Carriage fees central issue to Fox Sports 1 holdouts

August 14, 2013

With its launch date Saturday, Fox Sports 1 replaces the Speed Channel and Fox Sports 2 replaces Fuel TV.  But, DirecTV, Dish Network (Dish) and Time Warner Cable (TWC) do not have agreements to run FS1 and subscribers wonder if a deal will be done by Saturday.

DirecTV, Dish and TWC represent a total of about 46 million subscribers.  Fox has promised investors that FS1 would reach 90 million households. But, if carriage deals are not brokered by Saturday, the FS1 launch will not reach its proposed audience. The problem has to do with carriage fees, the amount that distributors will need to pay to air the network.

Despite the fact that Wall Street thinks highly of the new channel, the issue is the rise in carriage fees.  SNL Kagan indicates that cable and satellite operators pay 31 cents a month per subscriber (per Bloomberg story although SBJ story indicates 23 cents) for the Speed channel. Kagan estimates that FS1 will garner 80 cents per month in 2014 and could go as high as $1.50 per subscriber based on fee increases during the life of the deal.  Its far from the $5.54 cents demanded for ESPN, but there is backlash from many non-sports subscribers about the rising cable/satellite costs that are passed along to all subscribers.

There have been dueling theories on whether the rights fee bubble will burst.  Some argue that the rising fees passed along to subscribers will mean more cord-cutters and/or consumers looking to downsize its cable/satellite packages.  The other school of thought is that in a time with DVRs and “Hoppers” live sporting events is the last space for advertisers on television.  Citing sports as “DVR proof,” many television executives have looked to beefing up its inventory of network programs to include sports.

DirecTV, a satellite company forged on sports with the NFL Sunday Direct Ticket and Red Zone Channel is now one of the holdouts for Fox Sports 1.  This could be due in part to its assessment of the ever-increasing rights fees it must pay (and pass along to subscribers).

Via Sports Business Journal (subscription required) from this past January:

With more networks now seeking more money, DirecTV is becoming more comfortable with not carrying specific channels that they consider too expensive. The result has been the type of public battles that, historically, had never included DirecTV.

Despite its sports lineage, DirecTV let Versus go dark for from August 2009 to March 2010 during the NHL Hockey season (Versus carried NHL games) before making amends with the network. Would it do the same with Fox Sports 1?

More recently, DirecTV and Fox squabbled over fees for the satellite company to carry 26 Fox channels. Luckily, the parties resolved its issues a day before a widespread blackout of Fox programming which would have included Fuel TV, FX and other Fox-owned cable channels.

It currently is in a nasty battle with the Pac 12 Network.  Neither side is flinching in this impasse entering its second year.  In fact, entering the 2013 College Football season, it has been announced that a deal between the two should not be expected. The Pac 12 Network has turned to an ad campaign urging DirecTV customers to switch providers if they would like its network.

Time Warner Cable is in a current battle with CBS over carriage fees which has not only turned the lights out on CBS but Showtime, a CBS property, to over 3 million subscribers of TWC.  This could, if the impasse continues, indirectly affect Showtime boxing and shoulder programming leading up to the September 14th showdown between Floyd Mayweather, Jr. and Canelo Alvarez. TWC claims CBS is asking a 600 percent increase in fees which CBS scoffs at the accusation.

Dish Network has had its own issues with retransmission rights. It lost 78,000 subscribers in its second quarter of the year due to programming costs.  It carries Fuel TV on a sports tier so those not subscribing to the sports tier will not even get Fox Sports 2.  Then there is the rumor of a potential merger with DirecTV.

