In the latest sign of the media industry’s rethink of the traditional pay-TV bundle, NBCUniversal says it will wind down the operations of its sports cable outlet NBCSN by the end of the year.
Live telecasts on the network of sports events like NASCAR races and NHL hockey will migrate to USA Network and, to a lesser extent, nascent streaming service Peacock.
NBCU’s deal with the NHL, whose games provided a core programming element for NBCSN, expires at the end of the current season, but the company has expressed enthusiasm for renewing the agreement.
NBCSN has existed under other names and brands, including Outdoor Life Network and Versus, since its initial launch in 1995. While over the years it has added coverage of niche sports like cycling and lacrosse to its better-known offerings, NBCSN has not managed to consistently compete with more mature cable rival ESPN. Fox’s FS1 and WarnerMedia’s TNT do not command the same tonnage of cumulative viewing as NBCSN, but each arguably has a more visible profile in the sports world and has shown the capability of posting sizable ratings at times.
While the network still pulls in hundreds of millions a year from carriage fees and advertising, both revenue streams are declining and NBCU is contending with Covid-19’s sweeping impact on its operations.
In a staff memo (read it in full below), NBC Sports Chairman Pete Bevacqua called the shutdown the “best strategic next step” for the company. He said it would make USA Network “an extraordinarily powerful platform in the media marketplace.”
USA has existed for nearly two decades longer than NBCSN and is among the most deeply penetrated networks in cable, though sharp declines in live viewing have lately buffeted general entertainment networks like USA. It previously carried sports like the U.S. Open tennis tournament and has enjoyed strong ratings from WWE wrestling broadcasts, but much of the NBCSN portfolio will take it into new frontiers of programming.
Frances Berwick, who oversees USA as chairman of NBCU’s entertainment networks, said in a statement provided to Deadline that the company has long focused on “constantly broadening our slate and finding ways to excite our viewers through immersive storytelling and iconic personalities.” She added that the network would stay committed to original entertainment programming. “We believe that high-profile live sports will complement USA’s broad premium scripted, unscripted and WWE slate, enabling us to engage our passionate, intersecting audiences more deeply and with greater urgency.”
NBCU has shown a willingness to step back from traditional pay-TV networks in recent years, winding down rating-challenged properties like Chiller, Cloo and Esquire. Instead of the go-go times of a generation ago, when cable networks were popping up like oil derricks in Oklahoma, the company is now looking to manage costs in a shrinking sector. The number of U.S. pay-TV subscription households peaked at a bit more than 100 million homes a decade ago. Including virtual MVPDs, the total is now just north of 80 million and most analysts and forecasters project it will fall into the 50 million to 60 million range by 2025.
The increasingly discouraging economics of cable, which are especially pronounced in the sports sector as rights continue to climb in the U.S., come as NBCU confronts a potentially severe blow on the Olympics front. After having to postpone the 2020 Games in Tokyo to this summer due to Covid-19, organizers have been vexed by the daunting process of hosting athletes from around the world before vaccinations can vanquish the pandemic. In the most optimistic scenarios put forward by health experts, normal life could start to return in the U.S. around the same time as the Games (late July), but that may not be true in many other parts of the world. Additionally, delegations from countries like South Korea, where the virus has largely been subdued, would be faced with having contact with athletes and others from places where the virus remains unchecked.
Organizers rebuffed a report in The Times of London on Thursday that a cancellation was inevitable, vowing that the Games would go on as planned. A second washout would deal a major setback to a number of stakeholders, including NBCU, which has had Olympic rights for more than three decades and uses the two-plus-week event as a massive marketing and ad sales platform.
Peacock’s rollout was altered by the Olympics postponement, though Comcast has estimated it has attracted 26 million users to the service, which is ahead of internal projections. Live sports has been a foundational part of Peacock since it launched nationally last summer. The streaming service, which has a free tier as well as a premium level, both supported by ads, carried an NFL playoff game simulcast earlier this month. Last year, it streamed a number of Premier League soccer matches and had bonus live coverage of the U.S. Open golf tournament, which aired on other NBC properties.
NBC Sports Gold has also been in the market for several years as a subscription streaming offering with certain key rights.
Here is the internal memo sent today by NBC Sports Chairman Pete Bevacqua:
Team:
We’re all aware of how quickly the media landscape is evolving, and our Company is taking thoughtful steps to stay ahead of these trends wherever possible and, in many instances, help set them.
As evidence of our strong commitment to live sports programming, we recently transitioned all of Golf Channel’s linear studio productions to Stamford, and we’re producing multiple new programs for Peacock and other platforms in Stamford as well. In addition, we’re doing more in partnership with our colleagues at Telemundo and Sky Sports.
Commencing later this year, USA Network will begin carrying and/or simulcasting certain NBC Sports programming, including NHL Stanley Cup Playoff games and NASCAR races, as part of a larger transition within the Company.
At the conclusion of 2021, we have decided that the best strategic next step for our Sports Group and the entire Company is to wind down NBCSN completely, with key elements of NBCSN’s programming moving to USA Network and, in some cases, Peacock for 2022 and beyond.
This will make USA Network an extraordinarily powerful platform in the media marketplace, and gives our sports programming a significant audience boost. We believe that the power of this offering is the best long-term strategy for our Sports Group, our partners, and our Company.
This transition, combined with our robust portfolio of assets, including Golf Channel, The Olympic Channel: Home of Team USA, RSNs, SportsEngine, GolfNow, digital, audio, sports betting and gaming, puts us in an even stronger position as leaders in the sports media space and to continue to grow our business.
We will keep you informed as the broader plan develops, and please join me for a virtual meeting on Tuesday afternoon, January 26 to answer your questions. A meeting invitation will follow shortly.
Thank you for everything you’re doing on behalf of NBC Sports Group.