Can IndyCar Go Global?

0:05Congratulations! You made the varsity of the podcast. My name is John Arand, and I am Puck's sports correspondent and the host of this pod. And today, Eric Shanks joins the pod. Shanks is the CEO and executive producer of Fox Sports. He's one of the most strategic minds in the business, and he has deep relationships throughout all of sports. We're going to talk about everything from the run-up to the Indy 500 to his streaming strategy around Fox One. and we'll talk about some of his businesses outside of Fox Sports. But before we get to Shanks, here's what I'm watching these days. The WNBA kicked off its new season this weekend, and there are a few storylines that I'm going to be following closely.

0:53Look, if you talk to any investor, anyone involved with private equity, they evangelize about the promise of women's sports. I mean, it's expensive to get into the NFL or the NBA or MLB. But even though the category of women's sports has seen a ton of momentum over the past several years, there's still a sense in the investor community that there's so much upside with the WNBA or the NWSL or really any one of those women's sports leagues that are out there. The room for growth seems limitless right now. So coming out of the pandemic, WNBA Commissioner Kathy Engelbert raised about$75 million in capital.

1:34But it wasn't just that$75 million, the actual money, that really helped the league. It's that money raised created a safer environment for the other investors to get involved. And the league has seen a lot of success since then, culminating with last season, which saw wild increases in TV viewership, attendance, revenue, you name it. The WNBA this season has a new franchise in San Francisco, one that carried a$50 million franchise fee. It has two more coming next year in Toronto and Portland. It added four games to the regular season. Its championship series is going to be best of seven now, all growth here.

2:13But that growth also is going to lead to growing pains. And the collective bargaining agreement between the WNBA and its Players Association is up after this season. The players have noticed all the growth I just talked about. They see the headlines about the wild growth of women's sports. They see$200 million TV rights fees deals. They see$50 million franchise fees. So the players want more money for good reason. They also want to get rid of the salary cap. And most concerning to Kathy Engelbert in the league, the players have a lot of leverage right now. The question is, how much league owners will be able to give up?

2:53Because the league still is in growth mode. And while those TV and franchise fee numbers sound impressive, well, they are impressive. But still, it's not like the league is awash in cash. So while you hear about all this momentum women's sports is seeing, and it is, There are still a bunch of storm clouds on the horizon that could stall all of this momentum. So keep your eyes peeled on that. Okay, now let's get to Eric Shanks. Eric Shanks, it is great to have you on the pod. You are now, I think it's five races into the IndyCar season, a sport that's near and dear to your heart that you grew up with.

3:33Take us through those five races. What have you learned about IndyCar that you didn't know already? Sure. Well, first, thanks for having me on the pod. I think this might be the first time I'm on your pod. It is. You're not a very big pod guest. This is a big get for us to get Eric Shanks on this pod. Well, thanks for having me. And five races in, getting to the month of May, I think what I've learned is there's this incredible feeling that there is momentum and progress and a vision for the future. So it's and then getting here in the month of May and spending, you know, I'm not sure that there's any sporting event in the world where you spend really an entire month getting ready for one event where kind of the sport just kind of comes in one place, stays, gets ready for the event.

4:27And hundreds of thousands of people come, you know, in and out to get prepared for that one event. But when you're here, there's this like incredible kind of feeling of pride and nostalgia, right, for this event, but also a really good dose of, you know, being excited for the future and the future stars. So that's kind of where we are, I think, at the moment. When I talked to you before the start of the race, you were talking about it's going to take more than one season or two seasons to establish some sort of connection between IndyCar and NASCAR. But you're a unique broadcaster in that you have both of the main racing series in the States.

5:11You're only five races in, but have you been able to make any strides toward that? I don't think we've got it figured out yet. There's plenty of crossovers. Obviously, Penske races in both series. We broadcast both series. You've got Hendrick and Kyle Larson doing the double this week, so there's a crossover there. We've got Jimmy Johnson driving the two-seat IndyCar with Tom Brady in it so that Jimmy's crossed over, Tony Stewart's crossed over. And so I think we really need to continue to connect those dots with kind of lead-ins and lead-outs to each other, being able to make sure that we have as few conflicts as possible, but then feeding audiences and driving them back and forth.

