Factors That Go Into Television Network Contracts
by Anthony Caruso on August 19, 2013
Many sports analysts are watching the ascent of Fox Sports 1 as it makes multi-year television network contracts with several sports leagues, most recently the United States Golf Association and NASCAR. However, some of these deals - particularly the agreement with NASCAR - seem ill-advised on the surface, and do not appear to financially favor the television sports network, leaving some to question why these deals were made.
For example, NASCAR recently announced a hefty $8.2 billion, 10-year television deal with NBC and Fox, despite the fact that NASCAR's ratings and audience level have experienced significant declines over the years. So why enter into a multibillion-dollar contract with flailing sports? Several reasons. The industry is a lucrative one, and many networks dominate and gain a greater market share than others. For example, Fox Sports 1 is still in its infancy and NBC is still emerging as a sports network, and entering into a number of agreements with popular sports leagues allow them to compete with mega-networks, such as ESPN.
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