Thursday, December 3, 2009

Comcast to take control of NBC Universal

The worst kept secret in media M&A is finally confirmed. Comcast will purchase a majority stake in NBC Universal.

This is very good news for the IRL because it virtually ensures that Versus will be carried everywhere and by everyone (including DirecTV). Comcast will bundle Versus with more popular cable networks such as USA, CNBC and MSNBC. DirecTV can not seriously consider removing those channels from its lineup. Therefore, it will be forced not only to carry Versus, but also to assign the IRL's fledgling cable partner a decent channel number.

Translation: Comcast is prepared to spend $13.75 billion in order to acquire bargaining power with regards to negotiations with its customers and suppliers. Conversely, the IRL is preparing to select yet another single IndyCar chassis, thereby forfeiting its own bargaining power and that of its teams. The IRL will likely make the same mistake with regards to engine selection.

The IRL could learn something from its television partner. Regrettably, history suggests strongly that it will not.


Monday, November 30, 2009

Edmonton IndyCar event loses $3.9 million

This can not bode well for temporary racing circuits in the IndyCar Series. According to the CBC, the 2009 Rexall Edmonton Indy lost $3.9 million. The good news is that this is an improvement compared with 2008, when the Edmonton IndyCar event lost $5.2 million.

For those who are keeping score, that's $9.1 million in government funds that have been flushed down the toilet in just two years. If IndyCar were to attract a substantial television audience, then the money might be justified as an investment.

Unfortunately, that is not the case. The Edmonton Indy earned a 0.4 cable rating on ESPN in 2008 and a .24 cable rating on Versus in 2009.

U.S. television viewers have spoken. There is very little demand for this event.

The math is not difficult. The municipal and provincial governments have backstopped $9.1 million in exchange for a grand total of approximately 700,000 U.S. television viewers over two years. That's $13 per viewer.

If Edmonton were a profit-seeking enterprise, then it would have no choice but to follow Richmond out the door. When the contract expires following the 2010 Edmonton Indy, I suspect that we should anticipate the same conclusion.


Lack of U.S. Stars Killing Indy Event

The problem is not unique to IndyCar racing.

Mark Ambrogi of the Indianapolis Star reports that the city will likely lose its professional tennis tournament. Declining crowds, a dearth of sponsorship, and little hope for a television deal are the proximate causes.

But the real culprit is a lack of star U.S. competitors.

I vividly recall attending this event when it was the U.S. Clay Court Championships. I joined thousands of fans that crowded their way into an outer court to watch Jimmy Connors take on a brash but promising young American, John McEnroe.

Unfortunately, history alone can not sustain the event. Middle American tennis fans have determined that the present-day value proposition is irrelevant.

The two most recent champions of the Indianapolis Event are Gilles Simon and Robby Ginepri. Apparently, fans greeted these undoubtedly highly skilled competitors with a collective shrug.

Sound familiar?

The not-for-profit promoter of the Indianapolis tennis tournament is powerless to affect change. The same can not be said for IRL Management. It has chosen to abandon the non-technical aspects of product development.

The IMS Board and its chosen managers will have only themselves to blame both if and when a similar story is written about another once-great institution.