Determinants of Regional Sport Network Television Ratings in MLB, NBA and NHLby Norman O’Reilly, George Foster, Carlos Shimizu, Neal Khosla, Ryan Murray

Journal of Sport Management

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ARTICLE 356

Journal of Sport Management, 2014, 28, 356-375 http://dx.doi.org/10.1123/jsm.2013-0133 © 2014 Human Kinetics, Inc.

George Foster is the Konosuke Matsushita Professor of Management at the Graduate School of Business at Stanford University.

Norm O’Reilly is the Richard P. and Joan S. Fox Professor of

Management in the Department of Sports Administration at

Ohio University. Carlos Shimizu and Neal Khosla are with the

Graduate School of Management at Stanford University. Ryan

Murray is with the School of Human Kinetics (Sport Management) at the University of Ottawa. Address author correspondence to Norman O’Reilly at oreillyn@ohio.edu.

Determinants of Regional Sport Network Television

Ratings in MLB, NBA, and NHL

George Foster

Stanford University

Norm O’Reilly

Ohio University

Carlos Shimizu, Neal Khosla

Stanford University

Ryan Murray

University of Ottawa

This paper examines the determinants of live game Regional Sport Network (RSN) average annual ratings in three major North American professional sport leagues: Major League Baseball (MLB), the National Basketball

Association (NBA), and the National Hockey League (NHL). A conceptual model of the determinants of club

RSN ratings is constructed based on a marketing management framework. Five categories of determinants are identified: Product-Club, Product-Player, Brand-Club, Brand-Player, and Place. Data were collected over a 12-year period (1999–2011) for a total of 46 independent variables. The list of independent variables was reduced to 16 factors and a proxy variable for each of the factors identified. Univariate and multivariate analyses were undertaken. Strong support for the each of the five categories in the conceptual model was found for the pooled sample of all three leagues. Results at the individual league level revealed league differences in the relative importance of individual variables. Implications for future research and practice are presented.

Keywords: professional sport, RSN television ratings, club management, marketing, product, brand, MLB,

NBA, NHL

The television ratings of live sports are of high interest to many constituents. These include broadcasters, leagues, teams, players, advertisers, sponsors, fans, and marketing agencies. There is regular commentary in the business, broadcast, and sports media about television ratings and the often large differences across sporting leagues, clubs, and games. However, systematic research or analysis of the reasons for these differences is minimal.

Although previous research does exist about the determinants of TV audiences for sport broadcasts, the available commentary about sporting club ratings differences is often based on anecdotes. Interest in better understanding of rating differences is increasing as sports programming remains one of the few areas of television where high ratings are still occurring on a regular basis.

The purpose of this research is to examine the determinants of average annual regular season Regional Sport

Network (RSN) ratings of United States-based clubs in

Major League Baseball (MLB), the National Basketball

Association (NBA), and the National Hockey League (NHL). The analysis excludes ratings for the Canadian clubs in each league and the National Football League (NFL) who do not telecast games on RSNs.

Regional Sport Networks Television Ratings 357

Pivotal Role of Regional

Sports Networks in Live Sport

Broadcasting in the United States

Television has been synonymous with North American professional sport since the major leagues debuted on network television in the late 1930s. In the 80 years since, there has been a gradual and consistent growth in televised professional sport programming, first on the national broadcast networks (e.g., NBC, CBS, ABC), then on national sport cable networks such as ESPN (launched in 1979), and pay-per-view for specialty professional sport events. The most recent addition to the major U.S. broadcast networks (FOX) was very much fueled by the acquisition of major sports content (such as the NFL) in the early 1990s. Starting in the mid 1990s,

RSNs started to emerge. RSNs are cable television stations offering live broadcasts of professional and college sports programming to a local or regional market (Wise & Duwadi, 2005). Relatively quickly, the majority of live sporting games in three of the four major United States based professional team sport leagues shifted to RSNs.

RSNs benefitted from a dual revenue model (subscriber fees and advertising) and were able to offer sport clubs sizably higher contracts for the rights to locally televise their games. An important metric tracked by multiple

RSN-related stakeholders is the RSN television ratings, or the number of people who are watching the network’s various programs at any given point in time.

In the United States, ratings are tracked using ratings points by The Nielsen Company where a single ratings point represents 1% of the total number of households in the area measured. Viewing behavior is tracked using

TV meters and Local People meters, which calculate the number of viewers and the viewer demographic (Tainsky, 2010), via individual boxes connected to household televisions. The TV meter box collects general statistics such as what program is being watched and when it is being watched and the Local People meter comes with a remote for each household with designated buttons for each member of the family (Tainsky, 2010). In September of 2010, Nielsen estimated that there were approximately 116 million television households in the U.S. Thus, each single ratings point refers to about 1.16 million households. Specific to a RSN, Nielsen (2013) will measure by the number of households in each designated market area (DMA), where a single ratings point refers to 1% of the households in that DMA. A DMA is a region where all residents are able to receive the same programming and is typically labeled by the largest city (or cities) in the region (e.g., Chicago [3.5 million households], San