For Murdoch, Dodgers mean ratings
Posted: Friday May 29, 1998 04:33 PM
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Mike Piazza thought he would be a Dodger for life, but Murdoch's team does things a different way (AP) |
LOS ANGELES (AP) -- All-Star catcher Mike Piazza is gone and a few of his old teammates may soon be history as well in the latest sign that Rupert Murdoch's Fox Group has taken charge of the Los Angeles Dodgers.
The Dodgers' confirmation that they are trying to acquire Seattle's All-Star pitcher, Randy Johnson, highlights
the importance of sports in the strategy of big entertainment conglomerates like Fox parent News Corp. and competitors Time Warner and The Walt D
isney Co.
In a television industry where sitcoms and dramas come and go with the latest Nielsen ratings, sports has emerged as an island of ratings stability. Audiences are assured for major sports telecasts and thus become a foundation for network promotion.
And if Fox can turn the Dodgers into a winner by trading for players like Johnson, the foundation gets stronger.
"You get key movies here and there and obviously big shows becoming a hit could be an event. `The X-Files' is an event for Sunday night. But against those choices, your major sporting events are second to none," said Chase Carey, co-chief operating offic
er of News Corp. and the chairman and chief executive of Fox Television.
"Sporting events are first and foremost the events that you can build a brand identity with," said Carey, who brokered Fox's purchase of the Dodgers and negotiated Piazza's trade.
More than 60 publicly traded companies have ownership interests in major professional sports teams. Two-thirds of those companies are in the entertainment business, said Paul Much, a sports management specialist with Houlihan Lokey Howard & Zukin.
News Corp.'s primary rivals, Disney and Time Warner, have invested heavily in sports. Disney owns interests in baseball's Anaheim Angels and hockey's Mighty Ducks. Time Warner owns stakes in Atlanta's hockey, basketball and baseball franchises.
Telecommunications giant Comcast Corp owns shares of Philadelphia's 76ers and Flyers, and USA Today owner Gannett Inc. is a part owner of the Cincinnati Reds, according to Much's book Inside the Ownership of Professional Sports Teams.
"What you'll find is more media entertainment companies will be more likely to do that because of the synergies," said Much. "They want to control their programing. They want to control content, because that's the way you build value over time."
Bobby Bonilla (left) and Gary Sheffield are the newest additions for Murdoch's Dodgers (AP) | |
And when media companies see ties to a sport severed, they don't always walk away.
Turner Sports and NBC, losers in last winter's bargaining over TV rights for broadcasts of professional football games, this past week announced a joint effort to create a competitor to the NFL.
Murdoch outlined his sports strategy during a speech at News Corp.'s 1996 shareholders meeting. The company, he said, would use sports as a "battering ram and lead offering in all our pay-television operations."
But the value of sports goes beyond cable. Bringing the NFL to Fox Television in 1993 established the network by attracting audiences that also began to tune in to shows like "The Simpsons" and "The X-Files."
"We can see over the last 30 years that sports has remained as the one solid area in a swamp of viewing opportunities, so having said that it becomes fairly obvious that the entity that broadcasts primo sports is going to have the eyes, going to have the
viewers," said David Hill, president and chief operating officer of Fox Television.
The Dodgers aren't Murdoch's only sports holding. In addition to interests in New York's Knicks and Rangers, he holds options to buy minority stakes in the Los Angeles Lakers and the Los Angeles Kings. News Corp. also has a 20 percent interest in L.A. Ar
ena Co., the business that is building the new Staples Center sports arena where the Lakers, Kings and Los Angeles Clippers will play.
The acquisition streak has taken a toll. News Corp. earnings dropped the past three years, from a peak of $1.3 billion in 1995 to $720 million in 1997, partly on losses from Murdoch's attempt to build a new rugby league in Australia. Profits have improve
d during 1998, largely on revenues from Fox Television and "Titanic," which was co-produced by 20th Century Fox.
Disney, a company that was limited a few years ago to theme parks and children's movies, appears to be following a similar pattern. In buying the Angels and Ducks, Disney has secured program content for the ESPN sports network, which it acquired as part
of its $19 billion purchase of Capital Cities/ABC in 1996.
The cost of buying pro football rights for ABC and the ESPN cable network, plus poor general performance by ABC, helped trigger a drop in the company's share price.
But others believe Disney had to assert itself in sports to remain competitive.
"They basically made a statement: we are not going to play second fiddle in sports," said Arthur Rockwell, an entertainment industry analyst with Drake Capital Securities in Los Angeles. "While it is a growing expense, it is a platform that you need."
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