And Bryan Curtis on Schumpeterian competition.
Millen: I’ll never forget the quote he gave me. I said, “John, how it’s going?” He said, “Matt, let me tell you one thing. If you got one person who wants you, you get a job. If you got two people who want you, you get a great deal. And if you have three or more, you get a bonanza.”
This is from a LONG article: Bryan Curtis, “The Great NFL Heist: How Fox Paid for and Changed Football Forever,” theringer.com, December 13, 2018.
Millen, who said this, is Matt Millen, former NFL player, former president and CEO of the hapless Detroit Lions, and former NFL announcer. John, who is quoted, is, of course, the late John Madden, who died yesterday.
The quote from Madden reminded me of the famous Reuben Kessel study of competition among bond underwriters, a study that George Stigler references in “Monopoly,” in David R. Henderson, ed., The Concise Encyclopedia of Economics. With one underwriter bidding for the business, the spread was $15.74. With two underwriters bidding, it fell to $12.64. With three, it fell a little more, to $12.36. So it wasn’t exactly analogous to the Madden situation. He needed three bidders. The state of California, which issued the bonds, needed only two to get real competition and six to get something close to perfect competition.
Although I note above that the article referenced is long, it’s fascinating throughout. It tells with great detail how Rupert Murdoch bid a previously unheard of number to get the NFL’s NFC games away from CBS. Without that, Fox probably would not have been nearly as successful.
Here’s the ending quote:
Dolgin: If [Murdoch] didn’t make that bet on the NFL and change the character of that weblet to a major, revolutionary network, I’m sure of one thing: Things like Fox News, FX, Nat Geo — the cable empire wouldn’t have been there. I’m not sure that this whole empire wouldn’t have been there. … All of that is traced back to this bet-the-farm, multibillion-dollar Hail Mary to get NFL rights. Because NFL rights were the only thing that was going to get him new stations. … Look, he just sold [the studio] for $70 billion. I guess it was the best $400 million he ever spent.
Dolgin is Tracy Dolgin, Fox Sports executive vice president.
Once Fox won that bid, it wasn’t that hard a lift to get John Madden:
Jerry Jones, Dallas Cowboys owner: If you make that kind of commitment [for the NFC rights], you’ll go after and get the best. That’s [the huge amount paid to hire John Madden] peanuts. That’s arguing about the price of the seasoning after you’ve paid a fortune for the steak.
I’m not enough of an NFL follower (although my wife would say I’m too much of an NFL follower) to follow all the ins and outs of NFL television over those almost 30 years. But here’s the thing I like best about what Fox did:
“Fox-izing” football meant the pregame show would be about laughs and relationships as much as it would be about sports. It meant the score and clock would be on the screen at all times.
It’s the second sentence here. In football, the clock is huge, especially for the last few minutes of each half. When I watch, I want to understand the plays and strategies. Seeing the clock, just as the play planners do, is important for that.
Above all, the article about Fox and the NFL is about Schumpeterian competition.
Here’s the biography of Joseph Alois Schumpeter in David R. Henderson, ed., The Concise Encyclopedia of Economics:
[What counts is] competition from the new commodity, the new technology, the new source of supply, the new type of organization … competition which … strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.
Fox introduced more cameras, different commentary, and clocks, among other things.
READER COMMENTS
Jon Murphy
Dec 29 2021 at 1:07pm
Which are now standard. Any network (CBS, NBC, ESPN) all do the same things.
Competition is a hardy weed…
Tom Means
Dec 29 2021 at 1:19pm
The other thing about football TV monopoly/competition thing is the increase in technology. While crowd experience is nice, u get a very good experience watching a game on TV, whether at home or in a bar. The introduction of the yellow first-down line, the field goal line, detailed instant replays, the overhead camera, summary stats, and many other components. Once one network added a new dimension, the others soon followed.
BC
Dec 29 2021 at 1:34pm
It’s interesting to recall the long list of innovations, now taken for granted, in TV sports broadcasting, listed in Jon Murphy’s and Tom Means’s comments. As both point out, those innovations were quickly copied by the competition, i.e., Fox (nor other networks) did not really have a way to protect its “intellectual property”. Yet, Fox remains a dominant sports network — it still carries NFC games now — and the lack of formal IP protection hasn’t seemed to stop the networks from creating the innovations in Tom Means’s list. (Of course, we don’t really know the innovations that never happened but may have with stronger IP protections.) It would be interesting to understand better what advantage Fox and other networks think they gain from such innovations and whether those incentives carry over to other industries where IP may be hard to protect.
Alan Goldhammer
Dec 30 2021 at 8:05am
One needs to clarify this. While David’s main point above is interesting, the Fox television franchise was on a downward slope including the sports part. ESPN rapidly grew to become the the most dominant of the sports networks these days. I think this was one of the reasons that Fox Corp sold off a lot of the holdings and then reorganized Fox Corporation. The regional Fox Sports Networks were all sold to Disney who sold them on to Sinclair Broadcasting.
Fox Sports made some critical blunders. They used to carry English Premier League soccer (huge globally) and thought they had a lock on broadcasting here in the US (the EPL negotiates separate broadcast deals throughout the world). They submitted a low ball bid several years ago only to see NBC come in with a much higher one and get a long term contract. There were a number of other sport franchises that they let slip away as well. they are not the power that they once were.
Comments are closed.