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Media Economy Report Vol MEDIA ECONOMY 05 Vol. Report Media Economy REPORT WHY SPORTS PERSEVERE Vol. 05 June 2014 © 2014 MAGNA GLOBAL USA, Inc. All Rights Reserved All property, including trademarks, are the property of their MAGNA GLOBAL respective owners and have, as applicable, been licensed for use. New Value Drivers Value New Demand Supply CHANGING TABLE THE OF CONTENTS GAME Media Economy Report Vol. 05 Page 3 05 Page Vol. Report Media Economy SUPPLY Sports fans are avid consumers of content and their options are growing rapidly Page 06 Live Sports are the ultimate custom experience for marketers’ brands. As video consumption becomes 2022 by more than double the current con- tract (2010 and 2014), roughly $1 billion. increasingly on demand, there is unquestionably value in live sporting events that get people in front of the set as DEMAND MLB commanded a 250% increase in rights Ad spend for sports continues to grow, well as commenting in real time on social networks. Fans fees from Turner, FOX and ESPN. but rights fees are growing even faster don’t want to want to hear about the result of a game af- Page The new NFL deals (2014-2022) will see an 18 ter it has occurred. Major sports events, and in particular average annual increase of 65% above the the NFL, remain some of the most-watched telecasts on prior contract. television and ratings are remarkably consistent. The broadcasters also value them as a promotional platform NBC doled out $7.7 billion for the rights to air NEW VALUE DRIVERS for their other programming. the Olympic Games between 2022 and 2032. Social media and emerging technologies are However, it’s really about perceived value, as major bringing fans closer to the action Page 26 sports rights fees are typically a money-losing prospect Of the above-mentioned properties along with the other for broadcast networks. In order to mitigate these esca- major sports, the networks stand to lose hundreds of lating rights fee costs, we are seeing a growing number millions of dollars annually, but sports are so valuable to of major events moving to cable (the NCAA Final Four them that they continue to pay willingly. Sports program- CONCLUSION on TBS and the new college football playoff system on Insights for a competitive ming also commands the highest fees from cable and advantage ESPN, for example), where the networks are better able Page satellite providers. 34 to offset the rights costs by increasing subscriber fees. With the explosion of the sports media landscape, the In the past few years: opportunities for compelling brand content are truly limitless. It’s critical to create high-touch partnerships ESPN shelled out over $600 million annu- Drivers Value New between our clients and media owners that are brand- ally (almost a 400% increase above its prior defining, and that will continue to be our goal. contract) for the new aforementioned playoff Best, system of six bowl games and the title game. Kevin Collins Demand Telemundo and Fox outbid Univision and SVP, Integrated Sports Investment ESPN for the World Cup matches in 2018 and MAGNA GLOBAL Supply + 352% + 226% THE WINNING 2006 Winter Olympics 2008 Summer Olympics Market: Canada Market: United Kingdom Host: Italy Sports events rarely make top 10 TV telecasts in ATTRIBUTES OF Host: China China, unless local talent is featured prominently. 2008 Winter Olympics SPORTS 2012 Summer Olympics The 2011 French Open Women's Tennis Final--in Market: Canada Market: United Kingdom Host: Canada which home-grown ace Li Na took the title--was the Host: United Kingdom highest-rated in recent history. 1. LONGEVITY 5 04 Page Vol. Report Media Economy 2. INNOVATION The most-watched sports on television + 98% 3. PROXIMITY are almost always achieved by local FIFA World Cup 2006 Market: South Africa sports or local leagues of global sports, Host: Germany as fans feel connected to their home team. International competitions like FIFA World Cup 2010 The sports business industry has a track the Olympics and the World Cup can Market: South Africa record of innovation in devising ever more also draw substantial audiences, but Host: South Africa popular and successful properties and/or that effect is greatly magnified in the business models within a sport. host country. INTRODUCTION OF SOCCER 1871 1888 1930 1960s 1992 TOURNAMENTS FA Cup Soccer Football league FIFA World Cup Professionalism UEFA Champions League OVER TIME MLB Ashes AFL Australia NFL Music Reality TV Basebal Cricket Rules Football American Football Grammy Awards The Real World 1850 1860 1869 1882 1890 1897 1910 1920 1940 1950 1959 1980 1992 2000 Inception timeline of sports / entertainment properties 1917 1929 Drivers Value New SPORTING PROPERTIES