Greg Maffei, chief executive of Liberty “All sports properties have a desire for Media, owner of Formula 1 Group maximum reach and maximum revenue.
(F1G), is predicting an erosion of sports property values in the future due to increasing television fragmentation. At the recent Goldman Sachs Communacopia Conference at the Palace Hotel in San Francisco, Maffei warned that even, previously unassailable television heavyweights like Walt Disney owned, ESPN are losing ground in the face of extreme fragmentation taking place across broadcasting. Maffei said: “ESPN, which
has been a great asset and is our partner at Formula One, has declined from 105 million households to 75 million households, or something like that. So how do you find that full reach and still get paid?”
If the decline of ESPN continues, Maffei worries that it will be unable to continue
to pay top dollar for sports rights and the decline will become self-perpetuating, reducing competition for rights and thereby values.
Maffei, who has every reason for optimism, was very pessimistic of the coming fragmentation, he said: “I think you’re going to continue to see that fragmentation, and you’re already seeing in cases like (American) college football where it’s so much harder
to say, where are you going to watch, where do you find this game, and where do you find that game. And I think that’s going to be a challenge for consumers. And it will put the crimp, potentially, on sports rights valuations.”
Maffei further warned of the dangers of losing the mass audience in such a scenario:
And those two thoughts are not always consistent. In many cases, you can get an over-the-air provider who gives you full reach, and you can get a premium provider who gives you more revenue.”
Bernie Ecclestone started the move away from free-to-air mass television audiences
to premium subscriber audiences in 2012 and saw an uplift in television rights fees of well over 200 percent from what free-to-air channels were prepared to pay. Now even that model is under attack from extreme fragmentation. Maffei says: “To try and find that balance is critical. That’s going to be harder and harder because there are going to be fewer people who can provide you with both reach and that revenue. So that tension exists.”
See interview with Greg Maffei which starts on Page 70 inside this October issue.