Fox Sports Lands US Open in 2015

[Pakuni]

Fox way overpaid for the rights, but everyone knew that was going to happen.  The sports rights fees, already out of control, will get even crazier and drive up everyone's costs even more. 

 ... said everyone when Fox landed the NFL in 1993.
Just as was the case then, Fox overpaid (they outbid CBS for the NFL by $400+ million) but it gave the network credibility. Seems to me they're following a tried and true formula with FS1.
Bully for them, and bully for the Big East.

[Pakuni]

On a related note, this would be a great move for FS1:

http://www.awfulannouncing.com/2013/august/fox-offers-golf-analyst-position-to-greg-norman.html

[ZiggysFryBoy]

On a related note, this would be a great move for FS1:

http://www.awfulannouncing.com/2013/august/fox-offers-golf-analyst-position-to-greg-norman.html

will his analysis fade towards the end of the match?

[Benny B]

will his analysis fade towards the end of the match?

Bazinga.

[brewcity77]

... said everyone when Fox landed the NFL in 1993.
Just as was the case then, Fox overpaid (they outbid CBS for the NFL by $400+ million) but it gave the network credibility. Seems to me they're following a tried and true formula with FS1.
Bully for them, and bully for the Big East.

I still look at that as maybe the most significant move by a broadcasting company of my lifetime. Prior to that, NBC, ABC, and CBS were the ONLY three major networks in Milwaukee. Fox was viewed the same way people see the CW today. Suddenly the little backwater channel that spent most of its time running sit-com reruns and afternoon cartoons was carrying Packer games. Cue Fox snatching Channel 6, CBS bouncing around until they landed on 58, and a legitimate 4-network battle.

I'm not at all saying that Fox getting the US Open will have a similar fallout, but if any company knows how to go from also-ran to heavyweight contender, it's Fox. I'm still a little surprised they let the EPL get away considering how much value that content could have to FS1, but it's not like they haven't crashed a dancehall before.

[frozena pizza]

On a related note, this would be a great move for FS1:

http://www.awfulannouncing.com/2013/august/fox-offers-golf-analyst-position-to-greg-norman.html

Agree - brilliant.

[ChicosBailBonds]

... said everyone when Fox landed the NFL in 1993.
Just as was the case then, Fox overpaid (they outbid CBS for the NFL by $400+ million) but it gave the network credibility. Seems to me they're following a tried and true formula with FS1.
Bully for them, and bully for the Big East.

Not exactly true Pakuni.  There have been a number of properties that were, indeed, highly overpaid for and the networks lost their arse in the process.  In fact, it happens more often than you think if you were to look at each property as an individual P & L, but it gets peanut buttered over by other successes and not reported to investors, etc.  Or another way to put it, the blemishes are hidden by the successes elsewhere.  Happens everywhere.   They overpaid for this property and behind closed doors they will admit it to the right people, they need content and they are going to overpay in the short term to get it.  Everyone in this industry knows that to be the case...it is what it is, you are free to believe it if you wish.

And not everyone said that about Fox and the NFL back in the day. Many did, of course. Just as many people said some little satellite company doing a deal with the NFL for an out of market NFL package would go out of business.  So much so that GM, the owners of that little satellite company told the CEO of the satellite company not to do the deal and he did it anyway.  The rest is history.  Sometimes things pay dividends, sometimes they don't.  Football, is an exception, and that is the example you gave.  For the US Open, Fox overpaid and the drinks with the right people at the right time of night they will tell you that.  It is what it is.   

[forgetful]

Not exactly true Pakuni.  There have been a number of properties that were, indeed, highly overpaid for and the networks lost their arse in the process.  In fact, it happens more often than you think if you were to look at each property as an individual P & L, but it gets peanut buttered over by other successes and not reported to investors, etc.  Or another way to put it, the blemishes are hidden by the successes elsewhere.  Happens everywhere.   They overpaid for this property and behind closed doors they will admit it to the right people, they need content and they are going to overpay in the short term to get it.  Everyone in this industry knows that to be the case...it is what it is, you are free to believe it if you wish.

And not everyone said that about Fox and the NFL back in the day. Many did, of course. Just as many people said some little satellite company doing a deal with the NFL for an out of market NFL package would go out of business.  So much so that GM, the owners of that little satellite company told the CEO of the satellite company not to do the deal and he did it anyway.  The rest is history.  Sometimes things pay dividends, sometimes they don't.  Football, is an exception, and that is the example you gave.  For the US Open, Fox overpaid and the drinks with the right people at the right time of night they will tell you that.  It is what it is.   

