What a bunch of regional sports networks would do for Amazon – Channel3000.com – WISC

What a bunch of regional sports networks would do for AmazonAmazon via CNN



(CNN) –
Amazon has been steadily pushing into live sports broadcasting. Now those plans might be picking up speed.

The tech company is reportedly bidding on the 22 regional sports networks that Disney is putting up for auction, according to CNBC, which cited anonymous sources familiar with the matter. Amazon (AMZN) declined to comment about the report to CNN Business.

The fate of the networks has been in limbo for months, and it isn’t clear whether Amazon would prevail. But its rumored interest signals yet another way the tech industry could shake up the traditional media landscape.

Amazon, Netflix (NFLX) and other tech giants have already upended the TV industry. Legacy businesses used to rely on scripted dramas and comedies to draw in audiences every season. But streaming services now offer original programs on demand, largely eliminating the need for people to tune in weekly to a network or cable channel to watch their favorite shows.

That makes live TV, and especially sports, a valuable asset for any company that deals with the medium. People still consider such events appointment viewing.

The regional sports networks were valued last year at about $23 billion by the research firm MoffettNathanson. If Amazon is successful in its bid, the purchase could be its largest acquisition ever, surpassing the $14 billion it spent on Whole Foods last year.

The networks carry professional and non-professional sports for regional markets across the country, including Arizona, Oklahoma, Wisconsin and the Carolinas. The collection also includes the YES Network, which broadcasts Yankees games for the New York City metro region.

Disney (DIS) is picking them up as part of its $71.3 billion deal to buy most of 21st Century Fox (FOXA). It is agreeing to sell the networks to satisfy antitrust concerns from US regulators.

Major sporting events are still largely associated with traditional media channels, including CBS, ABC, NBC, Fox and ESPN. But technology companies have been dabbling in live sports, too.

Facebook (FB), for example, retained the exclusive rights to stream a couple dozen Major League Baseball games last season. And Amazon spent $50 million last year to nab the rights to stream Thursday night National Football League games for the season. Twitter (TWTR) has also streamed events.

For Amazon, a slate of regional sports networks would also serve as an added perk for subscribers of its Prime program, which costs $119 per year and has more than 100 million members worldwide.

Prime membership in the US is slowing down, according to an October report from the firm Consumer Intelligence Research Partners. But access to sports could be enough to draw in new members who aren’t already attracted to the service’s free shipping or entertainment programs.

Ownership of the regional sports networks would be more complicated than obtaining the rights to stream a sport.

Right now, for example, the networks up for sale are owned and operated by Fox, which cuts deals with teams in each region for the right to broadcast local games. Fox makes money by licensing the networks to cable and satellite providers.

Amazon couldn’t exclusively stream games for local audiences on its Prime Video service just yet. The company would have to offer the channels to cable and satellite companies at least until current contracts expire.

That’s not necessarily a bad thing, said Jay Rosenstein, a former CBS Sports executive and current adjunct professor at New York University’s Tisch Center for Sports Management.

“They can keep the linear deals with the Comcasts and the Charters and the other cable companies and DirecTV and all the rest at the same time that they’re fine-tuning the streaming model,” he said.

And if Amazon is serious about sports, owning the networks could give the company the clout and experience it needs to make a serious run at other linear TV properties in the future, Rosenstein added. Many of the most coveted national contracts, including those for football and basketball, will come up for renewal in the next several years.

“It gives Amazon a real seat at the table,” Rosenstein told CNN Business. “You’ve got some interesting opportunities for them to learn more and to be a part of the conversation with each of the major leagues, and that would be something that I think would be of some value to them.”

There are some concerns. Tech companies have stumbled with some live sports ventures. YouTube TV temporarily lost service during a World Cup game this summer, And Amazon’s Prime Video customers in the UK complained about the quality of the company’s Wimbledon coverage this year, which Amazon offered on its streaming service in the country.

If Amazon buys the regional sports networks and eventually plans to stream coverage, Rosenstein said, fans likely wouldn’t give the company a lot of room for error.

“That local audience is far more passionate,” he added. “It would be a real maelstrom if there were screw-ups in the ability of local viewers to be able to see their local teams in the way they are accustomed.”

The fact that the audience is smaller than the one watching games on a national broadcast might mitigate those problems, though. In a blog post last month, BTIG Research analyst Rich Greenfield wrote that the regional networks make sense for tech companies that want to invest in sports because local audiences would be easier to handle from a bandwidth standpoint.

Regional and local channels are also attractive because of how avid the fanbases are, Greenfield added.

“Diehard fans will find/seek out the content,” he wrote. “If you are watching YES Network nightly to watch the Yankees, you will seek it out on Amazon. Sports is tribal, especially on a local team basis.”

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