Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with the S&P Global Market Intelligence tech, media and telecom news team. Welcome to "MediaTalk," a podcast hosted by S&P Global, where the news and research staff explore issues in the evolving media landscape. Today, I'm joined by a trio of S&P Global Market Intelligence Kagan research principal analysts: Justin Nielson, who specializes in broadcast, among other areas; Seth Shafer, our streaming industry expert; and Scott Robson, who tracks US TV networks and sports. Last month, we were all together in New York for the 2024 Kagan Media & Telecom Summit, which returned to Manhattan for the first time in a while in deference to the pandemic and stops in London. We're going to try to recap a bit of what happened on stage and touch on a few key takeaways. Those conversations and presentations played out before a nice crowd of about 80 people. Executives from investment, advertising, media, and distribution communities, as well as top sports leagues, gathered at S&P Global headquarters at 55 Water Street. Justin, let's start with you. You are the MVP, not only our most valuable but our most versatile player. You opened the show by catching attendees up on a few data points.

Justin Nielson: Yeah, thanks, Mike. The conversation with Steve Lanzano from the Television Advertising Bureau was the stage setter in terms of looking at the advertising market for TV this year. It's a big year in terms of political ad spend with the presidential election upcoming, as well as for NBC and Telemundo stations, the Summer Olympics in Paris. So a lot of the focus around the conversation was where advertising is being placed in terms of TV and also in terms of the connected TV market as well, and moving from a linear to streaming world. But it was interesting because this was prior to the news of the switch out of Joe Biden for Kamala Harris on the Democratic ticket. But, still looking at a very good year in terms of political advertising with about $4 billion being spent on TV stations based on our estimates. A lot of that money will have to be spent in the next few months because those campaign coffers have to be basically used up by the political candidate leading up to the election.

Reynolds: You gotta use it or lose it.

Nielson: Use it or lose it type of situation, and broadcast television has been the primary source for a lot of those dollars given the fact that it's localized and given the fact that it's still a mass medium when it comes to the local markets with news and sports and the like. So it's going to be a good year in terms of political and sports. The core categories like automotive and others have been fairly sluggish.

Reynolds: Yeah, it's true. Seth, you had a pretty diverse group with you. Sadly, those ranks included me as a moderator, but please, tell me I did okay. And tell us a little bit about your panel, Seth.

Shafer: Your a clutch with the batting practice, lobbing a lot of easy balls in there for us.

Reynolds: Thank you.

Shafer: Yeah, so our headline for the panel was "Evolution of the US video marketplace from linear to streaming," and our goal was to sort that out, where we are in that switch in 30 to 40 minutes. External panelists were Brian Gordon from the National Women's Soccer League and Vincent Letang from Magna Global. I think a common thread for our panel and others as well was as much as we get excited about streaming, especially with sports, high-profile programming from the NFL going to Netflix, NBA likely going to Amazon. It's still a page to be...

Reynolds: We'll see, we'll see.

Shafer: Yeah, that story may have more pages, but we focus on all that stuff, leagues, content owners in general, brands, advertisers. Consumers are still watching a lot of traditional TV. We talk about headlines for streaming, but content is still king and consumers will watch it wherever that's at. Today, that still means a bundle of stuff, a mix of free over-the-air viewing, pay-TV viewing, virtual multichannel, SVOD, free AVOD/FAST stuff. So, the stuff is shifting, but really today, consumers, households are watching a lot of services a lot of different ways, and content owners need to be there, brands need to be there. I think we talked about the advertising back-end technology, where's that at? Still work to be done, not seamless. Anybody that's watching ads will gripe about frequency, things like that. But, moving in the right direction to be able to stitch these worlds together and make all that stuff a little bit easier. I think another big takeaway for me was that it's easy to segment things like YouTube, TikTok, and look at that as something separate and different — not quite premium quality. But more advertisers and consumers too, aren't really making that differentiation. A lot of homes watch YouTube on the big screen in the living room in a lean-back experience the way we look at other sort of premium TV experiences and things like that.

Reynolds: Yeah, there's a lot going on across the platforms. Scott was our most dedicated player, a bit of a rough road getting to New York with the weather?

Scott Robson: Yeah, it was a bit of a journey to get to the city, but thankfully I was able to arrive with a few hours to spare.

Reynolds: So as Scott does, he soldiered on, brought his A-game, led a panel about the bifurcation of sports, which Seth just referred to, relative to the game seemingly going broadcast and streaming. Tell us about your session, Scott.