Chicos, I think Pakuni is spot on and you are neglecting the issues.

You are simply looking at this as a, fair market value vs. what Fox paid.  That is way to simplistic, which is I believe what Pakuni is illustrating.  Fox is going to get content, do it right, increase the value of said content and use that as a platform for marketing their network.

The marketing value of the content for network promotion is what you are neglecting.  The value of the exposure is well worth the amount they paid over current fair market value.  Like the NFL, they will now improve the content and increase its value, thereby benefiting from the current network promotion while investing in future content growth.

This is a huge boon to MU and the Big east, as we will profit from their desire to leverage the conference for exposure.  Just as Fox sports 1 is going to be able to use them to get free publicity in many of the biggest markets in the world.

[ChicosBailBonds]

Where did I ever say this isn't a big boon to MU....I've said that since day one it will be big for MU.  The timing was perfect.

Look, I work with these guys all the time, some of them are my former bosses now at Fox....when I say they overpaid for that property and were $100M over the next guy, they overpaid.  They will admit it privately.  It's what they have to do to get content and try to be a "player".  That's the strategy, and believe me the leagues, the conferences, the tours are loving it because it creates demand that wasn't there anymore.  Now they get to sell their properties to multiple bidders, where at least one (I'd argue three) are going to spend more than the properties are worth. 

Trying to compare this to the football contracts is silly.  The fact is, there are properties that will get huge financial incremental dollars as a result of FS1 coming out that normally would not get them.  The values are artificially inflated because you have an irrational bidder wanting to buy stuff up.  Then you have other bidders worried about losing properties that will push costs up further.  Just wait until the downstream part of this hits in another 18 to 24 months...that's the part no one is talking about (but I remind Fox, ESPN, and others almost weekly)...someone has to pay for their checkbook writing and the usual suitors are not always going to be there.

Very "fun times" ahead in the coming years.  Very fun.

[forgetful]

Where did I ever say this isn't a big boon to MU....I've said that since day one it will be big for MU.  The timing was perfect.

Look, I work with these guys all the time, some of them are my former bosses now at Fox....when I say they overpaid for that property and were $100M over the next guy, they overpaid.  They will admit it privately.  It's what they have to do to get content and try to be a "player".  That's the strategy, and believe me the leagues, the conferences, the tours are loving it because it creates demand that wasn't there anymore.  Now they get to sell their properties to multiple bidders, where at least one (I'd argue three) are going to spend more than the properties are worth. 

Trying to compare this to the football contracts is silly.  The fact is, there are properties that will get huge financial incremental dollars as a result of FS1 coming out that normally would not get them.  The values are artificially inflated because you have an irrational bidder wanting to buy stuff up.  Then you have other bidders worried about losing properties that will push costs up further.  Just wait until the downstream part of this hits in another 18 to 24 months...that's the part no one is talking about (but I remind Fox, ESPN, and others almost weekly)...someone has to pay for their checkbook writing and the usual suitors are not always going to be there.

Very "fun times" ahead in the coming years.  Very fun.

Sorry, didn't mean to imply that you were saying it wouldn't be good for MU, was just reiterating the concept.

Also, I believe that they would say in a meeting that they overpaid for the content, but they are referring to fair market value.  The real-value also will include marketability of a new network, in which case they did not over pay as they are gaining publicity from these purchases.  Obviously, realization of how much benefit they obtain from the purchases is still unknown.

[ChicosBailBonds]

Sorry, didn't mean to imply that you were saying it wouldn't be good for MU, was just reiterating the concept.

Also, I believe that they would say in a meeting that they overpaid for the content, but they are referring to fair market value.  The real-value also will include marketability of a new network, in which case they did not over pay as they are gaining publicity from these purchases.  Obviously, realization of how much benefit they obtain from the purchases is still unknown.

That's fair...and you are correct no one knows for sure until it shakes out.  Today, they and just about everyone in the biz will say they overpaid.  We've all been wrong before, but usually more right than wrong.  Easy to point out when folks are wrong on this stuff, but plenty of bad decisions that insiders talk about all the time. 

It would be a great time to be selling these properties right now.  Have a few friends that do this very thing and they are going to make sick money when all is said and one.