With National Sports Network, News Corp. Would Be Picking a Fight It Can’t Win

News Corp. (NASDAQ: NWS) loves a fight, even one it isn’t favored to win. Its success building one of the most popular major television networks in the U.S., Fox Broadcasting, is evidence of that.

Now Rupert Murdoch’s media empire is looking to start up its own national sports network on television, hoping to topple Disney’s (NYSE:DIS) ESPN from its lofty position in the market. Fox Sports is already a potent earner in the company’s cable network and television programming segments, which collectively accounted for nearly $13 billion of News Corp.’s total $33 billion in revenue across 2011.

Cable is also accounts for two of News Corp.’s fastest growers, with cable income up 22% from 2010, to $2.8 billion. The company’s fleet of regional sports channels under the Fox Sports Net banner already reaches 75% of homes in the U.S., so the brand is out there. Why not start a national sports network?

Two very good reasons: One, News Corp. has tried this before and failed miserably. Two, News Corp. wouldn’t be fighting just ESPN but an army of competitors, including some already struggling newcomers.

Contenders in a crowded market

The Fox Sports Net brand has been used in the past to try and transform Fox into an ESPN competitor. Today Fox Sports Net is spread across 20 cable channels that fall under six satellites, including the extreme-sports-centric Fuel TV, Fox College Sports, the auto-racing Speed Channel, Spanish-language sports channel Fox Deportes, and the dual world football networks Fox Soccer Channel and Fox Soccer Plus. It also runs the Big Ten Network serving markets around Big Ten universities.

Starting in 1996, Fox started to air national programming through these channels, including its infamous rival to ESPN’s SportsCenter, Fox Sports National Sports Report, but NSR‘s all-national coverage suffered from poor ratings and was overshadowed by regional coverage. The National Sports Report died way back in 2002.

So not only would News Corp. be hoping to woo cable operators to pay fees for carrying a whole new network alongside all its existing regional outlets, it would be entering a veritable ocean of sports networks. ESPN alone commands seven different channels, and that’s in addition to network programming Disney has on ABC that carries the ESPN brand.

There’s also CBS’ (NYSE:CBS) CBS Sports Network and a huge number of nationally televised sport-specific channels like NBA TV and the DirecTV (NASDAQ:DTV), Time Warner Cable (NYSE:TWC), and Comcast (NASDAQ:CMCSA) co-owned MLB Network. That’s not to mention Comcast’s latest venture, the NBC Sports Network, which is itself a channel much like what News Corp. is considering.

Scrapping for viewers – and content

The NBC Sports Network is yet another cautionary tale for News Corp. Since debuting in January, the NBC Sports Network has performed horribly, averaging just 62,000 viewers per day throughout January. The network was built on the bones of the Versus network, which in January 2011 was at least pulling in 78,000 viewers per day. New content isn’t faring any better. Bob Costas’ NBC Sports Network exclusive Costas Tonight premiered on March 3 and pulled in just 31,000 viewers, ranking it 2,054 amongst 2,385 advertising-supported shows on cable.

The odds, based on Comcast’s performance, are stacked against News Corp. finding an audience at all. What’s more, but the company would have to struggle to get exclusive content. Comcast shelled out $2 billion for its new deal with the NHL and a $10 million per year deal for Major League Soccer programming — the latter of which was well worth it as MLS has given NBCSN its only “hit” — but that was arguably the only content it could pay for. The Time Warner-owned (NYSE:TWX) Turner Broadcasting has Major League Baseball locked down through 2013 as well as shared custody of the NBA through 2016 with ESPN.

According to the WSJ’s report, News Corp. won’t look to start up its network until at least 2013, but even then the pickings will be slim for sports content. Fox enjoys a lucrative relationship with UFC and some others, but will that be enough to build a force that could topple Disney and ESPN’s empire? Hardly.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.

Article printed from InvestorPlace Media, https://investorplace.com/2012/03/with-national-sports-network-news-corp-would-be-picking-a-fight-it-cant-win-nws-dis-cmcsa/.

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