Canceled College Sports Games Put Millions on the Line for ESPN

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You almost feel sorry for Mark Packer and Wes Durham. The two veteran broadcasters have what might seem like dream jobs, chatting about college sports for two hours every morning for the Walt Disney Co.-owned ESPN empire. These days they air their show separately from their respective homes, and you can hear the frustration in their voices when yet another athletic league cancels its season or a high-profile school delays its start date because of the coronavirus.

“We’ve talked about this almost ad nauseam,” Packer told his colleague after football powerhouse Clemson University said its students won’t return to campus until late September. If students aren’t even able to walk across a quad to class, “how can you have a football game, a baseball game, a tennis match, whatever it happens to be? That’s a very difficult question.”

It’s one echoing throughout the ESPN operation these days. No major media company has bet more on college sports than ESPN. The company airs college games on 10 different channels, including the ABC broadcast network and its ESPN+ streaming service. It runs specific networks for the Southeastern and Atlantic Coast conferences and for the University of Texas. Last season more than half of all college football viewers tuned in to one of ESPN’s outlets.

But this year the season is completely up in the air. Some conferences, including the Ivy League, have canceled fall sports entirely. The Pac-12 and Big Ten have eliminated games with schools outside of their conference, so they can limit travel and start their seasons later. That’s squashed popular matchups such as Ohio State vs. Oregon and Penn State vs. Virginia Tech.

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The college crisis comes as ESPN is benefiting from the return of professional sports, after months of airing old games, Korean baseball, documentaries, and an Eagles concert. The National Basketball Association and Major League Soccer are even playing their Covid-shortened seasons at the company’s Wide World of Sports facility near Orlando.

ESPN, which declined to make any of its executives available for this article, said the games canceled so far have mostly involved those on its online channels, or those coming from conferences shared with other broadcasters such as Fox Corp. So the lost games on ESPN could be fewer than it seems, it said. The network could also move up lesser matchups from its online outlets to run in place of canceled games.

Still, many decisions about the upcoming season have yet to be made. Unlike the professional leagues, which have one central commissioner and a relatively small number of teams, control of college athletic schedules is spread out among dozens of schools, presidents, and conferences. “It’s harder to get consensus,” says Patrick Crakes, a former Fox Sports executive who’s now a consultant.

College football accounted for about $793 million in advertising at ESPN, ABC, and their related networks, estimates Standard Media Index, which tracks advertising spending. That’s almost four times as much as their closest rival, Fox.

Big sponsors including AT&T Inc., Dr Pepper, and State Farm depend on college football for billions of ad impressions a year, according to ISpot.tv. College GameDay, a program in which ESPN commentators travel from school to school each week, is a Saturday morning staple for many Americans. The network says it still plans to take that show on the road, though longtime host Lee Corso, who’s 84, may appear from his house. Home Depot Inc., the main sponsor, says it will continue to be involved and looks at this as an “opportunity to engage with college football fans in new virtual ways.”

ESPN and other networks are doing their best to persuade advertisers to stick around, moving spots from one sport or channel to another, says Sam Bloom, chief executive officer of Camelot Strategic Marketing & Media, which helps companies including TurboTax, Whole Foods Market, and 7-Eleven make ad decisions. “For some of our advertisers, it’s forcing them to rethink,” he says.

Chris Wujcik, vice president for client consulting and services at GMR Marketing in New Berlin, Wis., says sponsors are mostly in a wait-and-see position. If entire seasons are canceled, it will be difficult to find programs that reach audiences of a similar size. If top-tier games are replaced by less-followed matchups, the networks will probably offer their sponsors other perks such as digital ads or even signage in stadiums to compensate. “Everyone’s going to be really creative with what they offer,” says Wujcik, whose firm’s clients include Hershey Co. and Nissan Motor Co.

The loss of postseason games, such as the Rose Bowl and Sugar Bowl, which accounted for about a combined $345 million in ad revenue last year for ESPN and ABC, would be painful. ESPN was scheduled to air 39 bowl matches. One, the Celebration Bowl, has already been canceled.

The National Collegiate Athletic Association said it would resume discussions in August about whether some of its championships will still be played. “We all remain deeply concerned about the infection trend lines we see,” NCAA President Mark Emmert said in a statement on July 24.

It’s not only college play that’s been disrupted. After losing two of the league’s 26 teams when players tested positive, Major League Soccer has continued to play in Orlando with no new cases since July 13. Major League Baseball, which is playing its games on the road, canceled several at the start of its season after players from the Miami Marlins tested positive.

ESPN’s cable networks could see ad revenue fall this year by 12%, or $320 million, says Scott Robson, an analyst for S&P Global Market Intelligence. Much of that could come from college sports. “We’re going to see similar declines at the rest of the programmers in this quarter and the current quarter,” he says. “It’s a big deal.”

With a loss of revenue such as that, ESPN, which coped this year in part by furloughing workers and asking on-air talent to take 15% pay cuts, may resort to layoffs, Crakes says. Throughout the pandemic, cable TV companies have continued to collect monthly bills from customers and remit programming fees to the sports networks, even though live sports have been off the air. If ESPN and its sister channels can’t deliver the contracted hours of live sports, cable operators could ask for some of that money back. Worse, cable customers, fed up with high monthly fees, may downsize to lower-priced TV packages or cancel service entirely. Those pay-TV subscriber fees are a big number for Disney: almost $10 billion from ESPN-related channels alone last year, or three times what its networks bring in from advertising. A recent UBS Securities survey found 14% of cable subscribers would likely cancel the service if college football didn’t happen.

“This could accelerate cord-cutting,” says Doug Perlman, who consults with leagues over media deals at his company, Sports Media Advisors LLC. “There will be more people who say, ‘There’s no college football. It’s time for me to move on.’ ” —With Lucas Shaw

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