Sports play a huge role in our society – from kids participating in all kinds of competitions to diehard fans paying hundreds of dollars to see their favorite team.
So it stands to reason that sports are important for the biggest media broadcasters. That includes:
- Disney (NYSE: DIS) and its ESPN network. Its major properties include the NFL (football), NBA basketball, MLB baseball and NHL hockey.
- Fox Corp. (NASDAQ: FOXA), which broadcasts much of its sports content on Fox TV network. Its major properties include the NFL, college football, MLB and Nascar.
- Comcast (NASDAQ: CMCSA), which broadcasts much of its sports content on NBC TV network. Its major properties includes the NFL, the NBA, college football and the Olympics.
- Paramount Skydance (NASDAQ: PSKY), which broadcasts much of its sports content on CBS TV network. Its major properties include the NFL, college basketball, UFC fighting and PGA golf.
- Warner Bros. Discovery (NASDAQ: WBD), which broadcasts much of its sports content on TNT. Its major properties include college basketball, college football and the NHL.
Money for eyeballs
These networks pay billions of dollars for the right to broadcast sports events, and there’s a good reason why. Sports, especially live competitions, draw viewers. Of the 100 most-watched TV telecasts last year, 85 were sports related, according to Nielsen, as cited by The Wall Street Journal.
So broadcasters can make big money on fees they charge to cable carriers and to people watching on streaming platforms. Of course advertising also is a major revenue stream for the broadcasters.
Around 15%-20% of Disney’s revenue comes from sports, compared to 20%-25% for Fox, 10%-15% for both Comcast and Paramount, and 5%-10% for Warner Bros., according to Artificial intelligence service Grok.
It estimates that sports is highly profitable for Disney, moderately profitable for Fox, marginally profitable on TV but loss-making on streaming for Comcast, profitable on TV but loss-making on streaming for Paramount, and marginally profitable or loss-making for Warner Bros.
Strengths and weaknesses
ESPN benefits from its huge size and high affiliate fees (those paid by cable carriers). Fox benefits from a lean sports portfolio and limited streaming exposure. Comcast benefits from strong NFL and Olympics revenue, but suffers from losses by its Peacock streaming service.
Paramount benefits from its NFL and college basketball properties but suffers from losses at its Paramount+ streaming service. Warner Bros. suffers from its loss of NBA coverage this year and high costs for the NCAA (college) basketball tournament.
Clearly sports broadcasters haven’t yet found a way to profit much from streaming, and they might ultimately have to raise prices to do so. The streaming services should attract plenty of customers, as viewers continue to shift away from cable service to streaming.
One concern for the broadcasters going forward is the explosion of rights fees they must pay to air major event. The NBA sold its media rights last year in an 11-year, $76 billion deal, up from a nine-year $24 billion package previously. It will be difficult for broadcasters to pay such lofty prices going forward, especially if they can’t make good money off their streaming platforms.
The broadcasters also now face competition from big technology companies. Alphabet’s YouTube, Amazon and Apple all are showing games from top leagues.
The traditional broadcasters have a big market in which to compete, but high costs and increasing competition will make it difficult.
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