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William Oscar Johnson
August 10, 1981
Cable and pay TV, which already have brought remarkable variety to the home screen, are precipitating revolutionary change, and all of sport will be affected. The first of two parts
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August 10, 1981

You Ain't Seen Nothin' Yet

Cable and pay TV, which already have brought remarkable variety to the home screen, are precipitating revolutionary change, and all of sport will be affected. The first of two parts

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Maybe the world at large wasn't aware of all the hours ESPN devoted to the 1981 NCAA basketball competition, but a certain citizen of good old Lolo certainly was, and it is with shy pride that Squire tells of what happened. "My friend Marty lives in Reno," he says, "and he called in February to suggest that we go to Salt Lake City to see the Western Regionals. I said, 'They only have three games there. Come on to Lolo; we've got 36 of them here!' We both took vacations, and we sent the wives off on vacations of their own.

"Marty arrived on March 12, a Thursday, and we watched every game on Thursday, Friday, Saturday and Sunday. They'd start about 5 p.m., and then there'd be reruns starting at 1 a.m. There were four games a night at first. We were in a daze, a real happy daze. We'd only go out to the liquor store to get Crown Royal Whiskey and 7 UP. One time we went put for a drive. I was going to show Marty where Lewis and Clark came through. We got about halfway, and he said, 'Let's go back. We might be missing a game,' and we did. Marty was really impressed with TV in Lolo. He told me, 'If we had this in Reno, my wife would've divorced me years ago.' "

Can ESPN last? All-sports, all the time, seems like a concept with a future. Yet it appears likely that ESPN will remain an upstart unless it can obtain the rights to more major events. And as long as it relies so heavily on advertiser support, that seems impossible. Some form of pay TV—charging the viewer as well as the cable system for programming—seems essential to produce the megabucks ESPN needs to buy into big-time sports, because prices for the rights to major events are about to soar out of sight.

Whatever else may be changing in the structure of TV sport, one thing has remained the same from the beginning: Sports entrepreneurs have an abiding love of cold, hard cash in hand. And there could well be a lot available. Says Warner's Hauser, "The combinations of ways to make money on TV sport are damned near infinite. The marketplace is more open than ever, and sports organizations are just beginning to realize that there is lots more money out there for them than either the gate or the networks have been able to generate."

Whatever the method of payment or the technique for collection, this, too, is unchanging: Ultimately, the viewer will be stuck for the dough. This is nothing new. Although commercial network executives like to throw around the word "free" when they talk about advertiser-supported TV, the cost of such ads has always been fed back to consumers through markups on product prices.

Even so, advertising alone can no longer underwrite a full slate of major sports for the networks. In fact, it hasn't for some time, particularly in prime time. Says Van Gordon Sauter, president of CBS Sports, "Sports programming on prime time has decreased in recent years because the ratings haven't been high enough. The networks and advertisers view sport as an economic entity. Prices in prime time are staggering, and most sports simply don't produce enough return on the advertiser's dollar from a prime-time audience to make his commercials pay off. Only the NFL, the World Series, the Olympics and a few other special events consistently generate audiences large enough to satisfy advertisers who prefer prime time."

Ergo, prime-time sport leaves the commercial networks and joins some other delivery system that operates on a smaller audience base. "When a sport doesn't produce enough mass appeal for the networks, then cable and pay cable can become a viable competitor for the rights," says Jim Spence, senior vice-president of ABC Sports. "But no one really knows how things might lay out down the road. Pay cable? Is that really where the money is? I'm not sure that the U.S. public will be willing to pay regularly—every night—for routine events. Special events, yes. A few big boxing matches, yes. The NFL will probably someday get into pay cable on a partial basis. But I wonder if there's a lot of money out there for run-of-the-mill events."

It's a good question: Is there really enough money out there to support sport in the manner in which it has—or would like to—become accustomed? The answer varies from city to city and sport to sport. Yes, says the Prism pay cable network, which has been operating out of Philadelphia since 1976. The network transmits mostly movies, but it also airs heavy helpings of the Phillies (30 games), the 76ers (25), the Flyers (30) and local college teams. Some 230,000 subscribers pay $10 a month for Prism. Does this generate enough money to make sports entrepreneurs happy? Absolutely. Bill Giles, vice-president of the Phillies, says, "In terms of overall revenue, the increase in our pay TV money is greater than that of any other income we have. From our experience, I'm convinced that pay TV is going to be the savior of professional sports—the one and only financial savior."

Jim Barniak, sports director of Prism, projects his euphoria well beyond the immediate situation. "Cable has popped everyone's eyes," he says. "I think you're going to find in the future that a person will own not only a team and a stadium, but also a means to electronically transmit his team's games. I think you'll see everything go to pay-per-view. You watch something and they'll send you a bill for it. If Prism were to switch from $10-a-month subscription to, say, $2 a game, hey, we could take in $460,000 a night. It's going to be there someday."

Is it? At the moment, there are precious few bench marks by which to measure the true potential of pay-per-view. However, there was a night last November when a most impressive test of pay-per-view occurred, and neon dollar signs have been flashing in the brains of sports entrepreneurs ever since.

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