SVG Summit: CBS’s Sean McManus, Turner’s David Levy Tackle Big Business Debates in High-Powered Keynotes

by Jason Dachman, Managing Editor & Brandon Costa, Senior Editor

With more than 1,000 attendees flooding the New York Hilton this week, the most successful SVG Summit to date was highlighted by a book-ending of high-powered keynote speakers: Turner Broadcasting System President David Levy and CBS Sports Chairman Sean McManus.

Day 2 of the SVG Summit opened with a one-on-one conversation between SVG’s Ken Kerschbaumer (left) and Turner Broadcasting System President David Levy.

Both shared thoughts on similar topics ranging from trends in rights deals, the debate over a la carte programming, and the pair’s mutual production of the NCAA Men’s Basketball Tournament and the Final Four.

Rights Wars
The conversation around the business of sports television always begins with rights agreements and the rapid growth of regional and national sports networks.

With the addition of Fox Sports 1 earlier this year, there’s even more competition for viewers and sports properties. CBS and Turner find themselves in two very separate boats. With the exception of a select group of keys properties (NFL, SEC Football), CBS Corporation President and CEO Leslie Moonves, McManus, and the CBS team have tried to stay out of messy rights battles. So far, it’s paid off for them.

“We have a very different business model from Fox and NBC,” said McManus. “I think their model is right for their company. We’ve chosen to not get into some of those bidding wars. $250 million for the English Premier League is probably a terrific deal for NBC. It wouldn’t work for our business model because I work for a man, Leslie Moonves, who does not believe that you should lose money on sports, even if it means building an asset for the future.”

The SVG Summit closed with some insightful sports television business thoughts from CBS Sports Chairman Sean McManus.

Turner meanwhile has continued to make stronger inroads in sports programming, making huge grabs for Major League Baseball and the NCAA Tournament to go along with its long-standing NBA deal.

“It’s all about supply and demand and there is a huge demand for sports content,” said Levy. “Ratings are continuing to grow in all the major sports and I can’t think of any television show in 26 years that still has ratings growth. Plus there is the fact that we are now going cross-platform. There is an opportunity to monetize this content on many different platforms.”

“Do I like to pay these sports rights? No.” he continued. “Do I need to do it to develop and grow in this business? Yes. Sports will likely be the last destination for appointment television – aside from news – on television. No one watches the Super Bowl on Monday. That is is going to be a rarity more and more in the future.”

Big Cable Debates
The escalating prices in the rights market have many outside the industry thinking it’s a bubble about to burst. McManus isn’t so sure but is looking forward to a break in the seemingly never-ending negotiations.

“I think there will be a mini-correction after the NBA and the Big Ten negotiations because I think what will happen is people will realize they have their portfolio in place. All of these deals are eight, ten years, sometimes longer. We will retrench and the focus will turn to getting higher distribution fees. At some point, the enormous escalation that we have seen will be tempered a little bit.”

“I think the cable, satellite, and telco business have done a really poor job in showing what great value we provide for 80 bucks a month.” – Levy on the a la carte cable debate.

Speaking of distribution fees, Levy and McManus each took strong stances in the hotly debated topic of the a la carte cable model. Both, naturally, subscribe to the belief that a la carte would be a negative for both the industry and consumers.

“I think the cable, satellite, and telco business have done a really poor job in showing what great value we provide for 80 bucks a month,” said Levy. “Plus with TV Everywhere, which we are pushing very hard, allowing people to have all this content on any device they own – these devices don’t work without quality content. We are putting all this content on those devices for the same 80 bucks.”

McManus echoed that thought, further emphasizing the bang-for-your-buck that consumers get with cable subscriptions.

“Look at the relative value that you’re getting not just from sports but in entertainment,” says McManus. “Then look at how much it costs to take a family of four to the movies with popcorn and refreshments; it can cost you near what your entire cable bill costs.  So I don’t subscribe to the theory that cable bills are running wild.”

For Levy, the focus needs to be turned to politicians that may have the ultimate say in the future.

“We still have people in Washington that believe a la carte is the smart way to go,” he says. “I haven’t seen a business model that makes a la carte work. ESPN’s sports rights and costs aren’t going to go down with an a la carte model, so the price of five dollars would go up to maybe 40 dollars. If ESPN is 40 bucks, my channels are going to be 25. In the end, you are looking at maybe five channels for the same 80 bucks you pay today. And all those other networks, well, they’re going to go out of business, which means less jobs – Washington should think about that.”

Innovating the Final Four

“We’ve chosen to not get into some of those bidding wars,” said McManus (right) to Kerschbaumer in regards to sports rights. “It wouldn’t work for our business model because I work for a man, Leslie Moonves, who does not believe that you should lose money on sports, even if it means building an asset for the future.”

In April, Turner Sports, which is carrying the Final Four games for the first time as part of its 14-year co-deal with CBS, will produce three separate telecasts of the TBS, TNT, and TruTV. Traditional national-audience-oriented game coverage will be presented on TBS, while TNT and TruTV will feature telecasts that are specifically tailored to one of the teams competing in each game. The team-oriented TNT and TruTV telecasts will feature two additional cameras each, a dedicated team of announcers, and an independent halftime show.

“The actual reason we did this is about innovation. It’s about trying new things and being first and finding what that next opportunity will be,” said Levy. “I do thinks ratings are going to grow for the triple-cast. The way we are doing it from an advertising basis is that all ads will be sold across all three channels, so we will be able to aggregate the rating and I think that rating will be higher.”

While McManus acknowledged that CBS likely wouldn’t try the same plan when it gets the Final Four back in the future, he supports the move for Turner.

“I think it’s a good idea,” he said. “There’s no question that if you air the basketball games on three networks it’s going to get more viewers than if you air it on one, even if you run the exact same broadcast on all three networks. I think the approach that they have come up with is innovative. Nobody knows how well its going to work but its something brand new that no one’s ever done before and there’s no down side to doing it.”

Levy said that the dedicated announcers and half-time talent will likely be broadcasters and celebrities tied to the respective teams (i.e. former Michigan State starter Steve Smith if the Spartans were to appear or Charles Barkley for Auburn).

He also believes that, should the Final Four experiment succeed (in terms of ratings, ad sales, social-media response, etc.), the new triple-cast approach could be used for a variety of high-profile live sports events in addition to the Final Four, including NBA or MLB games.

“This is a lot of extra money, but it’s an investment for us. We want to be innovators,” said Levy. “I also think it’s going to explode on social networking. That’s not necessarily a good or bad thing, but there’s going to be an explosion. And that’s part of the fun of it.”