Problems with CART's TV deal..

[SevenGrain]

I've been looking over the domestic TV package for 2002 and I can't believe that this is the best that Heitzler could do given the amount of time that went into it.

I suppose the good part of it is that CART will have more control over the content and there will be more air time. Qualifying will be televised as will a magazine format show.

There are several real problems, the first of which is that there is no guaranteed income. In the current deal, ABC/ESPN pays CART roughly 3.5 million dollars for the broadcast rights, but in the new deal with CBS/Fox CART is paying Fox $325,000 per race to produce the CBS races and purchases the air time from CBS for $235,000 per hour. That's a 6.4 million dollar expense for CART for the seven CBS races. CART keeps the Ad revenue until it's costs are covered and spilts the rest 70/30 with Fox. On the Speedvision races, Fox assumes the costs and keeps the Ad revenue so it is a wash. Will there be enough Ad revenue to break even??? Going from guaranteed income this year to guaranteed expenditure next year has many investors and share holders very apprehensive to put it mildly.

The other big problem is that Speedvision only reaches about 42 million homes in the U.S., about half as many as ESPN. Spedvision's market numbers are so low that Nielson doesn't even rate it.

Also CBS is not even obligated to show seven races, they can show fewer if they choose. " Obviously we have Football, NCAA Basketball and golf, but we will work with CART to do as many races as we can" says Rob Correa Senior VP of Programming with CBS Sports.

Looking over this deal, I only have to wonder why Heitzler regected ESPN's offer to renew