It was supposed to be a ground-breaking presentation. In a national first, ABC was going to partner with Showtime Event Television (SET) and the College Football Assn (CFA) for a pay-per-view telecast of the Nov. 16 Penn State-Notre Dame game. But the deal died.
The night before the pact was supposed to be finalized, Capitol Cities/ABC supremo Tom Murphy said at a party for ABC News doyenne Barbara Walters that the college football deal was “an important experiment” that might turn out to be a key part of the solution to sky-high sports rights contracts.
Across the room, CBS major domo Laurence Tisch called it “an experiment we will be closely monitoring.” (Just a week earlier, Tisch took a $169 million write-down on the Eye web’s ill-conceived major sports packages.)
But the next morning the deal, which would have offered the local game of the week free and a glitzy contest from another region for $9.95, was off. ABC instigated the plan, but it also put the kibosh on it.
The failure of the deal, a much different network approach than NBC’s expensive pay-per-view offering for the Summer Olympics, points out the hurdles facing a traditional network looking for another revenue stream from sports.
Several players caused the deal to go south. From the beginning it was cursed, not only by a lack of time, but by wary ABC and SET affiliates. According to insiders it also fell victim to internal opposition at ABC, where some execs were concerned the plan would hurt the network’s owned and operated stations.
“It’s good PR for ABC to back out of this and say they did it because of affiliate concerns, but they really don’t have that kind of clout,” says an ABC affil general manager familiar with the negotiations.
“There were people at the O&Os saying ‘ You’re going to be competing with yourself. Look at the situation in Chicago, where WLS [the ABC O&O] was playing the Michigan-Illinois game and the Notre Dame game was slated for pay-per-view. You have to believe the general manager of WLS was mad about that.”
Just days before word of the p-p-v negotiations leaked out, CapCities toppers had been doing some serious hand-holding about another cable issue at an ABC affil board of governors confab.
The affils were none too pleased about a recent lobbying foray by CapCities in Washington, an attempt to get Federal Communications Commissions to ax the prohibition against broadcast networks owning cable systems. The affils came out of the meeting far short of being appeased by promises from the web that its proposal contained safeguards that would protect local station franchises.
CapCities’ extensive, lucrative cable holdings – a controlling interest in ESPN and sizable pieces of both Lifetime and Arts & Entertainment – had never been something its affils were happy about. But now affils saw that their web not only wanted to add cable systems to its empire, it wanted to give further comfort to the enemy by getting into pay-per-view.
“We’re fighting this battle to determine where are [ the network's] priorities,” says John Garwood, vice chairman of the ABC affiliate board and general manager of WPLG-TV Miami. “We understand the people running the network feel there are business decisions they have to make. But we’d prefer to see them spending more money on compensation and program development and not focusing so much attention on cable.”
It wasn’t simply ABC that was having trouble with its affils. “SET was going to have to deal with between 700 and 800 cable systems to put this thing together,” says a cable executive with insight into the negotiations. “And in part, what they would be asking these guys to do was to promote ABC. To pull that off was going to take some selling.”
ABC sources say further forays into a p-p-v window are on hold for the rest of the season. “The next time out they’ll have a lot more of their ducks in a row,” says an executive familiar with the negotiations. “[ ABC] knows the first time around everybody is watching and they want a future in [ the pay-per-view] business.”
None of the players involved calls the concept dead. One industry insider predicts the next time ABC signs a contract with the CFA it will have a p-p-v clause, which irons out potential scheduling conflicts with the web’s O&Os and provides ample time to sell the deal to all concerned.
Next year, talks are likely to begin on National Football League contracts (the current ones run through the 1991 season), and when those new deals are struck it will probably include a p-p-v window for the webs that bite. Indeed, industry prognosticators think p-p-v will be a clause in all the major sports contracts coming up for renewal.
“To afford sports rights fees, the networks are going to have to do something innovative,” says media analyst Dennis McAlpine of Rothschild Inc. “This will eventually be a viable way to go.”