In the latest episode of “Rich Man, Richer Man,” one group of wealthy sports folks the NFL, NBA PGA, NCAA, “Hey, we no longer can foot all of your bills, in other words, stop feeding those pampered athletes gourmet TV dinners at our expense.”
For the past 18 months, CBS executive Neal Pilson has climbed on his soap box repeatedly, speaking out on the impending change in network sports. Many people aren’t listening, and of those who are, many are skeptical of Pilson’s motives.
Pilson’s message is simple: because there’s too much out there in sports programming and because ratings don’t necessarily equal dollars these days, the network can’t keep paying higher rights fees to televise sports.
“This is the most significant issue in sports television today,” Pilson said during a recent visit to Washington. “This funding cannot continue to escalate. What the industry has gotten used to since 1980, it now must go through withdrawal. What’s needed is you have to change the expectations of everyone in our industry, including the players and owners.
“If they’re building a team model on the expectation that TV money will increase will saying, ‘hold it. You better reassess it’ We can’t handle the growing imbalance between revenue and costs.”
In this new, not so brave world of network sports, networks will be less likely to grab at competitors’ events if costs are prohibitive. Anthology shows will be refined, streamlined or possibly eliminated. Advertisers will look elsewhere until rates become more reasonable in their eyes.
Pilson, executive vice president for CBS/Broadcast Group in charge of sports, is faced with an increasingly splintered viewing audience, which, in turn, helps create an increasingly apathetic advertising community.
“Advertisers have more choices, and a number of major advertisers have cut back on sports advertising,” he said. “There’s an insufficient line outside our door. Like the airline industry when we take off with empty seats, it hurt us.
“In our business, we don’t sell off our costs. Advertisers don’t give a damn how much we paid for an event. It’s not like a car ‘It cost me $10,000 to build it, it’ll cost you $12,000 to buy it.’ We can tell advertisers that and they say, ‘Pass. I’ll pay you (this). Take it or leave it.’
Major advertising executives have approached people like (NFL Commissioner) Pete Rozelle to tell them they can’t continue to afford pricing that, network pass on to them.”
Thus, even though NFL ratings are up 12 percent this season, Pilson is trying to prepare the NFL not to expect another grand leap in rights fees when the current contract ends after the 1986 season.
“If market conditions don’t improve,” Pilson said, “there is the likelihood that all three networks will be looking for a reduction in their rights fees starting in 1987, If we had to negotiate tomorrow, that would be the case.”
Critics of Pilson say he’s trying to create this new climate of austerity simply so CBS can cut more favorable deals in the near future.
‘’All I can say is, look at our track record of refusing to pay dramatic increases in a number of situations,” he said. “We walked away from major Triple Crown event (the Belmont Stakes) because rights fees are too high.
“Our position on (the Calgary Winter Olympics) was the right position. Our position with baseball, I believe, was right. We were offered ABC’s baseball package for $500 million. We think ABC is losing an enormous amount of money. I don’t know if I’d be in my job right now if I’d made that deal.
“We have been experiencing shrinking margins of profit. It’s easy for me to say it, and we’re not willing to open our books to prove it, but I have not felt that our margins are ridiculous or obscene. The issue isn’t margin of profit; it’s become our degree of loss.”
Pilson point to what he calls “the major event syndrome.” With all the increased sports coverage, only big events such as the Super Bowl command the overwhelming interest of the viewing public.
Recent ratings support this thesis: regular season numbers for NCAA basketball, the NBA and major league baseball basically were flat, but viewership for the NCAA tournament, the NBA playoffs, and the World Series jumped, in addition, most run of the mill tennis and golf tournaments suffered, but Wimbledon, the U.S. Open and golfs Grand Slam events had increase. And anthology shows, the networks’ mishmash of dozens of sports you don’t necessarily want to see, also have shown rating fatigue.
Although Pilson disagrees, it seems that CBS helped create this glut. Over the past decade, as cable and syndication ballooned, CBS more than doubled the amount of its sports programming. While the amount is leveling off at CBS, ABC, and NBC, there still are an average of 30 hours of sports programming per week on the three networks combined. Add to that ESPN, WTBS, WOR, WGN, regional cable systems and local independent stations (such as WTTG-TV-5 and WDCA-TV-20), and it’s reached the point where sports fans fall asleep nightly with remote channel switchers in their hands.
But now, the overkill might soften a bit, at least at the network level. “We used to run after each other’s events,” Pilson said. “It really doesn’t make sense … Occasionally, these days. We find the need to say no.”