How Broadcast Survives in a Netflix World

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1:17Congratulations, you made the varsity podcast. My name is John Aranda and I am Puck's sports correspondent and the host of this pod. And today, we have one of the most influential media industry lobbyists in Washington, D.C. joining us. Curtis LeJette is the president and CEO of the National Association of Broadcasters, and he spends his time advocating for not just Fox, CBS, NBC, and ABC, but also the local stations owned by companies like Tegna, Nexstar, and Sinclair. Curtis is a big sports fan and really knowledgeable about the business, so I'm really looking forward to this one. But before we get to Curtis LeJet, today is Sunday, March 22nd, and here's what I'm watching.

1:59We're less than a week away from the start of baseball's regular season, and in the first two days, we're really going to get a sense of just how different the league's media deals are going to look. The season opens Wednesday night with a Yankees-Giants game. Netflix is going to carry that game. Yes, Netflix, which is paying MLB around$50 million per year for three events. The opening night game, the Home Run Derby in July, and the Field of Dreams games in August. Then the next day, Thursday, another new media company, NBC, steps in with two games on what's considered the traditional opening day.

2:36First, it's going to have the Pirates and Mets. Then, it's going to carry the World Series champion Dodgers against Arizona. Now, these have the potential to become great deals for baseball if, and only if, Netflix and NBC decide that they want even more rights when baseball's rights deals are up in 2028. Of course, Apple still has its Sunday night deal. ESPN will carry some weeknight games. Amazon is going to carry the Yankees games in New York. Baseball's hope is that all of these outlets will become so enamored with the sport that they stay aggressive in 2028. it's certainly a strategy that has worked for others in the past and it seems like a smart one to me okay now let's get to curtis legit curtis you are the first dc type to join the varsity uh so i i really appreciate it uh overseeing the uh the basically you're the biggest broadcasting uh lobbyist in in in town what is what are you focused on right now i i i want to start with like an open-ended question like for you what are the biggest issues that that uh that take up your time yeah well first and foremost i appreciate the opportunity to join you today john and you know what i'm doing here in washington dc along with our team is really telling the story of local broadcast television and radio uh what we are in today's media ecosystem which is heavily disrupted relative to everyone else, which is that we are local, we are freely available, and the communities that we serve rely on us because our local stations have boots on the ground in every community in the country.

4:23So we're telling that story to lawmakers, ensuring they understand how fiercely competitive this media landscape is, that broadcasters need some scale to compete for advertising dollars for audience and for programming rights like must-have sports and we're ensuring they understand all of those tensions but why it's essential to uh to the health of our democracy and why viewers benefit when we are uh widely available so i'm telling that story every day here on capitol hill the uh part of the thing one of the themes i think that that I've been really writing about is, you know, the rise of the streaming companies and, you know, the cable cord cutting has been happening for the past, like more than 10 years, more than a decade now.

5:15A lot of broadcast television is tied to cable. So while it is freely available, very few people I know have the antennas on their roof, right, to get the signal. How would you describe, what is the state of broadcast television right now? Yeah, well, I think one point that you made is important to underscore, which is there's actually a bit of a resurgence in over-the-air viewership. And that's something that broadcasters, both our networks as well as the local stations across the country that they affiliate with, are really leaned into because we are the most consumer-friendly medium out there.

5:54And as you see, at times, consumers are frustrated with needing to sign up for that new subscription streaming service just to see their favorite team. Broadcasters stand out. And I think all of our member companies are seeing that when broadcast is the tentpole for their media distribution, the fans follow that. So you hit the nail on the head. There's obviously a lot of disruption right now. there's some major players that we're competing against every day that don't just have national, but they've got global scale, Netflix, Google, Amazon. And we're ensuring that the policy landscape keeps up and ensures that broadcasters can compete for those sports rights.

6:40And we think that the viewers benefit from that. I want to take that and sort of talk about some of the big trends that are happening right now we're we're conducting this interview just a day after the fcc uh approved uh the uh tegna uh next star uh merger doj as well that looks like that's that's moving forward which is quite i you know direct tv has sued against that um the consolidation of media is that in in your mind is that a good thing or or something to be wary of i i think for better or worse, it's an essential thing right now. And I'm looking at this purely through the lens of broadcast.

7:22If we're going to compete for those NFL sports rights, if we're going to compete locally to ensure that teams feel like they have a local distribution option that is freely available through local broadcast, as opposed to the cable regional sports networks, or even streaming, broadcasters need some scale in order to compete for that. And the only way to gain that scale is through some level of consolidation. I think at the end of the day, broadcast both at a local level, which is where Nextar and Tegno's business is really focused, as well as at a national level, you see the consolidation that's happening.

