When upstart Fox snatched the National Football League broadcasting rights from CBS in 1993, the sports world was stunned. Fox was hardly tiny, but few expected it to displace CBS, which had carried pro football for 32 years.
That early aggressiveness set the tone for Fox Sports a unit of Australian media magnate Rupert Murdoch's News Corp. which muscled its way to dominance by later inking deals with Major League Baseball and NASCAR while blanketing major sports markets with local cable networks.
But as Fox Sports matures from brash upstart to established heavyweight, its priorities and leadership are changing.
David Hill is turning over day-to-day management to the division's president, Ed Goren, as he takes over Fox's newly formed DirecTV Entertainment Group. At the same time, Fox is taking a harder look at broadcast licensing fees that run into the billions of dollars without the guarantee of profits.
"As much as I enjoy our relationships (with leagues) and as sensational as those relationships have been for us, if it means overpaying going in, we'll have to walk away from any given contract," said Goren. "There are big decisions coming up that will affect what Fox Sports is in the next five to six years. We have to figure out how to (get broadcast rights) and still be fiscally responsible."
Big financial hits
When Fox Sports inked its first deal with the NFL for the 1994 season, News Corp. executives weren't expecting huge profits. They were just trying to build the Fox television brand from a cluster of mostly low-rated stations to a competitor on equal footing with ABC, CBS and NBC. The strategy worked, as the NFL deal persuaded some CBS affiliates to switch over and high ratings for football helped draw viewers to other Fox programs.
But the bottom line has taken several hits as a result of past spending habits.
In 2002, News Corp. took a $909 million charge against earnings for losses associated with its contracts with the NFL, NASCAR and Major League Baseball. Fox executives admitted at the time that they had paid too much, particularly in light of the soft advertising market in late 2001 and 2002. Fox's largest write-down $387 million was for its eight-year, $4.4-billion NFL contract.
The charges contributed to an $8 billion loss for News Corp. that year, though the parent company rebounded in 2003, recording nearly $1 billion in profit.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Hill Makes Climb to DirecTV Post
- NFL in Talks With ESPN, In Bid to End Cable Battle
- NFL Network Scores on League's TV Contract Power Play
- Baseball Team Deals Showing New Clout on Local TV Scene
- Sports Bringing a Fresh Profile To Infinity News Station KFWB
- Disney Buys European Sports Network