Monday, August 5, 2013

The Rise of the Sports Mass Media Industrial Complex Oligolopoly

In Boston, the owner of the Red Sox threw some petty cash around and bought one of the town's major metropolitan dailies.

In Morgantown, disputes over Tier 3 broadcasting rights threw the old college town into a tizzy, hammered a wedge between two state Republican Party titans, and smashed a decades old relationship between the university and a media company.

ESPN long ago absorbed a traditional television network and an entertainment company.  Then it ran its bull through college sports' china shop, smashing conferences and forcing decisions on what defined a college sports program as "viable."  The American free market has sent two St. Georges, Fox Sports and NBC, to slay the dragon.

But that story is still developing.

These developments lead observers to ask, is the current fast inflation of the sports industry and its media handmaidens economically or ethically good for either?

Columbia Journalism Review analyzed the sharp rise in the value of sports franchises, as well as the coincidental correlation with the decline of traditional media, especially print.  It posed the question, can a hometown media outlet report fairly on a sports issue if it is linked with the franchise?

CJR answers the question by pointing out how poorly ESPN has covered stories in which it plays a central role.

Media tend to perform poorly when interests collide.  CJR speculates that the Boston Globe will have a harder time covering the team honestly when its parent company owns the Red Sox.  But this is hardly a unique situation.  When owned by General Electric, NBC tread very carefully when covering stories about its parent company.  Media outlets often face important decisions and criticism when dealing with stories involving critical advertisers.

Another problem with the sports mass media blobonomy is that there has to be a saturation point.  There are only so many sports fans.  There can be only so much interest here and abroad. Rules changes done for safety or (more often) public relations transform the games, frustrating traditional fans.

Rising prices have created an impact as well.  The cost of tickets and merchandise either now, or soon will, exceed the value of the product.  Players' and owners drives to profit as much as possible rely on a steep willingness of the market to pay.  What is the cost to the sport's profitability if children have less and less opportunity to see the games in person?

Franchises and media increasingly aim at sports followers instead of fans.  Serious differences separate the devoted latter from the fickle former.

A warning comes from the fate of American boxing.  Once one of the most popular sports in the nation, it died because the sports' foremost figures decided that it could thrive by forcing anyone interested in watching premiere events to pay through the nose.  Boxing still makes money, but how many Americans can name the heavyweight champion right now, let alone any contenders?

Anyone who thinks that bad decisions by the major sports could not reduce any of them in a generation to the status of boxing is delusional.

Sports teams' value comes entirely from the perception by their markets that an experience involving them has value.  No one needs to consume the product to survive. No one needs the product to help them understand the world better. That is why the notion of franchises worth over a billion is troubling.  At the end of the day, they don't make anything of substance.  How long can the market sustain them, especially given a seemingly never ending economic slump?

In other words, the sports media industry displays many of the classic features of an economic bubble, except for the availability of too easily obtained credit.  Nothing grows this fast forever and leisure spending is fickle.

And this is not meant to be a hand wringing, what-is-to-be-done, kind of commentary.  Making money honestly is no sin.  But, like any other industry, those invested and involved need to understand that no sure fire never fail model has ever existed.  What goes up tends to come down. And if mass media outlets tie themselves too securely to the sports industry ship, they may sink with it should market priorities change.

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