Fox Sports Networks to Stress Local Approach

When News Corp. cobbled together the nation’s major regional sports channels under one banner in 1997, the company heralded the new entity as the first serious challenge to ESPN. News Corp. vowed to go after the cable juggernaut’s huge national audience and advertising revenues.

But News Corp. has failed to dent ESPN’s stronghold. The Walt Disney Co.-owned sports network remains the most profitable network in the world. In the head-to-head nightly news contest, ESPN’s popular “SportsCenter” draws more than five times as many viewers as the Fox equivalent that airs across most of its regional networks.

Worse, in the process of trying to knock ESPN off its pedestal, News Corp. may have sacrificed profits from its one real strength: amassing local audiences through the airing of hometown games.

“Fox’s strategy of trying to compete with ESPN was ill-advised from the beginning,” said Jack Myers, chief economist of the Myers Group, an economic research firm specializing in the media. “They were never truly a national network because local sports inherently draw upon the loyalties advertisers have locally.”

Now, News Corp. is trying to harvest those missed opportunities.

While ESPN continues to focus solely on the national sports scene, News Corp. will begin putting an even greater emphasis on its local bias.

This month, the company renamed its nightly news program, “Fox Sports News,” anchored by wise-guy newscaster Keith Olbermann, as the “National Sports Report.” The idea is to pair the one-hour show with a separate half-hour segment, called the “Regional Sports Report,” to follow in local markets beginning this summer.

Further, News Corp. today will announce a reorganization of its ad sales force. The advertising sales managers at its wholly owned regional sports networks will report to the sister Fox television stations group. Come July 1, the local advertising efforts of Fox’s 11 sports channels and its 14 television stations will be consolidated under station sales chief Jim Burke. He will continue to report to Mitchell Stern, president of the stations division.

Analysts say these efforts could drive up advertising rates, helping to narrow Fox’s gigantic earnings gap with ESPN. ESPN earned about $830 million last year compared with $60 million made by News Corp.’s networks, according to analyst estimates.

“The home run here is to allow advertisers to have a one-stop shop instead of having two groups in a market competing against each other,” said Jeff Shell, who was named last week as chief executive of Fox Cable Networks. “Advertisers are shifting more and more to targeted marketing, and sports is one of the most lucrative drivers.”

The move comes at a time when media companies are selling advertisers bundles of promotional outlets.

“The hope is that we will get a bigger share of the local market by bringing advertisers more stuff--stations, Web sites, sports networks,” said Stern, whose stations group is the largest and most profitable of any of the major networks. “Everybody is trying to do these kinds of things.”

He said the alignment last year of advertising sales of Walt Disney-owned ESPN and ABC Sports under the cable channel has proven that bundling works on a national basis.

News Corp. says the plan does not represent a retreat from its national approach, which the company claims has been more successful than originally projected. The company says it will continue selling national advertisers spots that air alongside programs such as “National Sports Report.”