6:02And I think you saw that with some of the kind of on-the-fly scheduling changes that IndyCar and our programming department made to just tweak the schedule over the last couple of weeks so that we're trying to avoid trying to make people choose. Mm hmm. So in like four years time, five years time, what's your hope? What is that going to look like? Yeah, four or five years time. Look, there is, I'm hoping that, you know, obviously there's a lot of things they already have on the docket that will be kind of solidified for momentum then. You know, we will have the schedule somewhat perfected. They have already announced kind of bold new locations for races, Arlington, potentially some other international.

6:52And I know they have their sights set on other kind of major metropolitan areas to race. They have a new car. And, you know, working together with them to make sure that we are creating new stars and new storylines and that we get the teams in a place where, you know, there's a sponsor pool, an advertiser pool that continues to start, that really starts this flywheel of sponsorship, teams being extremely successful, ratings are on par with other kind of like big national series and making the Indy 500 bigger than it's ever been. How do races look different on Fox's here? This is my question to you about like, how have you Foxified the Indy races?

7:48Yeah, I think first it's, it always starts with the simple things, right? Like the, the, the people that you're choosing to watch the race with. So it starts with bringing over Will Buxton to pair with Hinchcliffe and Townsend Bell and the chemistry that they've created in the booth. And, you know, the, they were on the air for six hours yesterday during practice from the track, just kind of like, having fun and vamping, right. And, and being able to tell stories and go places around the track and talk to drivers and owners. Um, and so I think that there's a tremendous chemistry that, um, that we've created in the booth already.

8:36Um, and that chemistry comes where, you know, they've, they've, they've learned each other's personalities. They trust each other. Um, Um, and they are, you know, they're having fun, but with a ton of credibility. Right. And so I think that it starts with that. And then I think the other thing is, um, you know, we've invested in, in some technology that helps us tell the story better. Um, and it's not new to certain series, but, you know, we've got, uh, new, um, graphics around the in-car, right? So we call it the heads up display that goes around the halo. We've got more in-car cameras than they've probably had ever because we've got four or five cameras on each.

9:26I think we've got 57 in-car cameras we counted up yesterday, including cameras that literally sit next to the driver's eye in the visor. You know, more aerial coverage with drones. and you know then it comes down to storytellers right we're we're bringing in um tom rinaldi for the 500 which if you go back to the 80s uh the canvas that we have here for the 500 to um really kind of tell stories to folks that that haven't watched the race all year um you know tom kind of plays that Jack Whitaker role here. And so, and then, you know, on top of that, at least for this race, we're going to be bringing out, you know, a ton of, a ton of the Fox and Fox sports stars on top of all the other celebrities that are going to be here for the race itself.

10:17And you're going to incorporate them in the broadcast or they're just the, the, the pre-race. So I'm so confused about what, like, this is why I don't have your job. But when you talk about a storytelling, telling this is during the race? Is it, is it leading up to the race? Is it like, like, how, how do you view that? Yeah, we have a, we have a significant kind of Superbowl-esque pre-race show this year. And, you know, having grown up here, um, people get here early because the, the, the ceremonial part of the Indy 500 is like, it really is unlike any other. I mean, it lasts longer than the Kentucky Derby ceremony, right?

10:56Because we don't have other races happening like at the derby so you know there's a couple of hours of a show and and ceremony that's happening here 350 000 people singing the same songs right for a half an hour um it gets people choked up you know around here actually so there's the there's the storytelling of just covering what's happening um and then there's obviously the the the rinaldi-esque uh features that we're going to do and then you know if you go back to the 80s um when really kind of like i thought abc uh was doing just a tremendous job uh producing this race there are times you know breaks in the action and cautions where rather than just kind of like, um, continue to talk about the race itself, you take time to tell stories, um, and, and little featurettes and getting to know yous and making you care about the drivers and making you care kind of about this place so that maybe you'll watch the race next week, or you'll definitely come back for the race, you know, next year, or even make the visit to come here and see the race, uh, in person.