Robson: Yeah, so on the panel, we had Andrew Golding from Univision Deportes, William Mao from Octagon, and Lee Berke of LHB Sports. The panel was titled "Disruption in US sports rights and paths forward." And so, kicking things off, we got into the popularity of live sports, and we were fortunate enough to have Andrew Golding tell us about how La Liga MX is the most popular soccer league in the US. I hear so much about the Premier League and their deal with Peacock that it was surprising to hear that La Liga was the most-watched league. William Mao brought up that each of the Liga MX TV rights are sold by each club independently rather than on a league-wide basis. So that was interesting to hear about those inner workings. That's a much different setup than the MLS deal with Apple Inc. that allows fans to watch all games without blackout restrictions.

Reynolds: Yeah, those are 180 guys for sure.

Robson: Yeah, that deal that the MLS has with Apple always seemed like a win for me as fans were granted access to all the matches for a single fee and the league was able to secure $250 million a year from Apple. However, it was interesting to hear the panelists mention how the deal might be limiting the league's ability to reach new fans. Apple doesn't disclose subscriber figures, but some recent survey data points to only about 10% of US households subscribing to Apple TV. Given that limited reach, you can see how it would be hard for a casual channel surfer to stumble across an MLS game and become a new fan.

But speaking on media rights deals, the summit took place during the closing stages of the NBA rights renewal, which seems to be going to Amazon over Warner Bros. Discovery and TNT Sports. I was just mentioning how the MLS deal with streaming partner Apple TV might be limiting the league's reach. Meanwhile, the NBA has decided that partnering with Amazon provides a wider reach than TNT (US) and basic cable. Now, the NBA deal looks like it's going to include media partners across national broadcast TV with NBC (US), basic cable with ESPN (US), and then streaming across Peacock and Amazon. So the panelists during the session were pretty much all in agreement that during this time of transformation, it's the best strategy for the NBA to have distribution across all the different platforms. Now, it looks like TNT, TBS (US) and truTV are going to be locked out of the new NBA deal, but they are going to all be included on the Venu Sports streaming service, which is launching this fall. So, the panelists weren't very bullish on the potential for Venu to be a game-changer. I think William properly noted that ESPN's direct-to-consumer product launching in fall 2025 is the bigger story there as it has more potential to disrupt the industry than Venu does. I think looking ahead, it seems like there are a lot of folks interested in whether or not the leagues will be able to continue to secure massive media rights deals. The NBA's deal certainly is a big step up from the current deal. We've seen large increases for NASCAR and college sports in recent deals. But what's really going to happen during the next round of negotiations? It looks like some legacy media players like TNT are already starting to push back on the increasing fees. Players like YouTube, Apple, and Amazon are in a better place financially to take on sports rights deals that might serve as a loss leader. But it will be interesting to see if those tech companies are willing to continue to pay up for sports rights when some of these current contracts come up for renewal down the road. At the end of the day, the money for these media rights deals comes from the end user, and so Andrew Golding seems to think that sports fans are getting incredible value from their paid TV subscriptions, but with rights continually being parsed out among a variety of services, it's becoming increasingly expensive to catch all the action.

Reynolds: Yeah, if you're a big sports fan, you gotta have a lot of packages. Anyway, as to me, I had a fireside chat with Jim Minnich. He's the senior vice president of Walt Disney Co. advertising revenue and yield management. We talked about what has perhaps been the overarching story of the sports media and business world this year, the ascent of women's sports. I wanted to give the audience a sense for just how deep Disney's commitment is to this vast programming.

Disney's been showing women's sports for over three decades. Across its various linear, digital, and streaming platforms, Disney and ESPN are going to show 33,000 hours of women's sports coverage in 2024. That's crazy. Jim said that's 60% of the rights and the time devoted to women's sports in the US. The commitment and the investment seem to be paying off. Viewership is up 25% to 35% overall this year, led by the women's version of March Madness, in no small part to Caitlin Clark. Caitlin Clark is also helping growth with the WNBA. On the business side, Jim said Disney, ESPN's women's ad sales have increased sevenfold over the past two years. He didn't disclose a figure, but that seems like it's a nice jump off what I assume is a pretty robust base.

Back to you, Justin. What are some of the other key takeaways from your talk with Mr. Lanzano?

Nielson: Yeah, it's interesting. We did talk briefly about the distribution market, even though that's outside of advertising. It's a very important component of broadcast TV in terms of retrans and virtual carriage fees. We're at an inflection point when it comes to retrans growth, where you see the traditional subscriber churn hitting the bottom line when it comes to broadcasters' retransmission consent fees, but then they're also gaining in terms of some of the virtual carriage growth, the Slings and YouTube TVs and others. But that is on a lower net basis in a lot of cases because those deals are being negotiated at the network level. The other thing is around local sports rights. There was an announcement by Scripps Sports that they are the broadcast partner now for the Florida Panthers NHL team. I think we're going to see more of those types of deals, especially with the transformation of the RSN business model. Even though Diamond Sports Group LLC got a lifeline with the Comcast Corp. deal, I still feel like there's going to be some disruption in that marketplace.

