TV Sports’ Big-Money Bubble May Burst

2017 04 11   Peter Feinstein   Online vs Offline Media    

There will come a day of reckoning for ESPN and other media-rights holders that pay out billions of dollars to show sports. At some point, what once was considered a very good marriage is going to be seen less favorably, clearly benefiting only the top college and professional sports leagues.

Here’s why: The ability to leverage huge viewership numbers into a nearly bottomless supply of advertising money is dropping. While brands still like to spend on giant events such as the Super Bowl, the Final Four and others, the trend is clear: Viewership of all live sports through these single media points of entry is on the decline as consumers find other ways of seeing the action. And that’s going to spell declines in ad revenue, as brands will be less willing to spend against fewer and fewer eyeballs.

Unless the media entities slow the pace of their spending for live sports content, they’re going to find themselves in a rather substantial hole. If the scenario progresses too far, we’re likely to see a bubble of significant proportions burst, affecting the media; entire sports; individual colleges and pro-sports franchises; their staffs, players and sponsors; and, ultimately, fans.

I know, I know. “It’s just sports.” But when you stop to consider all the ripples created when these huge sums of money change hands, it’s not so far-fetched to paint a scary picture of what might happen to that entire chain when the music (and money) stops. The consequences go beyond even what I’ve described here. ESPN, whether it likes it or not, is the canary in the coal mine – our early warning sign. What happens to it is going to happen elsewhere. Advertisers and content providers need to pay attention.