12:11So we're going to take some time to, um, to, uh, obviously kind of unpack different layers of this place, uh, in addition to covering the race itself really well. All right. Let's talk about storylines here. One of my favorite storylines is Eric Shanks, uh, went to Indiana university, grew up in a, a small town in Indiana, used to attend the Indianapolis 500. You can, you can feel like this sort of, it's more than excitement. I mean, it's a knowledge of the history of this race. You've done Super Bowls. You've done Daytona 500s. You've done the biggest of big events that are out there. Does this feel different for you?

12:54It only feels different because I don't want to let anybody down, right? You know, this is kind of like a thing. I grew up 45 minutes away from here. And the people who have grown up coming here take great pride in it. it's really kind of, you know, the time every year where the spotlight is on this little part, you know, of the country. And everybody here takes great pride in it. So I don't want to screw it up. I want to do as good a job as hopefully anybody's ever done. And yeah, I mean, you know, there's, I don't think there's any other sport that we do here at Fox that, you know, uh i have memories from 40 years ago right like so our seats were front of um where danny sullivan you know did the spin to win 40 years ago like i was there right and so the same seats every year it was the same seats every year right um and the same you'd come and you'd see the same people around you right because you wouldn't see them all year from different parts of the state and And then all of a sudden you show up on race day and there's the there's your Indy 500 family.

14:07Right. So, yeah, those memories are great. And they just kind of add to I think I think being able to being able to, you know, help the production team, you know, get really excited about about producing this race. And I'm assuming that you're going to be in the truck for the duration of the race. Yeah, we've got a lot going on here. Obviously, like anybody who does these events, they all have a lot of things that they got to check off during the day before they get to the place where they probably want to be. So, yeah, we've got we've got an enormous hospitality here. Lots of clients, lots of guests.

14:58And then for races, I actually love being on pit road during the anthem. So whether it's Daytona, Talladega, I love being on pit road with friends and then the competitors during the anthem and the flyover. And then, you know, we're planning some special things after the flyover this year that probably people haven't seen before. and then um i think uh when derek and alex are going to derek jeter and alex rodriguez are going to wave the green flag um there's that little trench in between the track and pit road where i'm actually going to be for the start of the race and then head to the trucks then head to the truck to where uh i'm happy to report eric has an unlit cigar in in your spot right in the truck behind the producers and directors.

15:57It's unlit. Yes. Yes. And it'll remain there. Any other bells and whistles that we should expect for Monday for the race? Let's see. What else? I'm sure that there are others, but I think we've hit the highlights. All right. Let's take a quick break. And I want to get into a couple of sports business news, including Fox 1, the streaming strategy that they have coming up. How do we take breaks here? Yeah, I mean, we got to get paid. Okay, great. Yeah, it's not just subscription. So you got to have two forms of revenue.

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17:44Fox and Fox Sports has had what I think has been a really good streaming strategy, which is to, you have Tubi, of course, which is the free streaming service. But as opposed to a lot of other media companies, Fox has decided we're not going to invest a lot in streaming and lose a ton of money early. And we're going to let sort of the early, early entrance sort of figure out, figure out what works and what doesn't work. Just the over the past two weeks, you've decided we're going to launch now Fox one, and we are going to start to stream, you know, like the NFL, you know, most, most of your sports that get out there in addition to news and things.

18:29Is this a change of streaming strategy? Is it an evolving streaming strategy? or is this sort of what you have sort of been planning for all along? Well, when you say that you like our streaming strategy, have you been consistent in that, John? Did you like our streaming strategy five years ago? You know, I think probably if I had Jimmy Patara on here, I'd say Fox's streaming strategy was terrible. It's because you're on right now, Eric. Yeah, exactly. I think you know this about me. I'm an old cable guy and I appreciated the cable bundle And I thought that the strategy that ESPN and Fox did by trying to preserve the cable bundle as long as they could was a good strategy.

19:10But when Comcast, one of the biggest cable operators out there, decided that they were going to allow Peacock programming to leak outside of the cable bundle with Peacock, it seems to make more sense to do the ESPN direct-to-consumer or to do Fox 1. Yeah. Rupert and Lachlan were, um, uh, I think a couple of steps ahead of the game, obviously, when I think that they connected the dots between, um, on demand streaming services, which is really the entertainment streaming services, um, and the future of kind of linear entertainment. Right. And and at least, you know, the streaming wars started out about entertainment and hit shows and movies being on demand.

