Live sports has been one of the few remaining strongholds that traditional television has held onto, but falling NFL ratings indicate sports fans may finally be cutting their cords as well. Sports contents won’t come cheap for Facebook Inc FB, Amazon.com, Inc. AMZN and Alphabet Inc GOOG GOOGL, but Pivotal analyst Brian Wieser says these streaming giants won’t shy away from forking over the big bucks.
Budget Projections
According to Wieser, sports content is necessary for streaming services to provide television-equivalent content for advertisers. Weiser uses Facebook’s recent $600 million five-year deal to broadcast Indian professional cricket as an indication of the massive size of the potential sports budgets for streaming companies.
“Considering the tiny size of the Indian digital ad market – 1/40th the size of its equivalent in the United States – it does not seem unreasonable to assume that at some point Facebook and their peers will bid tens of billions of dollars for long-term professional sports rights fees in the US,” Wieser said.
Cuban’s Take
On Monday, Dallas Mavericks owner Mark Cuban told CNBC that broadcast TV and the sports leagues themselves have dropped the ball in convincing fans that watching sports on TV is still a much better experience than streaming.
“Watching it from a cable or satellite provider on a regular television is a better viewing experience than watching it streaming from any source on a phone, on an iPad, or even on a television because it buffers; it impacts your bandwidth to your home,” Cuban said.
Until that dynamic changes, Cuban said leagues like the NFL need to do a better job promoting the fact that television provides the best viewing experience for sports fans.
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Pockets Of Value
Wieser says investors shouldn’t count out the stocks of traditional TV companies just yet either. Despite the fact that Pivotal is forecasting single-digit advertising revenue declines in the long term, Wieser said several television media companies currently offer investors a compelling value in the near term.
Pivotal maintains Buy ratings on Twenty-First Century Fox Inc FOXA and Discovery Communications Inc. DISCA.
The firm also has Hold ratings on CBS Corporation CBS, Time Warner Inc TWX and Viacom, Inc. VIAB and a Sell rating on Walt Disney Co DIS.
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