Payout Perspective:

DirecTV, Dish and TWC represent 46 million subscribers that would be without FS1 if something does not change.  The three companies currently pay 31 cents per month for Speed.  What FS1 is proposing is a jump in fees to 80 cents per month for FS1.  This represents a 258% increase from the start.  At stake is approximately $22.5 million between the three companies.  This is based on the number of combined subscribers and the difference between the current fee versus the proposed fee (46M x .31 = 14.26M versus 46M x .80 = $36.80; $36.80M – $14.26M = $22.5M) (H/t:  Adam Swift)

All three distributors indicate that they are still in negotiations with Fox on a deal that could have the channel launch on time.  Even if a deal is not struck by August 17th, there is the possibility that deals occur shortly after FS1’s start date.  From Fox’s perspective, it wants to make sure that it maximizes its rights fees while ensuring that all major distributors have availability to FS1.  However, the distributors are feeling the pinch of the rising costs to carry these networks and it must decide how much more it can pass along to its subscribers without further backlash.

UFC on Fuel TV 10: 313,000 viewers

June 12, 2013

MMA Fighting reports that Saturday’s UFC on Fuel TV 10 ratings scored a 313,000 viewer average.  The show scored the second highest rating for a UFC on Fuel TV event.

The show was highlighted by eight submissions on the card including the main event featuring Fabricio Werdum submitting Antonio Rodrigio Noguiera.  The numbers are good considering it competed with the NHL on NBC and MLB on Fox during the same timeframe.

Via Fox Sports Media Group Press Release:

Prime time, which consisted of the one-hour live Prefight Show and the three-hour main card, averaged 250,000 total viewers and a 0.51 HH rating, up +468% and +538% respectively vs. the June 2012 Saturday average.

UFC® ON FUEL TV 10 aired from 8:00 PM ET – 11:19 PM ET and averaged 313,000 viewers, ranking second all-time for a live fight event behind UFC® ON FUEL TV 8: SILVA VS. STANN on March 2, 2013 (485,000 viewers). The audience peaked from 9:45 PM ET to 10:00 PM ET with 399,000 viewers.

Moreover, UFC® ON FUEL TV 10 was the second most-watched and second highest-rated show ever in M18-49, with 183,000 viewers and a 0.88 rating.

On Saturday, June 8, FUEL TV averaged 87,000 viewers, making it the second-most watched day in network history behind the record set on March 2, 2013 (131,000 viewers). It was up +129% vs. the June 2012 Saturday average.

Payout Perspective:

A good showing considering the lack of American fighters on this card and the fact that there were sports alternatives out there.  Notably, the NHL playoffs ratings are booming this year.  The ratings in the key demos are positive signs as well.

UFC on Fuel TV 10 bonuses and attendance

June 9, 2013

MMA Junkie reports that UFC on Fuel TV 10 bonuses were $50,000 each. Erick Silva, Thiago Silva and Rafael Calvalcante received the honors.

Silva won for Submission of the Night in disposing of Jason High.
Thiago Silva and Calvalcante won for a one round slugfest which saw Silva outlasting Calvalcante. TSilva was awarded the KO of the Night.

In addition, MMA Junkie reports that the attendance at the event was 6,286 with no reported gate. It was the lowest attended Brazilian event since the UFC returned to the country in 2011.

Payout Perspective:

There were many submissions to choose from last night and Silva’s was a good candidate for the bonus. Fabricio Werdum’s armbar of Big Nog could also have been chosen. Thiago Silva’s double bonus comes after a suspension. Still, his celebration of telling the crowd to “Shhh, he’s sleeping” after knocking out Calvalcante was priceless. Although the attendance was low for this event, it was likely expected.

UFC helps the environment at UFC on Fuel TV 10

June 8, 2013

The Ultimate Fighter 2 Brazil announced that it is participating in Brazil’s Ceara state government to make the UFC on Fuel TV 10 event 100% carbon neutral.  UFC Fighters Glover Texeira and Demian Maia participated in a ceremonial tree planting ceremony to commemorate the occasion.

UFC on Fuel 10 Event 2

Via UFC press release:

In 2011 the Ceara State Government began a carbon emissions policy under the guidelines of the Ceara Carbono Zero strategy. The strategy emphasizes support to renewable energy investments (specifically solar and wind power), the protection of the biodiversity of the Caatinga (a semi-arid scrub forest situated in the northeast of Brazil), the implementation of the solid waste policy, as well as a set of overall efforts to mitigate and compensate emissions.

