen Brodkin Executive VP, Business and Legal Affairs, Fox Sports Media Group Last year, when she earned her first Women in the Game honor, Karen Brodkin, then senior VP, business and legal affairs for Fox Cable Networks, was busy finishing up a 10- year deal with the Pac-12 conference.  This year, as she is being honored once again, Brodkin has an even bigger title, and has been even busier, inking new and renegotiated major sports media rights deals for Fox Sports Media Group.  In the past year Brodkin was directly involved in finalizing a seven-year multimedia rights deal for Fox with Ultimate Fighting Championship, the world’s largest mixed martial arts organization. She also took part in renegotiating with Major League Baseball to get the league to schedule more games on Saturday nights for Fox’s new live sports block, and with the NFL on a nine year extension to the current TV rights deal that was set to expire after the 2013 regular season.  “I’ve become a lot busier,” says Brodkin, adding that the length of these new deals and the digital components make negotiations much more complex.  And as a good leader always does, Brodkin is quick to praise her team. “I have a group of extraordinarily talented lawyers working for me, handling the day-to-day stuff. That allows me to think more big-picture.”   Marie Donoghue Senior VP, Global Strategy, Business Development and Business Affairs, ESPN Marie Donoghue went to law school at Columbia University even though she didn't plan to practice law. "I thought of it as continuing my liberal arts education -- I wanted to learn how to think differently," she says. More   Christy King VP, Digital, Technology Research & Development, UFC The Ultimate Fighting Championship had a busy 2011, with the sport's burgeoning popularity resulting in a landmark deal with Fox, giving mixed martial arts its widest reach yet. As part of the agreement, the UFC was set to increase its original programming output from 90 to 350 hours per year. More   Paula Madison CEO, Los Angeles Sparks; Investor, Africa Channel Retirement has been anything but quiet for Paula Madison, who one year ago departed her post as executive VP of diversity at NBCUniversal. More Bernadette McDonald Vice President of Broadcast Operations, Major League Baseball Millions of Americans move repeatedly as they change jobs again and again across a lifetime. But Bernadette McDonald, Major League Baseball's VP for baseball operations, has been in her current role since 2001 -- amazingly, she had her career path figured out by the end of high school and managed to live it. More   Christina Miller Senior VP and GM of NBA Digital; Senior VP, Turner Sports Strategy, Marketing and Programming Christina Miller knows how to multitask. Given the opportunity to join Turner Sports in 2009, she jumped at the chance. "Change is good," she says, adding that she grew up in New York City in a die-hard sports family. More   Robyn Miller Senior VP of Marketing, Tennis Channel Robyn Miller's life choices did not seem like they were leading to the post of senior VP of marketing for Tennis Channel. And it's not just that she's "a little embarrassed" to admit she's one of the few employees who doesn't play the game. ("I've taken a few lessons, but I suck," she says.) More   Lydia Murphy-Stephans VP and General Manager, Pac-12 NetworksLydia Murphy-Stephans has been busy in her new role at Pac-12 Networks. She has spent the past four months putting together an infrastructure of engineering, operations and facilities people. Now she is getting into the planning of programming and the hiring of on-air talent for the one national and six regional TV networks she oversees that will televise more than 800 hours of live Pacific 12 conference college sports events annually when they premiere in August. More   Deanna O'Toole Executive Director of Business Affairs, CBS Sports To say that Deanna O'Toole wears many hats as CBS Sports' executive director of business affairs is like saying the Super Bowl has a fair amount of fans. More   Molly Solomon Coordinating Producer, NBC Olympics; Executive Producer and Senior VP, Production and Operations, Golf Channel Molly Solomon's life is "a little chaotic" right now. Of course, any working mom might say that...especially if she has triplets...and especially if her family is about to relocate...and especially if it's an Olympic year and she is producing the television coverage for NBC...and especially if she was just named executive producer of the Golf Channel (the first woman to be executive producer for a national sports network) and is doing that job while producing the Olympics. More   Sharon van Zwieten Senior Executive Producer of News, Univision Deportes When Sharon van Zwieten was hired as senior executive producer of news at Univision Deportes last August, she was given eight months to launchUnivision Deportes Extra, a one-hour nightly Spanish-language sports newscast. Both Univision Deportes, Univision's new 24/7 sports network, andExtra premiered on April 7. More Melinda Witmer Executive VP and Chief Video and Content Officer, Time Warner Cable Time Warner Cable has long been a reluctant player in the sports arena. The MSO was the lone major holdout on the NFL Network, and it traditionally would not spend big on sports rights. But when executive VP and chief video and content officer Melinda Witmer decided the company needed to step up to the plate

MLB Ratings on FSN Remain Red Hot Though May

• After 658 local games the O&O average is up +18% from the same point in time last season, 3.72 over a 3.17 DMA average.

