Fox Sports takes $900,000,000+ hit on sports contracts

[Truth Detector]

You guys want to gripe about blank sidepods?

Look at Fox Sports. Between the NFL, MLB and NASCAR they are charging off over $900,000,000 last quarter.

Even though ratings are up, nobody is buying the advertising.

Ouch.

[HerbieIsHere]

Originally posted by Truth Detector:
<STRONG>You guys want to gripe about blank sidepods?

Look at Fox Sports. Between the NFL, MLB and NASCAR they are charging off over $900,000,000 last quarter.

Even though ratings are up, nobody is buying the advertising.


:</STRONG>

If your entire advertising budget is eaten up just putting your name on the side of a NASCAR car, you can't afford commercial time...And most of those companies that can afford to pay Fox's ad prices are on cars. Fox is going to have to lower their ad prices and pack more commercial time during races....Which won't go over well with their views!!!!! ABC is probably happy they didn't win the NASCAR bid.

Oh, and I forgot. Fox had to sell the Fox Family Channel(Which made money) to buy Speedvision(Which doesn't make money) in order to try to boost it's NASCAR investment.

[ February 13, 2002: Message edited by: HerbieIsHere ]

[c7]

More commercial time !!

It is already bad enough with that annoying advertising ticker that is disguised as a horizontal scoring pylon.

[SamC]

Hate to spoil the NASCARbashing, not to mention the "bad economy" spin, but here is the real deal:

Major sports contracts have been "loss leaders" for almost 2 decades. The idea being that you draw attention to your network via sports and make it back on the rest of the schedule. Anybody remember what Fox was like (and thought of) prior to its NFL deal?

ALL contracts with ALL networks, broadcast and cable, with the NBA, NFL, MLB, NHL, and PGA have been loss leaders for a long time. NASCAR moved up into that rare air with its 01 contract.

So, the corporations that own these networks have always accounted for these contracts in the tradional way, as current expenses. They take what they paid, say, NASCAR in a quarter and what they took in, and enter it into their figures as a negative line item and there you go.

News Corportation (which is whole lot more than FOX Sports) is accounting for this in a creative way. They are going to write off the whole thing all at once. This is traditionally done in smokestack industries with things like plant closing, new models, early retirements and so on. They just charge the whole loss off in one quarter, even though the money might not be actually "lost" for years.

The effect of this are several:

- News Corp get years and years of paper loses all at once and can take them in this year (both the US and Australia, where News Corp is based, have new conservative governments that have cut taxes in future years, so its better to make money in the out years)

- The News Corp bottom line will be unaffected by these contracts after this quarter. This will increase the value of News Corp stock to GM when it buys DirecTV from it after the FCC rejects GM's plan to sell it to its sole competitor, Echostar.

- In the long run, News Corp simply CANNOT enter into new loss leader contracts. So, if, and I think you will, you see GE (NBC), TWAOL (Turner), Viacom (CBS), and Disney (ABC, ESPN) do the same thing, then it is a message to the major sports and their players that the next contracts will be for actual value.

BTW, NBC just resigned the cast of Friends to a contract for $1M per friend per week, or about $4M more than it can possibably make off the ad sales. Same principle, but never brought up.

[Defender]

The absolute best, and I mean the brightest, biggest, smartest value in all of motor sports is the Indy Racing League. This has never been more true than it is right now.

Ask Marlboro.

[The Beer Baron]

Gotta look at what Fox has done with the NASCAR contract, they managed to penetrate more homes with FX , thanks to the NASCAR fans demanding it!

Also they're pushing a Motorsport TV channel to the mainstream , I see more NASCAR folk on forums referring to Speed Channel , and the rest wishing they had it!

Also he broadcasters will use their sporting events to lead into other programming , its all about Market share

The NASCAR contract was way,way overpriced I doubt it'll receive the same amount of money in 2006. I think Fox will re-up but NBC ,I'm not sure (just my gut feeling)

Got to agree with the

[Jim Wilke]

The Mariners signed Ichiro to a five-year, $90 million contract extension

That was in 2007.

What the heck is going on here?

[doitagain]

Spammer.

[bumpstop]

Defender's logic didn't age well.

[RS2]

Defender's logic didn't age well.

What a shock.

[WADSWORTH3]

meh - the taxpayers will eventually cover our losses one way or another

- Rupert
were WAY TO BIG TO FAIL