The State Government laid out a set of actions aimed to offset carbon dioxide (CO2) emissions at important events set to take place in Ceara throughout the next several years, such as the FIFA World Cup, the FIFA Confederation Cup and Saturday’s UFC event. The Government will work with the Federal University of Ceará to calculate the carbon emissions stemming from the UFC event.

The State Government’s carbon offset action develops an inventory of all carbon emission from transportation and operation of an event, including travel by the public to the event venue, the calculation of total greenhouse gas emissions – using the United Nations approved Greenhouse Gas Protocol, adjusted to local environmental conditions – and the compensation of emissions through the planting of trees, using native species to protect and preserve the local ecosystem.

“As a global leader in sports, the UFC is thrilled that its event can serve as a platform for bringing awareness and further helping the State Government’s environmentally conscious initiative,” said UFC Chairman and CEO Lorenzo Fertitta. “With athletes and fans from all over the world, we are proud to do our part in reducing the carbon footprint of UFC’s live event this week in Fortaleza.”

UFC on Fuel 10 Event 1

Payout Perspective:

The UFC’s participation in this local initiative is good PR for the company and helps promote good will.  Utilizing homegrown UFC stars ingratiates itself with the local fan base.  Involving itself with the local effort also shows that the UFC intends to continue its relationship with the area.

TUF 17 Prelims on Fuel: 236,000 viewers

April 19, 2013

The Wrestling Observer reports that the Ultimate Fighter 17 Prelims on Fuel TV garnered an impressive 236,000 viewer average.  The TUF 17 Prelims was the second most watched program in Fuel TV history.

In addition, the weigh-ins the day before scored 126,000 viewers which made it the third most watched weigh-ins in Fuel TV history.

Payout Perspective:

Good numbers for the Prelims as the Fuel TV portion featured mainly TUF 17 contestants.  Last December, TUF 16 Prelims only garnered 96,000 viewers so either fans wanted to watch some fights or they knew of the quality of fighters this season.  Once again, the surging Fuel ratings reflect the fact that the UFC will be an anchor for FS1.

UFC on Fuel TV 9: 236,000 viewers

April 9, 2013

MMA Fighting reports that UFC on Fuel TV 9 scored a ratings average of 236,000 viewers. It was the largest ever for a non-prime time broadcast on the network.

Via MMA Fighting:

What made this number impressive is the show aired starting at 2 p.m. on the East Coast and 11 a.m. on the West Coast. During those hours, Fuel was the highest rated ad-supported cable station in the Male 18-34 and Male 18-49 demographic, something unheard of for the station. In Males 18-49, it was the second-highest rated show in station history.

The East Coast rerun at 7pm scored 98,000 viewers while the West Coast prime time airing received 92,000 viewers.  Based on the airings it was the second-most watched day in Fuel history.

Prior to Saturday’s airing, the highest rated non-prime time rating was the GSP-Diaz weigh-ins.  

UFC on Fuel TV 8:  485,000 viewers, 219,000 replay

UFC on Fuel TV 7: 195,000 live, 116,000 replay

UFC on Fuel TV 6: 88,000 live, 143,000 replay

UFC on Fuel TV 5: 111,000 live, 140,000 replay

UFC on Fuel TV 4: 211,000

UFC on Fuel TV 3: 173,000 live

UFC on Fuel TV 2:  197,000 live

UFC on Fuel TV 1:  217,000, live

Payout Perspective:

The ratings are good considering the main event was changed last minute and an unknown was inserted into the top spot versus a relative unknown for UFC fans in Gegard Mousasi. Moreover, it improved on the 197,000 viewer average at UFC on Fuel TV 2 which featured Alexander Gustafsson.  It was another six hour card for those watching online and then the Fuel show.  The improved viewership are good indicators for the UFC’s move to FS1 later this year.

UFC on Fuel TV 9 attendance, gate and bonuses

April 7, 2013

MMA Junkie reports the attendance, gate and bonuses for this Saturday’s UFC on Fuel TV 9.  Bonuses were $60,000 instead of the UFC standard $50,000.