• The Rangers remain way on top of their division and the group (167K HHs) as their HH rating is up an impressive +86% year-year; 6.48 v. 3.49

• The Tigers (155K HHs) remain strong as their season average HH rating is up +48%; 8.40 v. 5.67

• The Dodgers have a commanding lead and viewers are watching (116K HHs) as their HH Rating is up +67%; 2.09 v. 1.25

• The Cardinals continue to show their strength (111K HHs) as their HH Rating is up +1%; 8.86 v. 8.79

• The Rays, Diamondbacks, Royals, Reds, and Braves on SS continue to be up year-to-year 

(Courtesy of Lori Rosner, HTS Research)

New Big 12 TV Deal Unsigned-- What's the Hold up?

Sports Business Journal
By John Ourand & Michael Smith

Published June 4, 2012, Page 3

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It was two and a half months ago that ESPN and Fox agreed to a 13-year, $2.6 billion deal with the Big 12 Conference.

What’s the catch? The agreement with ESPN and Fox is in the lawyers’ hands. GETTY IMAGES

But as presidents and athletic directors left the Big 12 meetings last week in Kansas City, the deal still hadn’t been signed, and insiders say an announcement could be weeks away, if not longer.

What’s the holdup? Blame the lawyers.

Sources say the contract is now in front of the attorneys and will lead to a signed deal eventually. But the original agreement in March created a level of strife with some in the Big 12 because the conference declined to take the rights to the open market.

The old ESPN deal with the Big 12 was set to run through 2015-16. While the new terms represent sizable increases in revenue for the conference, some league officials wanted to wait and see what the open market would bring in a few more years rather than tie themselves up in a long-term deal. There was a concern within the Big 12 that the conference might have left some money on the table by not waiting to open up the bidding to other networks. In the past few years, other sports rights holders have found that open-market bidding has helped push rights fees higher.

The problem was that the Big 12 couldn’t have gone to the open market with a full rights package. The only package that was expiring was ESPN’s broadcast-only football package. Last spring, Fox tied up the conference’s cable rights through 2024 as part of a long-term deal. The conference would not have been able to take those rights to market.

Sources said a round of new talks never really got off the ground and the three parties are back to hammering out the details of their original agreement — a single contract that outlines the specifics for ESPN and Fox, which have a similar joint arrangement with the Pac-12.

“This is just a radically different kind of deal,” one source said. “What started with maybe 100 issues is down to about a dozen. It’ll get done.”

All this is going down just as the conference looks ahead to the change in commissioner from interim Chuck Neinas to the newly hired Bob Bowlsby, whose first day officially is June 15.

The new television deal will pay the Big 12 schools an average of $20 million per year, making it among the most competitive college sports deals on a per-school basis. Big 12 schools also have the ability to monetize games that are not selected by ESPN or Fox.

Though the total value is not as rich overall as the Pac-12’s $250 million-a-year deal or the ACC’s recently completed contract with ESPN for an average of $240 million, the Big 12 is distributing the revenue to only 10 schools, not 12 like the Pac-12 or 14 like the ACC.

The average of $20 million per school per year is a sizable jump from the $15 million-a-year average the schools had just a year ago when the conference first extended its Fox deal, which at the time was separate from the ESPN deal.

The Big Ten and Pac-12 will distribute a little more than $21 million per school per year as part of their media deals, while the ACC and the SEC are around $17 million per school annually.

The SEC is in the midst of negotiating increases for its media rights agreement with ESPN, which is expected to include a new SEC cable channel. The Big Ten and Pac-12 schools do not have the ability to monetize any of their football and basketball games because they have pooled their rights with the conference to form TV networks. The ACC and SEC, like the Big 12, currently have greater flexibility to monetize games not picked up by the networks, either through pay-per-view, local TV broadcasts or online broadcasts.

Several reports of possible Big 12 expansion have mentioned Florida State and Clemson from the ACC, Louisville from the Big East, and independent BYU as potential targets, but the conference’s leaders have consistently stated their desire to stay at 10 schools for the near future.

TCU and West Virginia were added after the conference lost Texas A&M and Missouri to the SEC, and earlier lost Colorado to the Pac-12 and Nebraska to the Big Ten. TCU and West Virginia begin play in the Big 12 this fall. Missouri and Texas A&M start playing in the SEC this fall as well.