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Testimony of John Mansell Copyright Royalty Judges 2010-2013 Copyright Royalty Distribution Proceeding

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Testimony of John Mansell Copyright Royalty Judges 2010-2013 Copyright Royalty Distribution Proceeding ALLOCATION HEARING EXHIBIT 6002 Electronically Filed Docket: 14-CRB-0010-CD (2010-2013) Filing Date: 02/12/2018 04:06:54 PM EST TESTIMONY OF JOHN MANSELL COPYRIGHT ROYALTY JUDGES 2010-2013 COPYRIGHT ROYALTY DISTRIBUTION PROCEEDING THE MIGRATION OF LIVE TEAM SPORTS PROGRAMMING FROM BROADCAST TELEVISION TO CABLE-SATELLITE TV AND OTHER NEW MEDIA PREPARED BY: JOHN MANSELL ASSOCIATES, INC. 1093 LORAN COURT GREAT FALLS, VA 22066-1533 DECEMBER 22, 2016 CORRECTED MARCH 9, 2017 ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING TABLE OF CONTENTS I. BACKGROUND AND EXPERIENCE ………………...………………………1 II. PURPOSE OF TESTIMONY ....................................................... …………..3 III. EXECUTIVE SUMMARY .............................................................................4 A. LOCAL BROADCASTING STATIONS VERSUS RSNS…….. .........5 B. GROWTH OF NATIONAL CABLE NETWORKS .... …………………6 C. NEW MEDIA COMPETITION………………………………………... 7 D. NHL-NBA WORK STOPPAGES REDUCE LOCAL BROADCASTS………………………………………………………….. .7 E. DIGITAL VIDEO RECORDERS REDUCE LIVE SPORTS VIEWING…………..…………………………………… 7 IV. LOCAL BROADCASTING VERSUS CABLE REGIONAL SPORTS NETWORKS (RSNS)………………………….……………………………...…8 A. INTRODUCTION ................................................................................8 B. DECLINE OF LOCAL TELECASTS AND INCREASE IN RSN TELECASTS .......................………………………………….10 V. NATIONAL BROADCASTING NETWORKS VERSUS NATIONAL CABLE SPORTS NETWORKS .…………………………………………….. 12 A. MLB NATIONAL BROADCAST TV GAMES VERSUS NATIONAL CABLE GAMES ......................................................... 13 B. NBA NATIONAL BROADCAST TV GAMES VERSUS NATIONAL CABLE GAMES ................................................... …. 15 ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING C. NHL NATIONAL TV COVERAGE…….. ......................................... 17 D. NFL LAUNCHES NFL NETWORK GAMES.……………………….. 18 E. COLLEGE FOOTBALL DISTRIBUTION…….. .............................. 18 F. COLLEGE BASKETBALL ....................................................... ……19 VI. OUT OF MARKET CABLE-SATELLITE VIDEO-ON-DEMAND …………20 A. NFL FOOTBALL ....... ………………….………….……………………20 B. MLB ……………………................... ................................................ 21 C. COLLEGE FOOTBALL AND BASKETBALL…….. ....................... 21 D. NCAA BASKETBALL TOURNAMENT .. …………………………… 22 VII. INTERNET SPORTS PROGRAMMING ON THE RISE ........ …………… 23 A. NCAA BASKETBALL TOURNAMENT .. …………………………….24 B. MLB .......................................... ………………………………………26 C. NFL . …………………………………………………………………….. 27 D. NBA ........................... …………………………………………………..28 E. NHL…………………………..………………………..………….…… .. 29 F. COLLEGE SPORTS………………………………………… . ………..30 VIII. MOBILE AND OTHER DIGITAL DEVICES ...... …………………………….31 A. NFL…………………………………………………………………….. .. 31 B. MLB ................................................................................................. 32 C. NBA ................................................................................................. 32 D. NHL ................................................................................................. 33 IX. SUMMARY . ……………………………………………………………………..33 ii ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING APPENDIX I-RSN SUBSCRIBERS .................................................................... 38 APPENDIX II-LOCAL MLB TELECASTS .......................................................... 40 APPENDIX III-LOCAL NBA TELECASTS ......................................................... 41 APPENDIX IV-LOCAL NHL TELECASTS ......................................................... 42 APPENDIX V-NATIONAL CABLE SPORTS NETWORKS ............................... 43 APPENDIX VI-NATIONAL CABLE NETWORKS WITH SPORTS .................... 45 APPENDIX VII-COLLEGE FOOTBALL TELECASTS ....................................... 46 APPENDIX VIII-CURRICULUM VITAE ................... ………………………………49 iii ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING I. BACKGROUND AND EXPERIENCE I am John Mansell, Jr., President/CEO of John Mansell Associates, Inc., a company established over 20 years ago. Until April 2007, I worked exclusively for Kagan Research and related successor companies for over 32 years. Kagan is one of the leading media research organizations in the U.S. Its vast array of publications covers many arenas of media and entertainment, including broadcast and cable television. I began my career as a newsletter editor in 1975 and was promoted to senior analyst in 1986. When I left the company, I was Kagan's lead analyst for cable TV overbuilds and