Fox faces $38m loss on Super Bowl
http://www.theage.com.au/business/2002/01/17/FFX2T6RDIWC.html
By KIM CHIPMAN
NEW YORK
News Corp’s Fox television network is expected to lose as much as $US20 million ($A38.6 million) on its broadcast of the Super Bowl as NBC’s coverage of the Winter Olympics competes for advertising dollars.
Fox’s losses might force the company to write off part of its $US2.5 billion contract with the National Football League and possibly other sports programming rights, according to a report by ABN Amro analyst Spencer Wang.
“We evaluate the value of our sports contracts every year, and no decisions have been made so far this quarter regarding the NFL contract,” said News Corp spokesman Andrew Butcher.
The expected shortfall comes amid the worst advertising market in a decade. Still, Fox has managed to charge about $US2 million per 30-second commercial spot on the Super Bowl. This is close to what Viacom Inc’s CBS network got last year.
Coverage of the Winter Olympics on General Electric Co’s NBC, CNBC and MSNBC would be likely to take away some ad dollars from the Super Bowl, Mr Wang said. advertisement
The Winter Olympics will go to air from February 8 to February 24 from Salt Lake City.
“Fox is facing formidable competition for ad dollars, as we believe the Olympics is siphoning demand,” wrote Mr Wang, who has a “hold” rating on shares of Fox Entertainment Group Inc, the US media arm of Rupert Murdoch’s News Corp.
Fox so far has sold a little more than 80 per cent of its available advertising time for the Super Bowl.
It has said it expects to sell more than $US200 million in ads for nine-and-a-half hours of Super Bowl coverage.
That includes sales from Fox’s local TV stations and programs to air around the Super Bowl coverage, including the comedy Malcolm in the Middle, which will run after that game.
Mr Wang estimates that the network, excluding the TV stations, will generate up to $US110 million in revenue from the Super Bowl.
Fox and other TV networks agreed three years ago to pay $US17.8 billion for rights to air National Football League games for eight years.
Mr Murdoch has paid high prices over the years to buy sports programming rights for Fox and other TV networks around the world.
Yet audience ratings for most TV sports in the US have been declining, crimping advertising sales and resulting in losses for Fox and other networks.
“Sports programming costs continue to have a very questionable return on investment for broadcast networks,” Mr Wang said.
Fox shares yesterday fell 67 US cents to $US24.45.