YouTube Negotiations with NBA/NHL Signals Accelerated Unbundling of Old Media

YouTube Negotiations with NBA/NHL Signals Accelerated Unbundling of Old Media

In more than a few recent posts, I’ve referred to the oncoming seismic shift in the media landscape due to cord cutting, or people giving up cable/satellite for Web-only television. No one knows for certain how quickly it’s coming and no one can concisely articulate the coming impact, but it will be far greater than most media executives have let on. And recent news that YouTube is negotiating with the NBA and NHL for broadcast rights throws gas on an already combustable situation. That’s a major development that is sure to speed up the process.

My status as a loyal DirecTV customer for over a decade can be directly attributed to their owning NFL broadcast rights. I could not imagine a Sunday without seeing my Redskins (well, maybe not these days…). That made my choice for cable/satellite provider a no brainer since I had to pay someone for access to the rest of my television programming.

That decision is no longer such a no brainer. I’m already getting more and more of my video content via the Web and with the news that NBA and NHL broadcasts will likely be available on YouTube, that’s probably the news that will get someone like me to cut the cord for good. A recent study showed that 47% of Netflix subscribers are considering cord-cutting. HBO and the NFL have all the negotiating leverage in the world, but if the number of subscribers on their chosen platform starts tumbling, what will that matter?

YouTube’s agreement with the Indian Premier League of Cricket brought in 55 million visits and those viewers spent an average of 40 minutes watching Cricket. Regardless of how far out mainstream Cord Cutting may be, these are already numbers that would make any media company blush. Content is finding mass distribution via channels that didn’t exist even a few years ago.

This is all part of the process that GigaOm’s Om Malik described in his blog post titled “Old Media Is Being Unbundled, Just Like Telecom Was“.

The whole post is worth a read, but the money shot is here:

Today, no one cares if Rupert Murdoch’s Fox Network or the USA Network carries House. What matters is House. The show has been unbundled from the distribution network, which in turn has shifted the value to the show and the not the distribution platform.

This fundamental change means tremendous uncertainty for media companies who spent decades using their distribution channel as a differentiator. Does that uncertainty have anything to do with all of the 10-15 year media rights deals that have been signed over the past year or so? For now, all of these media rights deals look really smart for the media companies, who look to have waved a big wad of cash in front of their counterparts before they were able to figure out that the leverage was about to shift to the other side of the table.

The SEC’s 2009, 15-year, $2.25B deal with ESPN looked like an enormous victory at the time, but that deal may turn out to be a bad deal for the SEC and maybe it’s may be the kind of liability that restricts ESPN from keeping pace with the changes looming on the horizon. This could be a terrible deal for either or both. We’ll have to see what happens.

Either way, these dynamics dramatically alter the power structures in sports media rights negotiations. It will alter the impact of college conference affiliations, local television revenue sharing in pro sports, even the marketability of  individual athletes relative to the size of their local markets.

Waiting curiously to see which of the power players in sports figures this out.