Sports rights fees need to be reined in, says Madison Avenue kingpin
Sports rights fees are "totally out of control," a top advertising executive told a gathering of television executives today at an industry convention in Las Vegas.
"Something's gotta give.... I don't know how any broadcaster can continue to suffer these losses," said Irwin Gotlieb, chief executive of GroupM, a unit of advertising giant WPP. Gotlieb, who was speaking at the National Assn. of Television Program Executives, said he could not see how the billions of dollars CBS, Fox, NBC and ABC spend on sports could be "justified."
Gotlieb's remarks come just days after General Electric Co. said it would lose $250 million on next month's Winter Olympics and also was losing money on its NFL contract. The Olympics are taking a big hit from advertisers, Gotlieb said, because some key categories such as car companies are reluctant to spend right now because of the bailout money they got from the government last year.
The networks often view sports as a loss leader. CBS, Fox, NBC and ESPN spend north of $3 billion a year on football. However, for CBS, Fox and NBC, the games draw big audiences that they use for promotion and marketing purposes. Last Sunday, almost 60 million people watched Fox's coverage of the Saints-Vikings game and close to 47 million tuned in for the Colts-Jets game on CBS. Rights fees are less of an issue for cable channels such as ESPN because they have a dual revenue stream of advertising and subscription fees.
As GroupM has about $80 billion in annual billings and roughly 20% share of the advertising market, Gotlieb has a lot of clout within the media industry. He said he thought business would be a little better when the networks sell ad time for the 2010-11 fall TV schedule, but not to "read much into it."
-- Joe Flint
Photo: New Orleans Saints quarterback Drew Brees. Credit: Chris Graythen / Getty Images