Attendance at the Ericsson Globe Arena in Stockholm, Sweden were 14,506 for a live gate of $2,710,530.  The first show in Sweden which featured Alexander Gustafsson was higher attended at 15,428.  Unfortunately, Gustafsson had to pull out with a cut.

Bonuses were as follows:

FOTN:  Brad Pickett vs. Mike Easton

KO:  Conor McGregor

Submission of the Night:  Reza Madadi

Payout Perspective:

Conor McGregor stole the show with his knockout of Marcus Brimage.  Also, Diego Brandau could have won for Sub of the Night with a slick arm triangle of Pablo Garza.   Fortunately, Gegard Mousasi was willing to fight Ilir Latifi on very short notice or the show would have been in dire straits. Its interesting that the bonuses were raised for this event.  Maybe it was a way to motivate the fighters to give a good performance.

UFC on Fuel TV 8: 485,000 viewer average

March 5, 2013

Kevin Iole of Yahoo! Sports reports that UFC on Fuel TV 8 was the most watched UFC live event in the network’s history.  Saturday night’s event from Japan scored twice the previous high of 485,000 viewers.

Also impressive was that the rerun received another 219,000 viewers.  Wanderlei Silva versus Brian Stann was the main event for the show.

Via Dave Meltzer at MMA Fighting:

Both the pre-fight show (250,000 viewers) and post-fight show (219,000) became the second and third most-watched shows in station history. Even more impressive is the post-fight show didn’t start until 1 a.m.

UFC on Fuel TV 7: 195,000 live, 116,000 replay
UFC on Fuel TV 6: 88,000 live, 143,000 replay
UFC on Fuel TV 5: 111,000 live, 140,000 replay
UFC on Fuel TV 4: 211,000
UFC on Fuel TV 3: 173,000 live
UFC on Fuel TV 2:  197,000 live
UFC on Fuel TV 1:  217,000, live

Payout Perspective:

Outstanding numbers for a show that lacked big names and served as a ‘tweener show as the big event is in Montreal on March 16th.  It was unlikely that Silva-Stann as the main event would draw such a high rating but it was a pleasant surprise.

UFC on Fuel TV 8’s attendance and bonuses

March 3, 2013

MMA Junkie reports the bonuses and attendance for UFC on Fuel TV 8. Mark Hunt and Wanderlei Silva were the big winners on Saturday.

Mark Hunt and Wanderlei Silva shared KO of the nights and for good reason with their highlight knockouts of Stefan Struve and Brian Stann respectively.  Silva doubled up in bonuses as his upset of Stann earned the Fight of the Night.  All bonuses were $50,000 each.

Attendance for Saturday’s event drew 14,682 and no live gate was announced.  This is about the same to the unofficial 15,000 fans that attended last year’s UFC 144 (although there were rumors that it could have been up to 20,000 in attendance).

Payout Perspective:

Earlier in the week it was reported that over 10,000 tickets for a gate of $1.3M had been sold for the event at the Saitama Super Arena in Japan. With Wanderlei Silva on top of the card, is this a disappointment?  Silva recaptured his past with an impressive KO of Brian Stann.

UFC on Fuel TV 7: 195K viewer average

February 20, 2013

MMA Fighting reports that UFC on Fuel TV 7 received a ratings average of 195,000 viewers for the live broadcast this past Saturday afternoon.  The prime time replay of the show on Fuel garnered 116,000 viewers.

Below are numbers from the UFC on Fuel events held outside of North America with the live events not in prime time.

UFC on Fuel TV 6: 88,000 live, 143,000 replay
UFC on Fuel TV 5: 111,000 live, 140,000 replay
UFC on Fuel TV 2:  197,000 live

Payout Perspective:

As you can see, this past Saturday’s event fared well considering the history of low numbers for non-prime time events.  However, it did not have a strong replay viewership.  Still, the card lasted over 6 hours if you watched the 3 hour Prelims on Facebook or YouTube.  This is due, in part, to the number of fights that went to decision.

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