TEND TO BE FAR MORE DURABLE AND OLDER THAN THOSE NHL Film FROM OTHER GENRES OF ENTERTAINMENT. Ice Hockey Academy Awards Demand 1970 1994 2006 A HIGHLY PROFITABLE EVOLUTION 1. AFL-NFL Merger NFL Sunday Ticket package 1. Thursday Night Games Supply 2. Monday Night Football launches on DirecTV 2. Flexible Scheduling SUPPLY Media Economy Report Vol. 05 Page 7 05 Page Vol. Report Media Economy Nothing brings people together like a sporting event, whether it’s in-person at the stadium or gathered in front of a TV set. Televised contests are consistently among the most-watched broadcasts of the year across North America, South America, and Europe. In the U.S., a massive selection of sports content—on television and elsewhere—keeps fans constantly connected to their favorite sports and teams, and creates an attractive, engaged, and real-time audience for advertisers. 1. While the most popular sport may vary somewhat by country, televised events can generate unparalleled audiences in almost any market. 2. The U.S. leads the world in sheer amount of sports content available to the consumer 24 hours per day. 3. Avid sports fans are more likely than the general audience to be reached by traditional outlets like radio and magazines. 4. The best outlet for reaching younger sports enthusiasts varies by day of week and time of day—for example, radio is the dominant medium on weekdays. 5. Evidence is mounting that soccer—the most popular sport in the world overall—is gaining serious traction in the U.S. KEY TAKEAWAY New Value Drivers Value New Demand Supply 2 3 2 2 Canada NL Germany France Outside the US, in terms of viewing numbers, the three biggest 9/30 3 6/30 11/30 8/30 sports events in the last three years aired in Japan. Two were 5 2 6 World Cup qualifying matches, with the Asia Final between Jordan 1 2 6 and Japan garnering 30.2 million viewers. 2 2 Media Economy Report Vol. 05 Page 9 05 Page Vol. Report Media Economy 2 Ireland* 5/30 2 3 1 1 1 Italy Japan 7 US 14/30 25/30 16 UK 3 5/30 12 3 CN 1 2 2 23 The Super Bowl is consistently the #1 telecast of the year, with a Spain Amazingly, five of the ten broadcasts in 2011 involved the same two rating that is very constant at 38 (110 to 112 million viewers). 30/30 clubs: arch-rivals Real Madrid vs. Barcelona FC: two Liga "Classi- cos", one Champion's league leg (with a rating of 32), one Cup final and one Supercup final. Brazil 4/30 1 Australia 5 12 HIGHEST SPORTS RATINGS by Country 2011-2013 6 50 GLOBAL SPORTS Drivers Value New Soccer Olympics Handball CeremonyOlympics Closing Soccer National European Soccer National European Super Bowl XLVI Soccer National European Hockey Liga Soccer Soccer Euro Qualifier Hakone-Ekiden Hockey Rugby World Cup League Soccer Champions Football AFL Open French Tennis Cricket VIEWING 0 Rugby Ice Skating UK USA Italy India Spain Japan China Basket Ball Other/Local 2012 2012 2012 2012 2012 2012 2013 2011 2012 2013 2011 2011 2011 2013 2011 2011 Demand Sweden Ireland Canada France The map above illustrates the number of sports events (and Denmark Germany Portugal Australia US Sports Tennis Netherlands type of sport) that made the top 10 telecasts of the year in Over the three years analyzed, the highest sports rating was found in Denmark in 2012 when 46% of individuals (a viewing share of 84%) watched each market, over the last three years (2011-2013). Motor Sports Ice Hockey the Danish national handball team win the final of the European nation Championship. Other top ratings include the Closing Ceremony of London Olympics 2012 (UK, 43 rating) and the Superbowl 2012 (a 38 rating). The highest sports rating in Japan does not come from a major league sports but Supply from the traditional college relay marathon race (89th Hakone-Ekiden) on January 1st 2013 with a 28 rating IN THE CHARACTERISTICS 24-hour national US... 21 networks OF MALE SPORTS FANS Sports coverage runs the gamut in the US, ranging from wide-ranging + Regional sport Because the bulk of sports pro- national reporting and popular 60 networks gramming (including a growing post season contests to in-depth number of major events) resides on coverage of local teams on regional hours of sport cable networks, it’s no surprise that 11 05 Page Vol. Report Media Economy networks and radio stations. Even + programming nearly all male sports fans have a per year 4+ the average male under 50 spends 650,000 Multichannel years of multichannel subscription. They more than eight hours per week Subscription college consuming sports content, with are also more likely than the general rabid fans spending even more. market to have a college degree, 89% 30% work in a professional or managerial 99% 40% role, and own a video game console.
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