competition, sports media rights and franchise valuations, communications law, and a seasoned appraiser of sports business, digital media, wireless, satellite and communications properties. I was responsible for writing, editing and contributing to several Kagan books, special reports and newsletters, including Kagan's Wireless Broadband, Cable TV Law Reporter and Media Sports Business. I served as moderator at Kagan events such as the Kagan Digital Media Summit and have been invited to speak at industry association conferences, including the Wireless Communications Association, National Cable TV & Telecom Association, and the Western Cable Show. From 1984 to 2007, I wrote and edited the monthly Media Sports Business. This newsletter regularly reported on the evolving relationship between sports teams and the electronic media, franchise valuations, transactions, media rights fees, advertising, viewership, subscription revenue, labor relations and ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING stadium/arena financings. In addition to coverage of these issues in newsletters, I headed a Kagan team and contributed to a series of special reports, including The Business of Baseball, The Business of Football, The Business of Basketball, The Business of Hockey, and the U.S. TV Sports Databook. Over the years, I have done consulting and/or valuations for numerous entertainment and telecommunications organizations, including sports leagues, teams, and financial entities involved in transactions with teams and leagues. I have more than 25 years of experience in analyzing the sports business and appraising sports, media and communications properties. During that period, I have appraised over $10 billion worth of media properties on contract assignment. In addition, many more billions of dollars’ worth of such properties have been valued through regular informal analyses in Kagan Research’s Media Sports Business, Cable TV Investor: Deals & Finance, Motion Picture Investor, Broadcast Investor: Deals & Finance, Wireless Broadband and Wireless Telecom Investor newsletters. I have based my analysis in part on personal knowledge of the media and communications industries acquired over more than three decades. I have a B.A. in economics from the University of Michigan, 1974, received my J.D. degree in 1978 from Thomas M. Cooley Law School, and I am a member of the Michigan Bar, District of Columbia Bar and Federal Communications Bar Association. 2 ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING II. PURPOSE OF TESTIMONY The purpose of my testimony is to analyze the changes in the carriage of “live professional and college team sports” programming (as such term is used in this proceeding) in light of distribution and technology options that evolved through 2013 to compete for the attention of the consumer of live team sports programming. In addition to the research I conducted during my 33 years with Kagan Research, for this assignment I have relied upon the broadcast/media calendars on the websites of each MLB, NBA and NHL team prior to the start of regular- season games as well as other websites, including those of the sports leagues and programmers. In the broadest sense, sports programming is defined as the dissemination of audio and/or video of a game or contest involving individual skill or physical prowess, including baseball, football, basketball, soccer, hockey, golf, tennis, bowling, track & field, horseracing, swimming-diving, ice-skating, skiing, auto racing, boxing, wrestling, softball, lacrosse, volleyball, sailing, extreme sports, fishing and other activities. For the purpose of the instant proceeding to allocate cable compulsory license royalties, however, I focus on live over-the-air television broadcasts of professional and college team sport games involving teams belonging to Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), the National Hockey League (NHL), and the 3 ALLOCATION HEARING EXHIBIT 6002 MIGRATION OF SPORTS PROGRAMMING National Collegiate Athletic Association (NCAA), the sports programming that falls within the Joint Sports Claimants program category (“JSC Sports”). The JSC Sports programming is a narrower subset of the broader sports programming. I have analyzed the changes in live professional and college team sports games on television. Based on that analysis, I conclude that over the past 30 years, the number of live professional and college team sports games on local over-the-air TV stations has significantly declined. At the same time, the number of professional and college team sports games on cable networks and regional sports networks (RSNs) has dramatically increased. In effect, live professional and college team sports games in general, and JSC Sports programming in particular, have shifted dramatically from local over-the-air TV stations to regional
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