Fox Won’t Topple ESPN on Day One, but So What?

Fox Sports 1, News Corp.’s new 24-hour television network, doesn’t have to topple ESPN to be a success.

There is enough room in the global sports-TV world to accommodate both media-industry superpowers.

Fox Sports 1 will launch in approximately 90 million U.S. households as opposed to the 99 million on ESPN and ESPN2. Fox Sports 1’s daily 11:00 p.m. Fox Sports Live show will challenge ESPN’s traditional meal-ticket SportsCenter.

Perhaps Rupert Murdoch’s greatest triumph, the Fox News Channel — steered brilliantly by Roger Ailes all through these years — has spoiled all of us when we take a critical eye to Fox Sports 1’s prospects. It helps to recall that it took FNC many years to establish itself and still more to surpass Time Warner’s (NYSE: TWX) CNN, which it surely did. Fox News, which holds a stranglehold on the cable news ratings, didn’t dominate the industry overnight. But it has been No. 1 in the ratings for so long that we automatically assume it was born in the top spot.

So, don’t look for Fox Sports 1 to crush ESPN on day one. Or even on day two or three, either. These things take time, you know.

“Our hope is that we can be equally professional” with ESPN, noted David Hill to the members of the media. Hill directed Fox Sports when it debuted two decades ago and will lead the new venture. “It’s going to take us a while,” he conceded. “We’re not expecting to knock ESPN off in the first week or two. It’s going to take two or three years. It will be a slog.”

News Corp.  (NASDAQ: NWSA)will point proudly to its great success in cable news. “But Fox execs conveniently left out its failed attempt in the 1990s to create national sports TV programming, led on-air by then-ESPN refugee Keith Olbermann,” pointed out USA Today Sports.

The narrow-minded members of the media would like us to believe that the smackdown between ESPN, the crown jewel of Walt Disney Co., and Fox Sports 1, Rupert Murdoch’s new baby, which launches on Aug. 17, will be — or has to be, anyway — some sort of a bloodsport between News Corp and Walt Disney. The two companies will compete furiously — naturally — but there are enough programming opportunities to go around.

We’ll get an idea of News Corp.’s commitment when it bids for the broadcasting rights to show college basketball games. The new Fox entity could also try to acquire the rights to Thursday night National Football League games (though these didn’t exactly set the world on fire last season). Murdoch’s operation may also ultimately attempt to outbid the competition for the National Basketball Association showcase.

A successful launch will boost the stock-market prospects of Fox Sports 1’s parent company. Wall Street relishes splashy new products and likes to reward companies for show is of great ambition. Stock-pickers turn thumbs down on companies that either can’t or won’t launch new ideas. Rupert Murdoch has historically been a maverick in taking calculated chances without seeming to be reckless.

Wall Street analysts have suggested that pay TV distributors will shell out $1 a month for each subscriber — a big jump from the current situation, pushing up affiliate revenues to about $1.1 billion a year from $312 million. Plus, approximately one-third of News Corp.’s current pay TV arrangements will run out by the middle of next year and another 40% will come due in the year after, points out Barclays Equity analyst Anthony DiClemente.

News Corp. knows its heaviest lifting lies ahead. By the time the Fox News Channel torpedoed CNN, CNN had become a complacent operation and it was shocked to see scrappy, ambitious Fox News show such vigor. You can bet that NBC News watched every turn of events. One of the NBC News executives once told me that NBC was determined not to let the Fox Business Network do to CNBC, which NBC News supervised, what Fox News had done to CNN. NBC strengthened CNBC and retained many of the channel’s top journalists. Fox Sports 1 can’t hope to take advantage of a slumbering competitor, as ESPN will work hard to remain as No. 1.

The question is whether ESPN will come across as a traditionally dominant network or a tired giant. Look for Fox Sports 1 to try hard to exploit every possible weakness of ESPN. ESPN, the crown jewel of Walt Disney Co., likes to portray itself as The Worldwide Leader in Sports.” For once, when it comes to media self-flagellation, this happens to be closer to truth than hype.

For its part, Fox Sports 1 will readily acknowledge that this is, indeed, the case — for now, that is.