How Rupert Murdoch Could Go To War With ESPN

The blockbuster news that Rupert Murdoch bid $80 billion for Time Warner—and was at least temporarily rebuffed—points to an impending seismic shift in the media landscape. And, as the New York Times points out today, nowhere would that shift be felt more than in the business of televised sports. A Fox takeover of Time Warner could do what no one has been able to accomplish in 35 years: create a true competitor to ESPN.

ESPN may be its own self-contained universe at this point, but it didn't get there—and it wouldn't be able to print money like it does—without TV rights to actual sporting events. ESPN has almost everything it wants; Fox, NBC, and the Time Warner properties merely scrabble over the remnants. A merger would create something much more substantial, something worthy of having a sports network.

In addition to the N.B.A. and college basketball, Time Warner, home to the TBS and TNT networks, also holds sports rights for Major League Baseball and the P.G.A. Championship, a property of P.G.A. of America. Those rights, along with Time Warner's ownership of digital properties like the Bleacher Report, would complement Fox Sports 1, which carries baseball, Nascar, college basketball and college football.

Fox, too, owns rights to MLB, the NFL, and soccer.

That would be a formidable slate, one to rival ESPN's. And that would eventually mean profit. ESPN currently charges nearly $6 a month in carriage fees (the amount cable operators pay to carry the channel, a cost then passed on to subscribers), or almost five times as much money as any other channel. Upon launch last year, cable operators laughed at Fox Sports 1's demands for an 80-cent carriage fee, and FS1 settled for $0.23 a month.

ESPN's carriage fees, amounting to more than $7 billion a year nationwide, go a long way toward explaining why the network is worth nearly half of parent company Disney's total valuation. Rupert Murdoch would love a mint like that in the fold.

Fox Challenges ESPN With Pursuit of Time Warner [NY Times]