8:06We're obviously in the midst of a lot of discussion around Paramount, which is the owner of CBS. All of that is going to ensure for the consumer that more of these high quality sports are available on broadcast. It's really expensive to bid for these rights. The reports have come out as the NFL has begun negotiating its media contracts that even in their discussions with CBS, and again, this is just reported, they're asking for a billion dollar increase and annual rights fees. Our member companies need scale if we're going to compete for that type of dollar to maintain this must-have programming.

8:46So I would say scale and consolidation is essential if we're going to be able to serve viewers. So you brought up the NFL rights and that sparked the FCC, the Federal Communications Commission, to open up an inquiry about the move of sports to streaming. The DOJ also, the Department of Justice, said that it wants to look into it. What is your role in sort of what's happening there? Our role is ensuring that policymakers are keenly aware that their constituents benefit when sports are available on broadcast. We are the only freely available medium out there. And that is not, again, to suggest that streaming is a bad thing.

9:35Streaming has opened up the accessibility to a wider range of sports, especially for viewers like myself who maybe don't live in their home market. I'm a Boston sports fan. I'm a Providence College alum. I'm a Providence College basketball fan. So having all these options to consume sports is amazing. But there's no doubt that consumers are frustrated by suddenly having to sign up for a new subscription service, multiple of them in certain cases, just to watch their same favorite team. And so we want to ensure that these policymakers are aware that there are benefits when consumers have some access to especially the most premier sports through broadcast, whether that's ABC, CBS, NBC, Fox, or the local stations that are paired up with their local teams.

10:28and some of these laws were written in a universe where broadcasters were only competing against other broadcasters where they uh where where streaming didn't even exist and so i think these lawmakers and these agencies are right to ask the question as to whether this legal framework is enabling outcomes that are consumer friendly and broadcast is going to be a big part of that You know, Curtis, there are so many reasons why I wanted you to come on the pod. First of all, we're neighbors in D.C. You've been in D.C. forever. I just have to ask you, you name-checked Providence College. Also in D.C.

11:09is former Providence basketball coach Ed Cooley. Do you ever run into Ed Cooley? Like, you're a politician. You have to maintain a certain level of decorum. But if I were to like happen across like Kevin Willard, who left Maryland in a similar way, like I would see red. How do you feel when that happens? Well, I'm going to tell you, I have actually not run into Ed Cooley, which is amazing because you and I both live in a neighborhood that's effectively adjacent to Georgetown. And if I did, I don't think decorum would be the way that you would describe our interactions. And just for your audience here, you know, the back story is that Ed Cooley was the longtime Providence College basketball coach, relatively successful and left very suddenly to an in-conference rival in Georgetown three years ago.

12:05And there's a big feeling amongst the fan base that a lot of those discussions with Georgetown were happening during the season. So there's a lot of vitriol from the Providence fan base, but we're moving on. We're actually out in the market for a new coach right now. And so brighter days ahead. Certainly. Let's get back to the NFL. I just had to digress and you left it open. But Kevin Willard left Maryland to go to Villanova the exact same way. And yeah, the decorum would be it would be very hard for me to along with along with the rest of the fan base. Yeah, especially now that you see that Villanova's playing in the NCAA tournament.

12:46And so it's Texas A &M, which is where we poached their coach. Yeah, whatever it is. Enough college basketball. Yeah. All right, so the FCC invited a comment. The DOJ is looking into this. You've played in the D.C. circles forever. What does this mean? Like, I've been covering this. There generally is never any outcome to this. And when it is, it's kind of crazy. Take us through the process. Yeah, well, first and foremost, I think we are in somewhat uncharted waters in Washington, D.C. right now, where we are seeing a very outcome-driven administration. And so I wouldn't take for granted that just because things were done a certain way in the past, it means that that past is likely to repeat itself here.

13:41I think the FCC has taken a really important first step here by asking questions around the state of the current media marketplace and how those consumers of sports are being impacted by the significant changes that are going on on the media side and with regard to the sports leagues. You know, from a broadcast perspective, there's two elements here that are really central to my local television members. The first is, you know, we need more scale in order to be able to compete for these sports rights. And we've asked the FCC to modernize its regulations to allow broadcasters to get a little bit bigger.

