This year is not yet two months old but we can already see hints about the future of sports programming and delivery platforms. Some of these clues involve the continuation of ongoing story lines, while others are emerging. All of these have ramifications for college athletic programs and conferences.
Cord Cutting Continues
Nielsen Media reported at the end of January that the number of over-the-air (OTA) antenna homes has risen to 16 million, which means that at least 1 in 7 U.S. households has embraced some level of cord cutting. That number may be higher if one includes subscribers of skinny bundles such Hulu Live and YouTube TV.
As I wrote last month when speculating on a SEC-CBS extension, what is old is new again. Reach is important. Sports properties that continue to forge relationships with distribution platforms that are losing, rather than increasing, reach, will find themselves at a significant disadvantage. The Pac-12 Network’s distribution challenges are well documented. By relying on negotiating carriage deals, the conference has found itself with little reach on national platforms not named Dish Network, which might have been acceptable prior to the news last week that Dish fell below 10 million subscribers, its lowest in 15 years.
So while a 50% increase in OTA homes since 2010 may not seem like a real upward trend, my feeling is that the next eight years will look nothing like the previous years. Over-the-top services were not a thing in 2010, and OTA technology is only going to get better because ATSC 3.0 will be here soon.
ATSC 3.0 is Coming
Did you miss ATSC 2.0? You probably are not alone, so rather than defining 2.0, let’s focus on the future. CNET projects ATSC 3.0 televisions will arrive around Christmas 2020 with the technology promising “resolutions up to Ultra HD 4K TV, high dynamic range, refresh rates up to 120Hz, better reception indoors, better mobile reception, and more.” Or, more succinctly, “vastly higher quality video, for free, over the air.” Check out the 3-minute video on the CNET story and notice the use of football throughout. Sports rights on ATSC 3.0 seem primed to be big business and properties may soon want to eschew cable delivery in favor this attractive alternative.
Built on the “backbone” of the internet, ATSC 3.0 has the potential to reach mobile devices directly through a tuner in phones, negating the need to use an OTT app or streaming service. As the CNET article notes, today’s phones could be pulling in FM station signals but “the market” (wireless providers) decided phones did not need a tuner.
While that has wireless providers who make money selling data to consumers a bit skittish, it excites broadcasters who love the idea of delivering content directly to, literally, the hands of consumers. This is particularly attractive to local stations selling ad time to local businesses as well as large broadcasters such as Nexstar and Sinclair which own multiple local stations. All of these signals – wireless, television, and radio – share the same spectrum. Some companies just pay more for that spectrum than others.
If all this comes to fruition, sports rights owners who are locked up in long-term deals on cable networks may find shrinking audiences, while a property such as the NFL or the Southeastern Conference which is preparing to take an attractive rights package to market in the next few years, may find multiple bidders among broadcast networks CBS, NBC, Fox, ABC, and Stadium. Wait, what?
OTA has gone OTT
I have long been bullish about the disruptive nature of Stadium and wrote as much for AthleticDirectorU in August 2018. My enthusiasm for Stadium’s business model was heightened earlier this month when I turned on my Samsung television at home and noticed a Stadium app alongside apps for Netflix, Hulu, and Amazon Prime. Stadium is delivering its OTA digital signal, available in many markets served by its part owner, Sinclair, directly over the internet to my TV. It is an OTA signal delivered via OTT technology, and available free.
I asked Stadium’s CEO Jason Coyle about the play, and how it benefits Stadium. “It’s an important part of our overall vision – to become the most widely distributed sports network in the industry, pushing everywhere that fans are able to watch content either with or without access to traditional television,” Coyle said. “One of the key planks in our strategy is to provide our cable-style network onto key OTT platforms.”
Indeed, Stadium announced last week it had launched on SlingTV, joining Roku, Sony Vue, fuboTV, PlutoTV and other distribution partners. The play with Samsung’s TV Plus platform “delivers a very high quality experience to millions across the country in a cord cutting environment, making them a prime partner for us,” according to Coyle, who noted they are exploring opportunities with other television manufacturers.
Stadium currently holds rights deals with the Patriot League, Mountain West Conference and the West Coast Conference, offering hundreds of live sporting events through its app or website. It also has a stable of original programming, and has hired long-time college sports writers Brett McMurphy and Jeff Goodman.
One of the most innovative aspects of Stadium is its aggressive pursuit of ATSC 3.0, something Coyle addressed in a recent reddit AMA in which he disclosed what the future might look like for Stadium. “I believe we’ll have a much higher quality signal on TV as the new standard ATSC 3.0 rolls out. By then, our plan is to have become the most widely distributed, easily available sports network that there is. Well beyond the basic cable reach. With that, we anticipate continuing to add more rights, talent, and original programming. It’s our job to be the standard bearer for a nation of sports fans who want and deserve a free daily network, and we’re committed to making it a premier experience,” Coyle wrote.
When I asked Coyle to predict the future of OTA, he stated, “The OTA user base grows every year and undoubtedly will continue to grow as cord cutting continues, as more antennas hit the market both directly sold and otherwise shipped pre-installed on devices such as streaming boxes and smart televisions, and as the industry standard shifts to the third generation broadcast standard, ATSC 3.0, which will supercharge OTA awareness across the country. We are an enthusiastic believer in the long term potential and are thrilled with our first mover, and currently exclusive, position in the space.”
So while the Pac-12 Network and beIN Sports USA, rightsholder for Conference USA, fight for distribution on traditional cable and satellite MVPDs, Stadium is betting it can grow audience through the same, albeit much more technologically sophisticated, mechanism used a half century ago – the broadcast spectrum. And, as this space continues to evolve, there may be more disruptors, such as Locast, the subject of recent and lengthy New York Times piece by Edmund Lee.
Will Locast Last?
Some of you may remember ill-fated Aereo, the OTT service which delivered OTA signals digitally to a subscriber’s computer without paying the television networks a retransmission fee, a condition of the 1992 Cable Act. The networks sued. The case went to the Supreme Court where Aereo lost and subsequently filed for bankruptcy. I wrote about the Court’s decision, and the role of sport governing bodies submitting briefs supporting the broadcasters, for the Journal of Legal Aspects of Sport in 2017.
What Locast seeks to do is essentially the same as Aereo, but the difference, according to Lee, is that cable and satellite MVPDs may no longer be scared. In fact, it may be to their benefit to allow OTA signals to be delivered through OTT means as a way of preserving the cable bundle. The NYT article notes that roughly $12 of an individual’s cable or satellite bill is tied up in retransmission consent for OTA networks. MVPDs typically negotiate these deals every few years and when an agreement cannot be reached, the MVPD drops the network. Often these come at a critical time in the sports calendar with consumers (fans) missing a key game or event.
Where Locast’s service is particularly valuable is in large urban areas with heavy spectrum traffic and concrete buildings which block OTA signals. ATSC 3.0 technology may offset some of the value added which Locast provides.
What about the Fox RSNs?
A final interesting story line to watch in early 2019 is the future of the Fox/Disney RSNs, and the potential role that Stadium plays in that. You likely know that Sinclair Broadcasting has partnered with the Chicago Cubs to launch the Marquee Sports Network in 2020. Stadium’s equity partners include Sinclair and BAMTech, among others. Adding a portfolio of two dozen RSNs with professional sports rights to existing technology which delivers Stadium, and several college rights, free of charge to many U.S. households, would cement Stadium’s position as a disruptor in this space.
I asked Coyle about the possible acquisition of RSNs and what that would mean for Stadium. He told me he appreciated the question but he wasn’t in a position to make a meaningful comment. Hmmm.