20:00And, you know, linear television was the place for, you know, live events. And so because they sold off pretty much all the on-demand assets, the TV studio, the movie studio, a lot of the entertainment cable channels to Disney, that left us with really the leading news and sports, as a leading news and sports media company. And that fit really well with the bundle, right? it didn't seem like it made a ton of sense with our assets to do anything but support the bundle. And we love the relationship with distributors and stations. And so it honestly just made the most sense. It wasn't anti-streaming.

20:55We were supporting YouTube TV and Hulu as far as reaching those streaming customers. But if you really think about the sports fan, the sports fan needs a bundle because no one sports network or media company has everything. And so every a la carte product that you put out, especially five years ago, I think created a lot of confusion and angst among sports fans. And now you see for certain leagues, you have to have 10 or 11 streaming services if you want to try and watch every game. We wish that you would still just be able to get everything in one place. That's fan friendly. But I think we're at the point now where there's enough cord cutters and cord nevers that after supporting the bundle and probably being the lead supporter of the bundle for a while, it's time it really is time for innovation right I think you're seeing the the traditional distributors innovate right around packages and bundles that look more like kind of live bundles which we like because there's news and sports in those live bundles and then launching Fox One with all of the Fox channels in it gives us I think a lot of flexibility for the future right Whether it's selling Fox One standalone through storefronts, coming up with bundles with other streaming services, it gives you that flexibility that others have been doing for a few years now.

22:40The great group of bundling. Exactly. Yeah. And we're very targeted. You know, we we are going to market Fox one in a very targeted way to people who are not in a traditional bundle or who have never been in a traditional bundle. And the goal is, you know, as they evolve, they will see the value in in coming up to, you know, one of the more traditional bundles. So your idea is that when you launch Fox One, it's not going to cannibalize the traditional bundle subscriber. He's going to remain subscribed to the bundle. Yeah, the point, and I think that Lockman said this on the call this week, we are very focused with Fox One being additive to the system.

23:30You spent a bunch of days in New York last week for the upfront selling season. How did that go? What was a tenor that you felt? I can't quite decide whether people are freaked out over the economy and the tariffs or whether people are like, look, look at what you what you do in sports and say, like, oh, man, we got to get into that. So I'm not I'm not quite sure where that's going to fall right now. Well, I think I can only speak for us, but the meetings that I had last week with agencies and clients, you know, we have a very specific offering, right, which is essentially live news and sports, entertainment on the Fox network, and then Tubi.

24:20and those conversations go really well you know especially on the on the sports side uh with the narrative that we have over the next 12 months which is you know the nfl schedule came out right great schedule for us super excited about it having the world cup adding new big events like uh the indianapolis 500 uh and then you know the the special events that we've been able to acquire, like, you know, the new doubleheader in the NFL. So we have a really good story to tell to get the conversation going with events that our clients and agencies feel like they want to be a part of, especially the World Cup next year.

25:09So our conversations, I would say, have gone very well, mainly because we have, I think, really well-defined and also growing assets for our partners on the advertising side. The other thing is you have rights deals that go at least until the end of the decade. You're set for a good long while. Are there rights that are out there that you're interested in? Are you still kicking the tires on some things? Maybe we're pretty opportunistic, but I think our core portfolio, which is football, football, football. Um, and then, you know, jewel events around, uh, our partners at baseball, NASCAR, uh, the world cup, um, and now, uh, Indy, that's a pretty solid, you know, portfolio that, um, uh, gets us, I think year round relevancy, but then really pops, you know, Labor Day through New Year's.

26:13So I think we're, we're very comfortable with what we have today. And, you know, there's not, when we sit and think about, you know, the next short-term period, three to five years, we don't, we don't think that there's a big hole to fill. So, Eric, I'm going to take one more quick break. We'll be right back. Be right back. I want to ask a question to you that's near and dear to my heart.