14:27if we're going to be competing with Netflix, with Amazon, with Google for these premier sporting rights, we've got to have some ability to compete and a healthier overall ecosystem is going to enable that. And then, you know, you talked about those viewers who are accessing their television free over the air. You know, we're in the process nationwide right now of improving the quality of that over-the-air transmission. We're moving to a new standard. That new standard allows for distribution in 4K. It allows more interactive engagement from fans. And we need the FCC's help in enabling that nationwide transition.

15:10And I tie that back to sports because at the end of the day, sports fans right now expect that they are going to have that high quality video experience, that they're going to be able to engage as a fan. That content experience is not just locked to what's going on on the screen. So it's sort of table stakes for us to be able to offer that high-quality consumer product to those consumers that want to access it free over the air. So that's where we are really advocating at the FCC for them to look at some of these sports questions through the lens of local broadcast. But they've asked a wide array of questions here, And I think Chairman Carr is hitting on the right point, which is that consumers need to be put front and center in ensuring that this media landscape is serving them.

15:59And so we're going to be very, very engaged in that process at the FCC. You mentioned the Justice Department as well. Senator Mike Lee wrote a letter to the head of the Antitrust Division asking questions around the Sports Broadcasting Act, which is this decades-old law that first enabled the NFL and other sports leagues to negotiate rights at a league-wide level with the major broadcast networks. The media landscape has changed dramatically. The NAB doesn't have a position on the underlying Sports Broadcast Act itself, but we do think there is an obligation that certainly goes along with any of these benefits that are afforded by the federal government to the sports leagues to ensure that they're distributing their premier sports in a fan-friendly way.

16:52And we're going to continue to make that case. hey Curtis let me take a quick break come back and I want to talk a little bit more about sort of the the NFL rights deals and broadcasters place with that

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18:12All right. So Curtis, I want to ask you about, But if there are consumers who are listening to this, you know, they're going to say, you know, it's capital market. If the streamers are bigger and can afford the rights, you know, why not go to the streamers? You know, the idea of the NFL selling rights to ESPN, I've had to pay$150 a month for, you know, decades in order to see that. What makes this different right now today? Well, I'm not sure that the consumer would agree with your premise, John, that there's not a benefit to accessing these sports through broadcast. Whether that's free over the air or it's just the simplicity of getting that premier sporting event through the traditional pay TV model.

19:03You still got, depending on how you measure it, 60 million consumers out there who are accessing their television principally through a cable satellite system or maybe a YouTube TV. And distributing through broadcast just makes that simple. And so, you know, what we're seeing here is that when Premier Sports are on broadcast, the viewership is higher. You know, we were just talking about the conference tournaments, the Big East Championship last week. It was on Fox. It had the highest viewership in over a decade. We look at the World Baseball Classic, which just took place a few days ago. That final was on Fox.

19:48The all-time highs in terms of viewership. So you see a meaningful difference in the ratings for the games that are available to consumers on broadcast, whether it's a major network or a local station versus their streaming or pay TV rivals. So I think the consumers are actually showing up with their eyeballs and demonstrating that they do have a preference in continuing to access their games through broadcast. And that's the story really that my member companies are telling to the leagues. You know, they're in the game, not just obviously of getting the highest dollars in terms of revenue and sports fees, but also ensuring that they've got a product that they can engage with the fans.

20:34And there's no better game in town than broadcast as it relates to fan engagement. And we see that time and time again and again. The NFL, which is the premier not just sports league, but entertainment in the world, has really been anchored by its distribution through broadcast television over the course of decades. That's been a two-way street. our partnership with the NFL has been tremendously successful in helping to enable the success of broadcast television, both at a national and the local level. But I think the results are pretty clear that the NFL has gotten a lot of benefits from that as well.

21:15And so we look forward to continuing that relationship. If I didn't ask you this question, the NFL guys would kill me. But every single NFL game is available on local broadcast TV. Who cares if they sell it to Netflix or Amazon or Google YouTube, right?

21:37Well, I think right as of now, and we understand that the NFL obviously has a lot of considerations at play here, especially as they are thinking about global audience. But I think the proof is in the numbers. You know, you look at the recent holidays, the Thanksgiving games that were available through broadcast television averaged 45 million viewers, 57 million viewers for the Chiefs-Cowboys game. The holiday games that were streaming only, that viewership was, depending on which game you're talking about, Christmas, 27.5 million viewers on Netflix. The Black Friday game on Amazon, 21 million viewers.

