How the landscape of sports media is changing

Many Portland and Seattle sports fans were angry last month after Xfinity announced they would have to pay more to watch Trail Blazers, Mariners and Kraken games on cable. As the Washington Post reports, regional sports networks are feeling the pressure as streaming services cut into their revenues from broadcast rights. And with immersive reality domes expected to broadcast NBA and NHL games in the near future, the experience of sports viewing could be set to dramatically change.

Joining us to talk about the rapidly changing landscape of sports media is Lauren Anderson, director of the Warsaw Sports Business Center at the University of Oregon.

Note: The following transcript was created by a computer and edited by a volunteer.

Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. Many Portland and Seattle Sports fans were angry last month after Xfinity announced they’d have to pay more to watch Trail Blazers, Mariners and Kraken games on cable. It was just the latest reminder that regional sports networks and cable providers are under a lot of financial pressure these days. Lauren Anderson is the director of the Warsaw Sports Business Center at the University of Oregon. She joins us now to talk about the rapidly evolving landscape of sports media. Welcome to the show.

Lauren Anderson: Hi, thanks for having me.

Miller: It’s great to have you on. What was the business of sports broadcasting like at the very beginning, pre-cable?

Anderson: I mean, pre-cable, if you go all the way back to the beginning, sports were on tape delay. Who remembers a time where you actually tuned in and watched things on tape delay? The Olympics were probably the first case that anyone would remember, but broadcast wasn’t simulcast and it wasn’t live cast and it was when we could put it in a prime-time hour for the most viewing.

Miller: And then cable arrived and it changed everything? It seems like the rise of cable networks were the first really big disruption to that early model. What did cable mean?

Anderson: Well, cable meant there were many more hours to program, and with all the needs for content, live sports and a variety of sports really became the opportunity for these new channels to fill the airwaves. You think about it, ESPN started with Australian Rules Football.

Miller: Right. But at a certain point, the model shifted to regional sports networks. What are they?

Anderson: RSN’s– Regional Sports Networks – are really the networks that dive into a local geographic community to pick up all the sports that are available and relevant to those consumers in that area.

So, with the PAC-12, for example, how do you display not only the big revenue-generating sports, but also the full array of sports that are at our PAC-12 colleges, giving more of your Olympic sports the opportunity to be seen and shared across the airwaves. Same thing in Portland, for example, with our…

Miller: You’ve been cutting in and out a little bit, unfortunately. But if I could just go back. It seems like there are a lot of reasons here, but what are the reasons that regional sports networks are in some serious financial trouble these days?

Anderson: Well, part of the reason is that the model is shifting and the regional sports companies, since they rely on the cable distribution, the viewership numbers are dwindling. So as the numbers dwindle, it’s a less appealing product for advertisers. And then how do you justify the high cost that you’re paying for the broadcast rights versus creating an ROI [Return on Investment] on those with fewer viewers seeing those games?

Miller: So let’s get to the basic calculus that a cable provider like Infinity went through when it came to their deal with Root Sports Northwest. Customers are going to have to pay something like $18 a month more if they want to be able to watch Blazers or Mariners games. So what is Xfinity thinking here? And what are teams like the Blazers or the Mariners thinking?

Anderson: $18 a month, that’s serious revenue for the cable company. If the RSN isn’t seeing those eyeballs, they don’t want to pay the same amount to Comcast for fewer eyeballs. So therein is the rub, is that it’s where the money is going, and as people are cutting cords and leaving cable and finding alternate ways to watch and consume their sports, that’s where the revenue is shifting.

Miller: How much, say, does a team like the Blazers or the Mariners have in terms of how cable companies package or price these regional sports networks, the channels that broadcast their games?

Anderson: They’re not in control of that part of the mix. The team gets to cut the deal with their RSN, so the Blazers can cut the deal with Root for their money, but they can’t go back and say, ‘Hey, Xfinity,  it’s $3.00 a consumer versus $5.00 a consumer.’  That’s not a piece of the equation they’re in. That’s the conversation between cable and broadcaster.

Miller: You know, it does remind me, in the big picture this last spring, the Phoenix Suns and WNBA’s Phoenix Mercury, they announced that all of their games this season are going to be available on broadcast TV. The Jazz are doing something similar. So bucking this trend of having fans have to pay for games now, in some cases, having to pay more for games. But I can imagine a team, a franchise thinking about this in opposing ways. On the one hand, they’re foregoing TV-deal money, broadcast rights money. On the other hand, they might be gaining fans for life, kids, maybe whose parents can’t, or won’t pay for them to watch and who might then say, go to games when they’re older.