Reynolds: Yeah, no doubt. That's a story that still has some chapters to be told. Seth, things that perked up your ears as they were talking to the audience?

Shafer: Yeah, it seems like every panel talked about sports in some way or another. And I think that reflects what's going on in the media landscape right now in a lot of ways, too. I think it was interesting when we put our research analyst hats on. From a simple, though, take that hat off and just be a sports fan, it seemed like there wasn't a lot of optimism that things would change much to improve the plight of the sports fan. Like you mentioned, where are these things going to coalesce? Will Apple's deal with MLS become the wave of the future? Can we ever, as a sports fan, pay one price and get all the games and never have to worry about blackouts and know where to go? Pretty much across all the panels, there was more enthusiasm for where we are right now that there's just more money to be made by piecing this out across over-the-air broadcast, local deals, select streaming packages, basically the status quo of sports, which makes sense. All of these partners, whether you're a league owner, content owner, or distribution — wherever you sit in this value chain, your business is to make as much as you can, not to be a friend to sports fans like ourselves, make it easy. So I think still a ways to go before the thinking really shifts there. But like we've talked about, we're starting to see things like Venu. If there's industry consolidation, mergers, acquisitions, things like that. If you bring enough of these pieces together, that could change pretty quickly.

Reynolds: I gotcha. So Scott, anything from Lee Berke? Anything else that caught your attention from your guys?

Robson: Yeah, I think the key takeaway was that sports content is really driving the economics of the media space right now. Live sports account for about 95% of the most-watched broadcasts each year, and there doesn't seem to be anything really getting in the way of that trend. I think we're all in agreement that the near future points to sports media rights continuing to demand a premium. And while some of the legacy players won't be willing to shell out those increasingly high fees to broadcast games, there are enough streamers and networks out there that are willing to make that investment for now.

Reynolds: I'd also be remiss here if we didn't mention that Kagan analyst John Fletcher, who tracks broadband and the multichannel space for us, was at the summit. John is attending another conference today, so he couldn't be with us now. But he spoke with Lori Adams, vice president of broadband policy and funding strategy at Nokia Oyj, about the Broadband Equity Access and Development Program or BEAD. BEAD's been in the works for four years. It's a $42.5 billion federal initiative to build out more infrastructure and help connect the US broadband deserts across all 50 states and a number of territories. Both of them said, though, we're probably going to have to wait a little bit longer until the funding arrives. Both John and Lori don't expect BEAD funds will be available before the end of the year. They said it's a complicated process, lots of rules and clarifications, even waivers.

Guys, getting to the end here, just wanted to wrap up on quick final thoughts about the summit and what you're keeping your eye on for the rest of the summer here. Seth, can you start us up?

Shafer: Yeah, tee me up. I think for me, the last half of the year is seeing how some of these stories play out that we've talked about. We didn't really mention Paramount Global being acquired, but that chapter changes there with that service. Is that kind of a roadmap for future acquisitions, further consolidation? We've alluded to the NBA rights situation. That's still a tiny bit up in the air. So, seeing where that lands, things like that. I think just for me personally, there's a lot of focus on the push into advertising by the big streaming services like Netflix and Disney. You know, where they are with those efforts and they're all scaling that up internationally as well.

Reynolds: Gotcha. Scott, you're in the number two hole.

Robson: Yeah, so I think everyone is interested in seeing how the Diamond Sports saga plays out and the long-term viability of the regional sports networks. It looks like Diamond will kick the can down the road for another year here, having just secured carriage on Comcast. But going forward the rest of the year, I think it's going to be interesting to see how that all plays out. And then, as Seth mentioned, also have our eyes on the NBA rights renewal and some of the fallout that might occur there with TNT Sports moving forward.

Reynolds: Back to you, Justin.

Nielson: Final takeaways and what I'm looking forward to in the second half of the year: Definitely looking at women's sports as a movement, not a moment. Watching the Olympics, you know, it's basically parity now, 50-50, male and female events, as well as a lot of influence and talk about women's gymnastics and now the women's rugby team. So, I definitely think that there's going to be a continued shift and focus around women's sports in general. And overall, from the advertising environment, political is going to come in in the next few months, but I'm really interested to see what happens in the end-of-the-holiday season in terms of: does the core advertising come back? Do the retailers start coming back and so forth? And then the auto category is really the core segment for broadcasters and that big push to the end of the year. So there'll definitely be topics that we'll be looking at.

Reynolds: That concludes this episode of "MediaTalk." I just wanted to thank Justin Nielson, Scott Robson, and Seth Shafer for sharing their thoughts about the 2024 Kagan Media & Telecom Summit. Thanks.