Michael Grotticelli /
12.11.2009 08:46 AM
Comcast-NBCU deal could mean competition for ESPN

While the Comcast takeover of NBC Universal has fundamentally shaken the world of entertainment, it's expected to also have a big effect on sports TV. For the first time, ESPN — the major powerhouse in sports broadcasting — could get some competition.

If the government approves the deal, Comcast will succeed Walt Disney, owner of ESPN, as the nation's largest media company. It will earn $51 billion a year in revenue and have more than $100 billion in assets.

Comcast would take control of NBCU from current owner General Electric. It will contribute all of its cable networks, including sports networks Versus, the Golf Channel and 10 regional sports channels.

The major impact of the transaction is that the new conglomerate is well-positioned to match the bids of ESPN on TV rights to major sporting events. Prior to this deal, ESPN had the advantage due to its dual revenue streams of subscriber fees and advertising. Now NBCU can more than match that bidding power.

Experts said Versus may be the big beneficiary. Versus is currently is in 63 million homes, but it is expected to grow dramatically if the deal goes through. ESPN has started each year with about $4 billion in subscriber fees. However, Comcast, with 25 million homes subscribing to its cable and broadband services, is much larger. Last November alone, Comcast reported quarterly revenues of $8.8 billion and earnings of $994 million.

The first competition between Comcast and ESPN will come in negotiations for rights to events including the Olympics, NCAA basketball tournaments, NFL and baseball rights. However, Comcast COO Steve Burke, in a conference call with reporters, played down his company's readiness to compete with ESPN.

“NBCU has such a wonderful track record of getting great programming, and it will only add to Versus and the Golf Channel to take those assets and bring them to a different level,” Burke said. “But it's simplistic to think we can take on ESPN.”

The deal also leaves speculation about CBS, which remains as the only over-the-air network without the dual revenue streams from both cable and advertising. Some sources speculated that the deal left CBS already seeking a partner like Time Warner to bid on future sports events.



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