Peter Chernin: The Future of Live Sports is Online

Former News Corp. president Peter Chernin, who now runs The Chernin Group, thinks live sports will eventually be a bigger business on the web than on broadcast channels.

044924465-st-patricks-day-sports-showgro“I’m not sure what the timeline is, but there’s clearly more money to be made online than there is out of those broadcast deals,” he said Wednesday at the Re/Code Media conference. “There’s more money to be made on a subscription basis, through targeting, they’re global, there’s almost zero distribution friction. I think what the leagues are wrestling with, especially the big leagues, is what is the breadth of their audience on each of those three big national platforms.”

Those would be broadcast, cable and OTT.

“Look, 15 years ago people said sports would never be on cable, the NFL and so forth would never be on cable, ” he continued. “But now, they’re all over cable at this point. So I think you’ll see an inevitable evolution” toward OTT.

Given our orientation here at Concurrent Media, we obviously agree. The real question though is, who will get to participate in that “inevitable evolution”?

Broadcast, cable and streaming rights for live sports are still, for the most part, sold separately. There are important exceptions, such as the Olympics, where NBC has all rights to the next several games, the Super Bowl, and the NCAA’s March Madness deal with CBS and Turner Sports. But the NFL, Major League Baseball, the NBA and NHL all continue to withhold streaming rights from their broadcast and cable partners.

Neither CBS All Access nor NBC’s new linear OTT offering, for instance, includes the NFL games those networks broadcast. The regional sports networks that broadcast most regular season baseball, basketball and hockey games, under deals negotiated directly with the teams in their markets, cannot make those games available online because the teams themselves do not control the streaming rights; the leagues do.

It may be true, as Chernin believes, that there is a lot more money to be made online “than in these broadcast deals,” but he means by the leagues, not by the current broadcast rights holders, or at least not under their current contracts.

These days, it’s pretty hard to separate the economics of college and professional sports from the economics of television; increasingly, they’re one in the same. Ever-growing TV money is the economic engine behind nearly all big time sports, while sports, which are still predominantly watched sports, are almost single handedly keeping the pay-TV business bundle intact.

If the inevitable evolution toward online distribution of live sports ends up prying those two apart, one, or the other  could be facing a serious problem.