26:53I know it's sacrilege. I have Eric Shanks, the most senior of all media executives, sports media executives. I wrote your 40 Under 40 when I was at Sports Business Journal just a couple of years ago. The idea that you are the longest tenured sports media executive out there. Do you think about that at all? Does that ever enter your consciousness? Not until you brought it up, Johnny, at all. I hadn't really thought about it, I guess. are you the most tenured sports media writer at the moment? Well, when Sandemir left, yeah, absolutely. Yeah, absolutely. Yes, we're both the oldest guys in the room, I guess.

27:41It's terrible. Well, I thought I put it a little more delicately. When you put it like that, it sounds terrible. But so, you know, I have Eric Shanks on and he have the World Cup coming up. You have the NFL, MLB, NASCAR. All I want to talk to you about is your 2021 purchase of the Ojai Valley News. You are now in my business. I went on the website this morning. Oh. There's a city manager who's accused of stealing. Oh, this is a big story for us. $200 ,000. The breaking news on there. It's a daily online publication. There's a weekly hard copy. I love it. There's a tab. on the homepage for yard sales.

28:28When you click on the yard sales, it's like high tech. All of a sudden, there's a map that you can see. Why did you buy the Ojai Valley News in 2021? I grew up in the newspaper business, working for the Brazil Times in Brazil, Indiana. I wrote uh, every day, uh, uh, was it, you know, I did it mainly so that I had a dark room that I could go and develop film. So, uh, I got to use the dark room anytime I wanted to. And so, um, I've always, always loved it. You know, I worked in, in the sports information department at Indiana. And so I've kind of always been, uh, it's, it, it's been something that has been near and dear in my heart.

29:19So, um, in our little town of Ojai, I got to know the, the owner who had owned the paper for a very long time. He was the state farm agent in, uh, in Ojai. So he, he was the leading state farm. He was the lead, the leading insurance agent and also ran the paper. Um, and he did a pretty good job of it. He was, by the way, that's the most depressing thing. I think you can't own the paper and make a good business. You also have to be in insurance. Yeah. Terrible. Terrible. And he was he was getting to the point where, you know, he was going to get out of the business and got the relationship with his name is Bob Daddy.

29:59And he didn't want the paper to dissolve and he wanted it to be in the right hands. And so myself and the current publisher and one other partner are partners in it. And, you know, it's clearly, you know, local newspapers is very philanthropic, I would say, to the town because it's not a great business. Although, you know, we have expanded the paper and we've got more reporters than we've ever had. We're moving out geographically and everybody listening to the pod should absolutely subscribe. So what we should do, you know, how about a Puck Ojai Valley News Bundle? Oh, you know what? We could look into that.

30:55Absolutely. I think that would be tremendous. Maybe we'll host an event on your avocado farm. Yeah. And we've, you know, we've broken two big stories, that city manager story. And then the Pope, the new Pope actually spent a fair amount of time in Ojai. So we broke that story. Yeah. What did he do in Ojai? Uh, you know, we have a, we have a, uh, a Villanova prep school, which is a Catholic prep school in town that he spent time at. So he's, he had actually come and visited a number of times. And so, um, yeah, we have a connection to the Pope and, uh, now we have a bundle with puck. And, and you said it's a philanthropic venture.

31:37Are you making money off this? Is it profitable? We actually got it to the point where we're not losing money. And the cool thing is, if you've ever been in kind of a tourist town, they have those free magazines, those glossy magazines that are there. So that's part of our paper as well. So we do a quarterly magazine that's glossy and actually really cool, good photography, good storytelling, and a lot of ads for tourists in there. And so between the two, between the magazine and the paper and the reporting, you know, they kind of subsidize each other. And so we're at a point where we actually started a new masthead last year called the Ventura County Sun.

32:18So we've actually moved one town over because, as you know, reporting is is is, you know, definitely on the decrease in these markets where the big conglomerate papers have taken over. And so that happened in Ventura. And it's it's kind of a right. Anyway, these there are new markets for for, I think, local independent papers. So I'm dying to ask you, this was my business. My first job in journalism was for the Bethesda Gazette, where I was going to county planning board meetings, everybody trying to fight the new office building that's going to be built up. How are you not losing money on this?