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

[Liz]

In case you hadn't noticed, there was loud, vocal, frequent complaint from the fans about the quality of the ESPN coverage, the fact that no qualifying, pre-race, post-race or other Champ Car related programing was included in the package, and that frequently the race broadcasts were so chopped up that it was hard to tell what was happening at all. Add this to the horrible commentary package in which every pilot's name was pronounced "Michael Andretti" and you have the answer as to why the ESPN offer was rejected.

Please relise that the United States is not the only market for Champ Car races and that the rest of the world does not get RPM2Nite or any of the ESPN2 spillover programming that is allegedly offered to the USA. We do get Speedvision up here in Not The USA. We are cheering our tiny heads off at the new package.

And personally I would guess this IS the best they could do given the shambles that was left for them to work with and the low ratings due to the lack of promotion and stability of coverage. As the audience picks up and the press becomes more favourable, one would guess that the package will become more valuable. But as anyone knows who has tried to get a job in a buyer's market, it is occasionally necessary to work for free or for low wages to prove that one's services are of value to the employer. This I think is what Champ Cars will have to do this coming year at least.

[SevenGrain]

Well, I did say that the good news was that CART has more control over the content of the broadcasts, but given the fact that Andrew Craig decided to make CART a publicly held company (a bad decision IMO) you have to look at the financial side of it. Thanks to Craig, CART has to answer to Wall Street now.

Indeed, from a fans perspective, the package is quite good, if you have Speedvision and Fox Net (which is supposed to carry some crossover promotional programming.) So there is reason to cheer.

But for an investor, a sponsor, or a potential sponsor this package is not so attractive. For many teams, this may make it difficult if not impossible to retain current sponsorship or gain new sponsorship. Sponsors will not get the same value for their money with Speedvision, and because Speedvision is not rated by Neilson, there is no standard measure of how many people are even watching CART broadcasts.

I see what it is that CART and Heitzler are trying to do, taking a step backwards in hopes of taking two steps forward. And they are banking that NASCAR programming will not only increase the number of households with Speedvision, but will provide lead in audience for CART broadcasts. In certain aspects, their plan makes sense, and I am rooting for it to work, but it may be too late. There are a number of sponsors and engine manufacturers on the brink of leaving. Miller, Marlboro, Pioneer, K Mart, Toyota and Honda contribute a lot of money to CART and it's teams. If they are gone, who will take their place.

[Emfa]

I'm trying to look on the bright side of this (honestly!), but I'm having trouble. There seems little doubt that the new TV deal will provide a better broadcast than before and there WILL be more airtime. However.

There is still one thing that really bothers me, and another issue that nobody seems to have been able to address yet:
1. What happens when CBS preempts a broadcast? (ref. "Rob Correa, senior vice president of programming for CBS, told The Associated Press on Tuesday, "CBS does have a deal with CART to try to do seven races per year for the next three years, schedule permitting.") Will CART have enough warning to try to organise an alternative, or will the race simply not be broadcast? (I'm sure the sponsors will find that hard to swallow.) Maybe it will end up tape delayed at some wierd hour on whatever network they can buy time on. :confused:
2. What happens outside North America? Agreed that Speedvision and FOX should do a good job, but what are the poor sods who are not in the USA or Canada going to do?

I'm just a dumb fan, not a sponsor, so I don't really know, but some of the issues that SevenGrain raises seem like a bit of a worry!?

[Arneal]

I'm optimistic about the TV deal. Yes, it is a gamble, but it is one that I think will pay off. Speedvision is already the natural home of race fans and with NASCAR coming on board it will become even bigger. CART needs to be on Speedvision.

It won't be long until Speedvision is in almost all US markets. When FOX promotes the channel on their Winston Cup races the phones at the cable companies will light up with angry viewers demanding Speedvision.

Speedvision will not only reach enough fans, but will actually promote the sport which is something that ABC/ESPN has failed to do. If it weren't for Speedvision's promotion I would have absolutely no interest in F1, superbikes, or MotoGP. Now I love them (especially the bikes). I suspect that there are a lot of people out there who will become CART fans because their TVs will be tuned to Speedvision's NASCAR programming and without realizing it they they will find themselves watching and enjoying CART in the same way that I became a fan of the aforementioned series.

Liz is right about the "shambles that was left". This is about as good a deal as they could expect. Fortunately it puts them in a good position to do some brand building because what CART needs more than anything is promotion and that is exactly what ABC hasn't done and what Speedvision will. I am quite optimistic as I am seeing light at the end of the tunnel that Tony George has dug.

Seven Grain,
Are you sure that ABC/ESPN is paying CART. I am almost certian that CART is responable for selling the add space and that no money is going from ABC/ESPN to CART. I suppose I could be wrong.

[SevenGrain]

The current ABC/ESPN deal guarantees CART income which amounted to 2.4 million dollars for the first six months of 2001. While the new deal can provide income it will likely be a loss, at least for the first few years.

I want the Speedvision/CBS deal to work also, I love watching Speedvision. I am just concerned over some of the sponsor issues and the tremendous expense CART is putting forward for seven races on network TV that aren't even guaranteed to happen. But I am cautiously optimistic.

[tanalised]

Any ideas what happens to us Antipodeans (that phrase again!) ie: Kiwi's and Aussie's. I currently can get ESPN but I don't know about these other broadcasters