During last week’s “Marchand and Ourand Sports Media Podcast,” hosts Andrew Marchand and John Ourand asked Michael Nathanson, co-founder and senior director of research firm MoffettNathanson, to share his vision for the future of sports media. Here are some highlights from that conversation at Sports Media 2025:
Ourand: The year is 2025. Who’s next?
Nathanson: It will be the first year of the new NBA contract signed by Disney, Turner, Apple, Amazon. Who’s ready is Adam Silver. All your stories at age 25 will be about how great Adam Silver was… how he did a great job of extracting money from every player in the industry to make the NBA the most valuable league next to the NFL. ’25 is the year of the NBA.
Nathanson: Baseball is in decline, because I think RSN, that universe of 20, 30 million, loss, I don’t know how they turn to a better model. And baseball is such a local sport and such a long season that I don’t know how the league recovers from what is happening to RSN’s business. It will take some time to rebuild. I always say that. I am a great athlete. I really do, but I have YouTube TV, I’m a Yankee and Ranger fan, and I’ve gone the last two years without a game in the season. You might think I’m crazy, but that’s the decision I made. I watched all my Ranger playoffs and I watch all the national games, and baseball goes on forever, so I’ll watch it — ESPN game of the week or something. But I think the ribbon cutting will really hurt baseball more than any other sport.
Marchand: When will ESPN go direct to consumers? We bet on this. I said within five years. We started last year, so let’s just say we’re four years away from ESPN going direct-to-consumer.
Nathanson: I assume it will be on cable. Start with that. It will be on cable. … So I’d say it’s been five years because our math is, you probably want a world where half the US is penetrated with some kind of pay TV. Currently, it is 130 million homes. We have 80 million in pay TV. In four years it will be 60 million. So, right at point 25, 26, when you have a decision, look, half the world has never taken pay TV, half has. The half that has, is the subscription. So I think it’s been four to five years. The question I can’t answer is what is its price because you have to be very careful about the price.
Michael Nathanson, co-founder of MoffettNathanson, said the NBA will be praised in 2025 while baseball will be looking for a better media model.
Ourand: What would be the price? If you look at the Red Sox getting $30 a month in 2022, what would ESPN go for? And as a sports fan, I don’t watch all my sports on ESPN, so suddenly if I have to cut the cord, I’ll have to get MASN or whatever the local rights are going to be for $40 a month and ESPN for $50 a month.
Nathanson: Look, I can’t understand if someone who’s a sports fan doesn’t have a bundle of cables. I don’t know why you would combine what you described to meet a sporting need. Yes, I live without network YES. I’m guilty. But I’m not going to get rid of my bundle and get seven à la carte streaming services. That just doesn’t make sense. We always thought you had a package that served its purpose. Why you actually want to create an alternate universe, get people to stay in the bundle, look at the prices, look at the offer. Again the problem with ESPN, if it’s such a high price, you might as well give up. Maybe you’re really, really worried about churn because not everyone will need to subscribe to the same content. I’m not a college sports fan, the NFL is over and then maybe I’ll black out. Who knows? So it’s really interesting. I always think they have to go very slowly.
Ourand: I have to ask you about Warner Bros. Discovery because Turner was taken over by [David] Zaslav. Zaslav, a great sports fan, entered. Everyone I know in the sports media business says, “Let’s go.” And they were deathly quiet. They were not included in the Big Ten rights. Formula 1, they were not involved in it. Any of these major football leagues. They are simply not included. What am I reading into that?
Nathanson: They have a lot of influence and their priority is to increase cash flow, not additional sports costs. Their biggest expense in the future will be the NBA. They need to get an NBA application for TNT. He may be a big sports fan, but that doesn’t really matter. The company is highly indebted. Their main activity is the cable network. Cable networks face pressures that you are well aware of. Therefore, it has to manage its costs and cannot overpay for sports rights. And actually the world he sees before him is NBA, baseball, hockey, NCAA. That is his hand and I don’t think he will deviate from that hand. On the international level, which we don’t talk about much, the question is what is he doing on the international level? There’s also a bunch of rights, including the Olympics. But I really don’t think he is there to invest and lose money in sports. That’s not his way of working. He must become more rational.
Marchand: We talked about Amazon and Apple. It looks like Apple will get the Sunday Ticket. They may also be included in NFL Media. We’re just waiting for that deal, if it’s going to happen. Amazon has “Thursday Night Football” and has the Yankees locally on Friday nights. … And then they have all over the world, a lot of football, a lot of cricket. So which plan do you like better from their point of view?
Nathanson: Amazon’s plan against Apple, because Amazon to me, if you look five years down the road, connected TV will be one of the dominoes of how you watch video. It is now. They have Amazon Prime, Amazon Fire, Amazon TV. Apple, despite all its promises, is nowhere to be found on connected TVs. Their Apple Box is literally 10 times more expensive than it should be. I’m amazed that Apple hasn’t been more aggressive in making connected TVs. … Whereas Amazon has a whole infrastructure they’re building to connect TVs and advertise to basically make your Prime purchase more valuable.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ and read his weekly newsletter and listen to his weekly podcast.
