Fox to unveil sports channels for ad buyers in challenge to ESPN

Fri Feb 8, 2013 4:35pm IST

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(Reuters) - News Corp (NWSA.O) will unveil its long-rumored national sports channel to advertisers in early March in its drive to siphon viewers and advertisers from sports behemoth ESPN, according to two people with knowledge of the launch.

The Fox Corp unit will soon send advertisers invitations to its first sports "upfront" presentation, the TV industry's annual unveiling of new shows, for a splashy New York City event, the sources said. It will make sales pitches for both its 22 regional sports channels and its new Fox Sports 1 and Fox Sports 2 national channels.

Daytime talk show host Regis Philbin is in talks to host a daily afternoon show with other hosts on Fox Sports 1, according to one of the sources, and could appear at the event.

Fox will convert its motorsports channel Speed into Fox Sports 1. It will convert its extreme sports channel Fuel into Fox Sports 2, the person said, and would also offer subscribers the ability to get the channels on mobile devices.

The main offerings will include Major League baseball, college football, NASCAR races, professional soccer, and ultimate fighting, the person said.

The two new channels are expected to begin broadcasting games in August and would expand its offerings in 2014, the person said.

News Corp's new offerings will likely lose money in the early years, according to analysts, which mirrors the company's money-losing launches over the years of its Fox News and Fox Business channels. The Fox Business channel, started in 2007, is expected to become profitable this year, News Corp president Chase Carey said in an earnings call on February 6.

"The company has shown in the past that it's willing to consider its new channels as investments for its portfolio, said James Dix, an analyst with Wedbush Securities in Los Angeles who rates News Corp. "outperform."

"Their regional channels are a great business, but sports contracts are forcing channels to charge more and more, especially for people who don't care about sports," he added.

Fox Sports spokesman Lou D'Ermilio had no comment.

The company has positioned itself over the last few years to create the national channels by signing deals with sports leagues that contain provisions that allow it to carry sports on a national cable channel that it been carrying on its regional sports channels and its general entertainment channel FX.

In October, it signed a nine-year extension of its agreement with Major League Baseball that allows it to carry up to 40 games on a national cable channel, according to an MLB press release. It carried Pacific-12 and other college football games last year on its FX channel that can be transferred to the new channel, according to one of the people.

Disney Co's (DIS.N) ESPN said it welcomes the competition.

"We like our position and the fact that others recognize what we've known for a long-time, which is the power of live sports," said ESPN spokesman Mike Soltys.

Carrying national sports would allow Fox to charge more to the cable and satellite operators who carry its channels and expand its carriage to more homes to sell higher priced ads.

The Speed Channel, which is seen in 87 million homes, currently gets 22 cents a month for each subscriber, according to media consulting firm SNL Kagan. Fuel TV get 15 cents monthly for each of its 37 million subscribers.

By contrast, ESPN gets $5.13 cents a month and is seen in well over 101 million homes, according to the National Cable & Telecommunications Association.

Fox is asking 90 cents to $1 per subscriber for its Fox Sports 1 channel, according to a person with knowledge of the discussion, and expects to increase that price in future years.

Some of Fox's contracts with the cable and satellite channels also have provisions that allow some increases in the monthly fees they pay to carry its sports channels that would escalate if they were to add more popular programs, such as Major League baseball, said one of the people.

"MLB and college football will get them some viewers and sub fees," said Brad Adgate, senior vice president and research director of marketing and advertising firm Horizon Media, "but many other premiere sporting events are lined up into the next decade."

(Editing by Mary Milliken and Matt Driskill)

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