What do you think about this double edged sword?

Anderson: I mean, it’s super interesting and I actually think in terms of fandom it is a very interesting conversation that we have a lot and  actually the trend has been to more of this sort of old-school, traditional ‘over the air’ broadcasting, like from the teams you mentioned. If you lose fans long term, all your other revenue streams are going to decline.

So it’s really an interesting thought about what the economics of sport are going to look like down the road, whether it’s two years or five years. But to your point, accessibility is huge. If fans don’t have the ability to consume a game, we all know it’s very expensive, for some families unattainable, to get to a live event. So if you’ve taken away their ability to watch it at all, then there are so many other choices, fans are going to pick something else and then your fan base declines and then other things are going to fill their time and space. With such a limited attention span, I really actually think it’s quite genius to go back to find ways to deliver the content, free, on over-the-air networks, to be able to keep part of your fan base. All that’s going to happen are the higher…

Miller: Do you assume that all the other NBA teams or other sports teams are paying close attention to what Phoenix and Utah are doing?

Anderson: I absolutely think they are.

Miller: The Washington Post had a helpful article about this recently. They had this line: “In whatever model emerges, sports entities probably will have to collect more money from sports fans to account for the missing money from the non-sports fans that came from the cable bundle.” But that made me wonder just how much more fans are willing or able to pay. Do you have a sense for that?

Anderson: I mean, again, I think it gets back to your super hardcore fans. So whether you’re ‘passionate about a team’ fan, or you’re ‘passionate about a league’ fan, versus a casual fan who may be brought further down the funnel of that super-fandom, right? Like, if it’s not accessible to other people, you’re never gonna get somebody who, in the old vernacular, ‘channel surfing. You’re not gonna stop and watch something if it’s not an option.

But, yes, it is a real thing, that there were numbers. You buy your sports bundle and you get 25 different cable channels. There was money associated with all of them, and as people are not buying those bundles, there is going to have to be somewhere, where somebody makes up the cost.

I feel that over the last several years, like the sports bundles, like the cable companies, in trying to not lose all the people, have been trying to adjust for that because you have your super basic and then your basic that might have some and then you do another step. So they’ve been trying to compensate for that, especially as the numbers of cable subscribers decline.

Miller: I don’t know if this says something about the people who I’m acquainted with or if it says something broader, but when I’ve been talking to people recently and asking around about how you’re getting games these days, how you’re able to watch games at home, it seems like the most common response was pirated streams from, I don’t know, some random Eastern European country. People don’t even necessarily know where it’s bouncing around from.

Do you have a sense for how widespread this is? And if it’s actually widespread enough to be seriously cutting into the bottom lines of these companies?

Anderson: I mean, I think it’s a concern. And it’s a trend that needs to be stopped. But I also think a lot of people are doing that because they don’t have another way to get access to the game. For example, I was in London a few weeks ago, and there was a Ducks game. It was the Ducks - Washington game. I really wanted to watch the game. My friend lives over in London and she’s a Duck. I was like, how do you normally watch it? She’s like, ‘I can’t, unless I pirate it.’ So, then you go, huh.

Well, then there’s this other part of the interesting model of, some people are trying to get it for free because that’s a work around. But there are other people who legitimately maybe would pay, but technology hasn’t set it up so that they can.

Miller: What do you see as the next big thing in sports viewing?

Anderson: The next big thing I think is gonna be a merger of, sort of an augmented reality, more of a multi viewing... I think there’s going to be a way to try and make the ‘in arena’ environment available to people outside of the arena and in different locations. I mean, I think when you start looking 5, 10 years down the road, that’s where there’s going to be some advances in technology. These conversations about rights and where they’re happening are going to level set. I mean, there’s certainly going to be a big direction in how that shifts when the next NBA contracts are signed here in another year or so. But I think all the broadcasters are looking at what the next generation is and how consumption of sport is going to be different during that next contract period. Like there’s going to be an evolution and it is all going to change and it’s who’s creative and acquires what’s right in those bundles.

Miller: Lauren Anderson, thanks very much.

Anderson: Thank you very much. It was great talking to you.

Miller: Likewise. Lauren Anderson is the director of the Warsaw Sports Business Center at the University of Oregon.

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