When most people think of sports on cable, ESPN and Fox Sports Net — and maybe even general-entertainment services like USA Network and Turner Network Television — come to mind.
Between them, those networks have acquired the lion's share of the major professional and college leagues, as well as the bulk of the marquee pro golf and tennis tournaments that appear on basic cable.
But it's cable's nature to move toward niche services, and several targeted sports networks have emerged in recent years. Those channels provide specialized programming for avid fans of several non-team-oriented sports.
Industry observers say the ability of such networks as The Golf Channel, Outdoor Life Network, Outdoor Channel and Speedvision to continue to develop strong, targeted original programming will inevitably allow these Davids to thrive among the Goliaths on cable's field of play.
"For any of these niche networks, the lifeblood is going to be programming that the niche can't get anywhere else," said Speedvision president Jim Liberatore.
HIGH VALUE, LOW COST
Once considered long shots to make it in a crowded sports and entertainment cable-network environment, niche sports channels have often been able to reach affluent and loyal viewers through a mix of live events, news, informational fare and instructional programming.
By aggressively targeting the brand while keeping programming and operator licensing fees in check, niche sports networks have staked their claim to significant distribution. The Golf Channel and Outdoor Life Network are now in 40 million homes, while Speedvision — which will be renamed Speed Channel in February — reaches 45 million homes.
The expansion in channel capacity sparked by digital cable's proliferation has provided a gateway for such networks, noted Paul Kagan Associates Inc. sports analyst John Mansell. Their low affiliate fees — nowhere near the $1 to $3 charged by national and regional sports services — have made them attractive to operators.
"I think the key is that programming costs are relatively minimal, so they can get away with low ratings and low advertising and low affiliate fees," Mansell said.
These networks have prospered without spending millions of dollars to secure rights to marquee events within their respective sports. The Golf Channel, for example, was shut out of acquiring any major PGA tournaments when the circuit inked a four-year, six-network, $850-million deal that begins with the 2003 season. Golf lost its current 14-event lineup to USA and ESPN.
USA was the big winner, gaining coverage of up to 35 events annually, up from 14 per year. It will also tee off a weekend-morning preview show.
The Tennis Channel — which is expected to launch in third-quarter 2002 — will debut without rights to the ratings-rich Grand Slam tennis tournaments. TNT and CNN/Sports Illustrated hold the cable rights to the prestigious Wimbledon fortnight, while USA airs the U.S. Open.
At press time, USA was negotiating to renew its rights to the French Open, which expired with the conclusion of the 2001 clay-court tourney.
To secure its position in the outdoor sports business, ESPN last April purchased B.A.S.S. Inc. (the Bass Anglers Sportsmen's Society), leaving Outdoor Life Network and Outdoor Channel without access to programming from the largest fishing organization in the world. B.A.S.S. sanctions or runs more than 25,000 fishing tournaments a year and publishes several of the top fishing magazines in the country.
PLENTY OF ACTION AVAILABLE
Though executives at targeted sports networks concede that marquee events are important, they said they don't need them to reach their target audiences. Undaunted by their inability to acquire high-profile fare, the executives said there's plenty of live programming available through smaller tournaments and, in some cases, the early rounds of the majors.
The Golf Channel, for example, will still televise more than 90 live tournaments — about as many as the other networks combined, said COO Dave Manougian.
Through the new PGA deal, The Golf Channel has exclusive U.S. rights to the association's qualifying circuit, The Buy.com tour. It also has events from South Africa, Europe, Australia and Canada. It also will feature Ladies Pro Golf Association tournament action.
"That's probably the biggest misconception about our service. People read headlines and don't have a clear picture of what we have and don't have," Manougian said. "If you look at how we program Thursday through Sunday, [live events] gobble up a major part of that."
Tennis Channel CEO David Meister said that 40 percent of that network's initial lineup will consist of live tournament programming. The channel has announced rights deals with tournaments sanctioned by the Association of Tennis Professionals (the men's tour) and the Women's Tennis Association, from Florida to California.
Meister has also said that Tennis Channel will air tournaments in Europe to Asia and has agreements with World Team Tennis and the sport's seniors' tour, as well as deals to air collegiate-level events.
"With network coverage of some of the tournaments, not all the matches are aired, so it's not clear where to go," Meister said. "We won't expect to usurp the ESPNs and the Turners and certainly not CBS and NBC, but absent the grand slams, there's thousands of hours of tennis that's not covered comprehensively."
THE PRICE CAN BE RIGHT
Executives said they're able to keep a lid on programming costs because they're often bidding for tournaments or other programming that may not be of interest to traditional sports networks, but appeal to their core viewers.
