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World Cup TV: Many Viewers, No Profits
ESPN, ABC, and Univision won't cover their costs of buying tournament rights in the U.S. That's fine with them

By Sommer Saadi

More than 24.3 million soccer fans in the U.S. tuned in on July 11 to watch Spain defeat the Netherlands in the championship game of the World Cup, setting a U.S. record for a soccer match. One might think that an event that can pull in that many eyeballs would mint gold for TV networks. Not quite.

Despite soccer's growing popularity in the U.S., the networks that paid for the rights to air the matches stateside did not realize a profit on their investment—at least, not a tangible one. ABC and ESPN, both of which are owned by Walt Disney (DIS), and the Spanish-language broadcaster Univision Communications paid a combined $425 million for rights that include this year's championship as well as the 2014 World Cup. Executives at ESPN and Univision wouldn't say exactly what their World Cup ad revenues were, but in interviews they acknowledged that they did not realize an immediate return on their investment in the rights. "Broadcasters never make up the cost of the Cup," says Ezechiel Abatan, a senior sports researcher at Sportcal, a London-based sports business-intelligence company. "But they buy the rights to build up their image, to become known as the soccer channel."

Media executives maintain there are still good reasons to spend the money. "Broadcasting the World Cup allows us to attract viewers who are really tuned into the sport," says Joe Uva, president and chief executive of Univision. "The benefit is we get to keep those viewers after the Cup is over." ESPN, the network that bills itself as the worldwide leader in sports, says that passing up the World Cup is just not an option. In a July 8 conference call with reporters, Scott Guglielmino, senior vice-president for ESPN Programming, said: "For us, as we continue to grow our business, being involved with marquee events of that level is absolutely valuable."

One obstacle networks face in recouping their investment is that soccer is not the most ad-friendly of sports. The two 45-minute periods of each match go mostly uninterrupted, limiting natural ad breaks to immediately before and after the match and at halftime. (Some networks have experimented with on-screen ads as well.) Those add up to around 25 minutes of ad time. By comparison, there are about 45 minutes of ads during the National Football League's much longer Super Bowl games.

Marketers are also reluctant to buy spots too far ahead of the World Cup matches, because a steep drop-off in viewership occurs when a national team gets eliminated from the tournament. In the U.S., more than 19 million viewers tuned in on June 26 to watch the decisive U.S.-Ghana match, according to Nielsen. The very next day, U.S. viewership for the Argentina vs. Mexico game dropped more than 20 percent, and for the Germany vs. England game the reported audience was less than half.

The real winner in this game is FIFA. Soccer's governing body took in $1.9 billion from the sale of World Cup TV rights to rights-holders worldwide, from CBC in Canada to Sky Deutschland in Germany—a nearly 60 percent increase over the previous quadrennial tournament. "In every market you have broadcasting companies willing to give up an arm and a leg to have these rights," says Sportcal's Abatan. "FIFA can play these bids off one another, pushing up the price tag and again making it more difficult to turn a profit on broadcasting the tournament." The Zurich-based FIFA also collects revenues from official sponsors, which this time around included Adidas (ADS:GR), Coca-Cola (KO), Sony (SNE), and Visa (V). As part of their contracts, those companies are entitled to purchase ad spots on broadcasts seen all over the world.

So what do ESPN and Univision gain from airing the World Cup? Brand cachet, for one thing. Audiences learn to associate the stations with soccer, which can pay off in access to players and coaches for interviews, explains Abatan. Plus, a station that has the rights to the 2010 Cup is more likely to win the bidding for future tournaments.

Over time, networks may also gain viewers for other, more profitable soccer coverage or their other programming. Building on the World Cup momentum, Univision is now the exclusive U.S. home of the Mexican national soccer team, with rights to all its qualifying matches for the 2014 FIFA World Cup. Strong viewership numbers are expected for future matches involving the Mexican team, based on its performance in this year's tournament. The Argentina vs. Mexico match pulled in nearly 10 million U.S. viewers, the largest audience in the history of Univision. "The Hispanic community in the U.S. is almost a country within a country," says Univision's Uva. "It is a community of active soccer enthusiasts that continues to grow not just in numbers but [also] in spending power."

Saadi is an intern for Bloomberg Businessweek in New York.
Jdubb and 5 other people were the only ones watching. :roflmao:
Can I get a summary of that article from someone?
Words. Words. Words.

I actually read the entire thing, I normally don't when you guys post long shit.

whatever though.
I was a Little League superstar, don't hate.

Dudebro #5 on the Rich Davis poll and Dudebro #11 on the Steve Covino Poll.  Former Dudebro #18.
[Image: 1square07.jpg][Image: 1square01.jpg]
Joe In PA Wrote:Jdubb and 5 other people were the only ones watching. :roflmao:
don't forget us that are international :poke:
Brampton Wrote:don't forget us that are international :poke:

You aren't international. You are Canadian. That's like North Minnesota.
Pokes28 -- AKA David in Missouri
[Image: twighlight-soccer.jpg]
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