Disney's latest strike in its ongoing fight with Fox came in the form of a hefty check.
Walt Disney Co., the owner of ABC and ESPN, has offered to pay the National Hockey League nearly $600 million for exclusive U.S. broadcast rights for five years, industry sources told The Associated Press on Wednesday.The offer from ABC, ESPN and ESPN2 that could shut Fox out of the NHL one month after Disney scrapped plans to launch a regional sports network in Southern California to rival Fox Sports West. Fox Sports Net has made inroads recently into ESPN's dominant position in cable sports broadcasting.
"If you look at what is going on between Disney and Fox in the sports arena, the two of them are competing head to head in the cable area as Fox is attempting to mount a threat to ESPN," said Steve Grubbs, who oversees national broadcast advertising buys for the agency BBDO Worldwide.
"I think Disney will do whatever it can to support ESPN. It showed that during NFL negotiations and it is attempting to secure another major sports franchise here."
The big winner in the rivalry is the NHL, which will nearly triple its rights fees despite the fact that network ratings have fallen 30 percent since 1995.
Under the current deal, which expires at the end of the season, Fox pays the NHL $155 million for five years and ESPN pays $100 million for seven years.
A Fox source, speaking on condition of anonymity, said the network was notified of the offer by the league and is deciding whether to make a counterbid before an Aug. 14 deadline. But it is unlikely that Fox would renew at so steep a price.
"I don't know how hockey fits into Fox's overall sports game plan," Grubbs said. "They are tied to baseball and the NFL, but whether or not they feel hockey is worth that investment, I'm not sure."
This offer is just the latest example of a professional sports league capitalizing on the increasingly competitive bidding war between the networks for sports programming. The NBA more than doubled its TV deal last November when it renewed its contract with NBC and Turner Sports. The NFL also doubled its intake in a nearly $18 billion, four-network deal signed in January.
But while the NFL and NBA remain the two hottest TV sports, the NHL has struggled on television. Fox got a 1.4 rating this season, down from a 2.0 in 1995. A rating point represents about 980,000 households. Regular-season ratings fell 17 percent on ESPN and were flat on ESPN2.
"Obviously the bidder believes there is value there," Grubbs said. "There is value beyond the ratings delivered and revenue those events bring in. If you look at it on a straight revenue basis, it is either revenue neutral or it takes a loss."
Similar to the NFL deal, which gives exclusive prime-time coverage to ABC and ESPN, Disney is looking to take advantage of cross-promotion opportunities in a hockey deal. The league also is eager for such an arrangement after a season in which Fox and ESPN were hesitant to promote games on the other network.
The proposed deal should not affect ESPN's dispute with cable operators over the rates the network charges systems to carry ESPN and ESPN2. After agreeing to pay $600 million a year for the rights to the NFL, more than double the previous deal, ESPN increased the rates it charges cable operators by about 20 percent.