"We have an advantage over some of our programmers who know that without us, they wouldn't get aired anywhere else, so it's of little economic value," Liberatore said. "It's when you start bidding on product that would find a home elsewhere that it becomes more expensive, because they have other options. But getting the exclusivity within your niche is worthwhile, as long as it's within reason."
OLN and Outdoor Channel can pick from an abundance of fishing and hunting shows that aren't carried by the traditional sports networks.
"Most of the mainstream networks are stick-and-ball services — they carry outdoor programming on a part-time basis," OLN CEO Roger Williams said. "It's the same type of competition that ESPN faced in its early years when it went up against the broadcast networks.
"We're programming outdoor sports and lifestyle programming 24-7, while an ESPN or a Fox Sports can't devote that much time."
Added Outdoor Channel CEO Andy Dale: "For these other channels, [outdoor sports] is more of a programming block that viewers have to hunt around for. We have no problems finding content; the content usually seeks us out because it's based completely outdoors."
Dale, whose network is in 12 million cable and direct-broadcast satellite homes, also said that most of its programming is very inexpensive to produce — in fact, a good portion of it is produced by amateur outdoorsmen.
"Portable video gear is much more affordable for folks these days. You can produce a very professional, full network show today for a fraction of what you could in the old days," Dale said.
"In the outdoors you don't have sets, you don't have makeup, you don't have studio rentals — there are many, many things you can do that won't bust your budget," he added.
NEED FOR NEWS
To supplement tournament and event coverage, niche sports networks provide viewers with extensive news updates, late-breaking information and statistics for all major events within their genre — even if the matches are televised by a competitor.
Providing avid tennis fans with updated information — even going so far as to list the networks that carry the major tournaments — is the type of service that will help endear The Tennis Channel to fans, Meister said.
"If there's a event like Wimbledon where Turner is doing early-round coverage and NBC is doing weeknights, weekends and finals, then we'll promote that event even though we don't have anything to do with it," Meister said. "It serves the tennis audience and by serving the tennis audience, we build the value of the tennis channel to our constituency."
The Golf Channel's primetime schedule features a number of news and information shows. On Mondays through Wednesdays at 7:30 p.m., the network features a news show that repeats three hours later. Wednesdays at 8 p.m. the network tees up Viewer's Forum, a preview show of the upcoming week's events.
"While other networks feature golf news, viewers may not want to wait 30 minutes or an hour watching another news show just to get three minutes of golf information," Manougian said. "We provide a full half-hour show where viewers know they'll get 30 minutes of golf news."
'INSIDER' FARE
Just as important, niche sports networks also offer exclusive "insider" programming for enthusiasts that more general sports networks can't or won't televise. Whether it's The Golf Channel's European Tour Weekly
— which gives viewers an inside look at tournaments on the Continent — or Speedvision's Inside Winston Cup, in which viewers can get up close and personal with the race car drivers and provide updated information on upcoming races, such programming is invaluable to niche sports networks.
"While we don't have the live races, which is obviously the big draw, we will have original programming that will give viewers more in depth access with the races and the racers," Liberatore said. "The ability to have the NASCAR [National Association for Stock Car Racing] personalities sit down to talk about the race and to provide in-depth coverage to fans does satisfy that need of the NASCAR viewer, because they won't get that kind of coverage anywhere else."
Sometimes niche sports services are able to get the cream-of-the-crop tournaments for their particular niche. Outdoor Life Network holds the rights to the prestigious Tour De France cycling tournament through 2004. While the audience for the Tour may not rival that of the National Collegiate Athletic Association men's basketball tournament — a.k.a. "March Madness" — Williams said it draws a loyal audience that will remain with the channel after the finish line is crossed.
How-to programming is another major draw for niche sports networks. Unlike specialized skill sports like baseball and basketball, millions of viewers play tennis or golf, or fish. Shows that provide the average player tips on how to improve his or her game can draw viewers.
It's not surprising that two of The Golf Channel's most popular shows are instructional programs that attract both amateur and semi-pro viewers. Golf Channel Academy, which features some of the top golf teachers around the world, and Academy Live, which allows viewers to query world-renowned PGA instructors, give the network a major point of difference.
The network's newest show, Troubleshooter Challenge, is Golf's take on reality television, Manougian said. The network will pair an average golfer with a pro instructor, and follow the student's progress for 13 weeks.
"It's reality TV," he said. "I think both our news and the instruction set us aside from the rest."
The Tennis Channel will devote 40 percent of its original lineup to instructional programming to lure racquet wielders. Everything from improving one's backhand to workout tips and equipment will be covered in an effort to provide viewers with a complete tennis experience.