22:21That is a substantial difference. And so I'm not here to advocate one way or the other in terms of how the NFL is looking at this in terms of their long-term strategy. But there's no doubt that the best bang for the buck today is to continue to grow viewership through broadcast. We represent an unparalleled platform. And I'm going to continue to tell that story and ensure that consumers understand that there's benefits as well there because of that freely available option and the simplicity of accessing these games through broadcast. And one of the trends, of course, I've been writing about is the return of sports to broadcast television.

23:03You know, the NBA deals on NBC and ABC as well. I almost said ESPN, which, of course, is a cable channel. And you have the college football is, you know, throughout broadcast television. Hockey is going on to ABC more frequently. What does that return of sports to broadcast mean for these broadcasters? I think it's tremendously important in terms of our ability to stay front and center in the living room for consumers, but also our ability to invest in the other things that broadcasters do, especially local broadcasters, which is that local journalism. You know, if you back out, obviously, the advertising model has been tremendously disrupted over the course of the last two decades as a result of Facebook and Google.

24:00The way consumers are consuming content obviously has changed quite a bit with all of the time shifting. Sports are the one piece of media, along with news, that consumers are accessing in real time and engaging. And it has a stickiness that is essential to the overall health of our networks and our local stations. So I think it is tremendously important. I think there's a reason from a fan perspective, though, that we also celebrate this. I mean, look, just last month, the NBC really underscored this trifecta of having of providing the Olympics, the Super Bowl and the NBA All-Star Game all within the same weekend.

24:50And what do you see from that? The NBA All-Star Game had hit an audience, an audience threshold that I hadn't seen in more than a decade. Obviously, the numbers associated with the Olympics and the Super Bowl speak for themselves. But I think this is, again, a two-way street that the leagues are showcasing this, and broadcasters need to tell this as a very celebratory story, that this is how we're servicing our fans, and I think we're doing that. Another theme that I've been writing about is the local sports angle. You have Main Street Sports, which had, of course, the FanDuel TV sports that, you know, that's going out of business.

25:33Warner Brothers Discovery, you know, before they were bought up by Paramount, they closed their regional sports networks as well. A lot of the rights, the streaming rights are going back to the leagues and they're trying to figure out what to do with the streaming. happening, some of the teams are then negotiating with cable distributors or satellite distributors to try to get traditional games on the cable and satellite. But there's also in several markets, local TV broadcasters that have invested in these rights and have used them. Talk me through this strategy. Is that something that you expect to sort of go into overdrive?

26:16Or is it still sort of a wait and see and look how this works out right now? Yeah, as you look across the country, you know, there are dozens of teams between the major sports leagues, MLB, NBA, NHL, that have entered into local broadcast partnerships for select numbers of games. Those are not, for the most part, full season packages right now. So I think what you're seeing is a bit of an experimentation, both from the local broadcaster and from the local team, as to how a partnership with the local broadcast station increases the fan reach in those markets. and I do think you're going to see more of it.

27:00I do think this is a place where, again, scale is important because those sports rights, even at a local level, are extremely expensive and the local broadcaster who is purchasing those rights, yes, providing it for free over the air, but also has to find a way to monetize it when they're programming, when the games are being resold by the pay TV distributors. And more scale will help to ensure that broadcasters can maintain those relationships in a way that is economically viable. So I think we are still in the early innings of this, pun intended. But my hope here is that you're going to see more and more of these games as the local broadcast groups especially gain some more scale, because I think the fans really benefit from it.

27:50And again, your role in doing this, it's to tell that story on Capitol Hill, or are you trying to advocate a specific position to the regulatory agencies up there?

28:06It's a bit of both, because I think you've got to start with the story. You know, sports, in a lot of ways is the most potent message in Washington, D.C., because every policymaker understands how much their constituents care about their local sports teams. So what can sometimes be very, very wonky issues when you're talking about spectrum fights or FCC ownership restrictions, when you can actually translate it to saying, here's what's happening in the media landscape. Here's how broadcasters are fighting at a national level through our networks to maintain access to these premier sports rights.

28:52Here's how communities benefit when their favorite teams are available through local broadcast stations. If I'm telling that story to policymakers, the wonky policy then flows from there. And so I'm doing a little bit of both. We're ensuring that there is a policymaker understanding of, first off, what a broadcast television network and local broadcast station is in this media landscape. There's a ton of confusion around that. And reminding them that constituents are really well served when those games are available that way. Again, not exclusively that way necessarily. This can be part of an overall mix.