Fox takes aim at ESPN with national sports TV channel
(Reuters) - News Corp introduced a long-rumored national cable sports channel, Fox Sports 1, on Tuesday, aiming to compete with leader ESPN in an increasingly crowded TV sports marketplace.
Fox will launch the channel on August 17 in 90 million homes, executives of the network said at an event in New York City.
The channel will carry college basketball games from conferences such as the Big 12 and Pac 12, college football games including a Notre Dame versus Stanford matchup, and Major League Baseball games starting in 2014. NASCAR, UFC matches and soccer will also appear on the new network.
Fox is the latest broadcaster to invest in building new national sports networks to grab a slice of the lucrative market dominated by ESPN, Walt Disney Co's sports juggernaut.
"We believe we've amassed enough live events ... where we can be a major player in the market," said Fox Sports Media Group's co-president and chief operating officer, Randy Freer.
Media companies from NBC to Al Jazeera are chasing the advertising dollars that flow in to live sports programming, plus monthly subscription fees paid by cable operators that are far higher than those for other channels.
Advertisers flock to sports programming because viewers tend to watch sporting events live, instead of viewing them later and skipping commercials.
Fox's new channel will have live sports and talk shows. Daytime talk show host Regis Philbin will have an afternoon show on Fox 1 called "Rush Hour." Fox has also poached ESPN on-air talent including Erin Andrews.
Initially, about 15-17 percent of the new channel's programming will be live sports, Freer said.
The main live offerings on the channel will include Major League Baseball, college football, NASCAR races, soccer and ultimate fighting. A new Fox Sports Go app was also unveiled allowing viewers to watch more than 1,000 live games and events on mobile devices.
Fox said it will use its 22 regional sports networks to promote the new channel and would refer viewers to it during and after live sports on those channels.
News Corp shares were up 2.3 percent at $30.16 on the Nasdaq on Tuesday afternoon.
Fox has long been rumored to be launching the channel, which News Corp Chief Operating Officer Chase Carey called the "world's worst kept secret" a month ago. In October, it signed a nine-year extension of its agreement with Major League Baseball that allows it to carry up to 40 games on a national cable channel, according to an MLB news release.
The glut of sports channels seeking higher subscriber fees is certain to inflame tensions with cable operators who complain about the already-high payments they are required to charge customers who do not watch sports. DirecTV, Dish Network Corp and Time Warner Cable Inc are just some of the operators to complain about rising sports fees.
The channel is likely to lose money in the early years, analysts have said, which would mirror the company's money-losing launches over the years of its Fox News and Fox Business channels. The Fox Business Channel, started in 2007, is expected to become profitable this year, Carey said in an earnings call on February 6.
Offering national sports would allow Fox to charge more to the cable and satellite operators who carry its channels and expand its distribution to more homes to sell higher-priced ads.
RBC analyst David Bank estimates that the new channel could generate more than $1 billion in annual revenue if it gets distributed to roughly 90 million homes, receives a fee of $1.00 per subscriber per month and makes $460 million in ad revenue.
Fox Sports 1 will replace Speed Channel, which is seen in 87 million homes and currently gets 22 cents a month for each subscriber, according to media consulting firm SNL Kagan.
By contrast, ESPN gets $5.15 a month and is seen in well over 101 million homes, according to the National Cable & Telecommunications Association.
An ESPN spokesman said in a statement that "we like our position. We have always had vigorous competition, so there is really nothing substantially new here."
Analysts say that while Fox's channel is not an immediate threat, it could chip away at ESPN's dominance over time.
"We would remind those who think ESPN's incumbency is insurmountable that Fox has succeeded as the insurgent in two other significant cases: broadcast, with the launch of FOX in the mid-80s, and cable news, with the launch of Fox News Channel in the mid-90s," Bank said in a research note.
"It's going to take us a while, and we're aware of this fact," David Hill, News Corp's senior executive vice president, said when asked about becoming a viable alternative to ESPN.
In a nod to its past, Fox played clips in New York comparing the launch of Fox Sports 1 to the creation of Fox's broadcasting network and Fox News and featuring a voiceover saying "Fox is ready to change the television landscape again."
(Reporting by Liana B. Baker in New York and Lisa Richwine in Los Angeles; editing by John Wallace and Matthew Lewis)
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