"We'll do stuff on equipment, training and diet," Meister said. "We'll talk about how to enhance your experience in playing tennis."
INSTRUCTIONAL
Outdoor Channel's Dale said the most popular programs on the network are instructional shows hosted by lay experts, rather than professional instructors. One viewer favorite is a how-to show on bow fishing — the art of using a bow and arrow to catch fish — hosted by veteran rock star Ted Nugent.
"Our hosts aren't Hollywood types, they're regular Joe and Jane types, but they know their stuff," Dale said. "Our audience doesn't care how you look, as long as you are knowledgeable and capable of communicating with the viewers."
While ESPN, TNT and USA draw blue-chip advertisers and command high license fees from operators, niche network executives said an unwavering commitment to serving their respective target niche is their key to gaining increased distribution and advertising revenue.
"For a mass-audience delivery, the ability to get through with a golf tournament and then televise a football game or a tractor pull certainly behooves [mainstream sports networks]," Manougian said. "But for us, delivering our high-end demographic, we're the beneficiary of their schedule because viewers know they can tune to us and get golf 24 hours a day, 7 days a week."
Niche sports networks' ability to reach their viewers — who are often very affluent and elusive — isn't lost on the advertising community. Marketers of high-priced specialty products such as sports equipment — as well as traditional sports advertisers such as beer brewers and automakers — like the high-end demographics that these networks draw.
Ad agency RJ Palmer — which represents such companies as German-based technology company Siemens Corp. and lawn-care product maker The Scotts Co. — believes that networks like The Golf Channel are better buys for clients looking to reach upscale consumers than most traditional cable networks with greater distribution numbers.
"From a media perspective, I put The Golf Channel in an upscale category that puts them into the CNBC, CNN [Cable News Network] arena," said RJ Palmer president Peter Knobloch. "That sport is certainly associated with an influential, upper-income type of audience, which for some of our clients is key.
"We can get the CNBC viewer on the business side of the fence and we can get the sports viewer through The Golf Channel," he added.
To further attract advertisers, Outdoor Life Network has offered companies an opportunity to purchase in-program sponsorships that extend the advertiser's brand. This summer, the network provided Ford Motor Co. with an opportunity to sponsor the Mercury Cycling team in its efforts to qualify for the Tour De France.
Outdoor Life Network's Williams said niche services need to provide greater incentives to advertisers in order to compete with mainstream companies.
"Given the cutbacks in today's advertising marketplace, if we're out there trying to sell on a CPM basis with 40 million homes, we'd be a marginal net at best," he said. "But by putting together integrated advertising packages, an advertiser might consider us one of the last to be cut, if we get cut at all."
The ability to match product and viewer specificity can make niche sports services very attractive to marketers.
"The advertisers have figured out that the enthusiasts that want their product are watching our networks. If you advertise a fishing lure on a [traditional] sports network, you're going to get a lot of people who are just sports fans — they're not active fishing consumers or anglers," Dale said. "But with the Outdoor Channel, we deliver the qualified consumer of that product. Our distribution is smaller, but we have a greater percentage of active users of the product."
But sometimes becoming too niche-targeted can be problematic. When Fox Sports purchased full control of Speedvision, most observers thought it would become a 24-hour stock car channel to complement Fox's piece of the $2.8 billion NASCAR television rights deal.
But Liberatore said the network's viewers demanded that it only add NASCAR programming to its other motor sports programming. The network recently acquired rights to the Championship Auto Racing Teams (CART) races from ESPN.
The combination of NASCAR and CART programming — along with more targeted auto-oriented programming — allows Speedvision to serve two different and distinct sets of auto racing fans under one roof.
"We're reaching everybody within our niche," Liberatore said. "We're reaching the affluent purists of racing fans who love the machines and the technology, and then we reach the rabid NASCAR fan who can't get enough of their drivers and who know the whole story behind the team. Those are two distinct audiences that are our niche, and we serve both of them."
STRONG RESPONSE
The networks' adherence to their respective niches have allowed these channels to become household names among fans of their respective sports. As a result, operators said networks like The Golf Channel are often among the most requested by subscribers.
"From a brand standpoint, there are some companies that try for years to get that type of consumer response or demand, and we've been able to do it in a relatively short period of time — and that goes back to the quality of the product," Golf's Manougian said.
"If you're a cable operator and going digital and expanding channels, at some point you have to say to yourself, 'Do I want to add the 20th movie channel to the group of channels or do I want to add the first and only tennis channel?' " asked Meister. "The operator enhances its product by providing a unique service that reaches a specific target audience."
