Fox goes for billion dollar touchdown

WHEN News Corporation's Fox Broadcasting Company agreed to pay dollars 1.58bn ( pounds 1.06bn) for the television rights to cover the next four seasons of the National Football Conference, many in the TV industry goggled in amazement. Fox, they said, had overpaid.

But Fox and Rupert Murdoch, the News Corp chairman, clearly disagree. Since signing the football deal in late December they have been on a spending spree to bring in technical staff and commentators, pushing up costs in some areas to previously unseen levels.

Earlier this week, Fox hired the sports commentator John Madden, a former football player and coach of the Oakland Raiders, for a package reported to be worth dollars 30m over four years. Mr Madden is recognised for his technical knowledge of the game as well as his down-to-earth and entertaining commentating style, but dollars 30m puts him in the same earnings bracket as Troy Aikman and Jim Kelly, the two quarterbacks who will be starring for the Dallas Cowboys and the Buffalo Bills in tonight's Superbowl.

The package is also more than twice what Mr Madden had earned at CBS, which is now without football for the first time since it started broadcasting games in 1956. Mr Murdoch met Mr Madden personally and won him over with reassurances that Fox will be making a big commitment to its football coverage. This means spending more big money, including expensive contracts for Mr Madden's co- commentator at CBS, Pat Summerall. And the former star quarterback Terry Bradshaw has also been hired from CBS to anchor the Fox game day studio show, reportedly doubling his CBS salary.

Not surprisingly, many are questioning whether Mr Madden is worth dollars 30m, and whether Fox is going to lose hundreds of millions of dollars on the venture. One sports columnist on the New York Post recently risked the ire of his proprietor - Mr Murdoch - by writing that 'to pay someone dollars 7.5m per year to call 20 football matches actually would serve more to question Fox's credibility than solidify it'.

But television industry analysts say it is necessary to look beyond the money made or lost on the football deal itself, and view the broader picture at Fox, which has been building itself up over the past few years to become a serious challenger to the big three networks - CBS, NBC and ABC.

'The only way to justify the current investment in NFL football is to see what it does for the overall Fox network,' says Christopher Dixon, media analyst at Paine Webber. 'Sunday afternoon football can provide a promotional base and give Fox much more credibility in the eyes of the public, and even more important with advertisers.'

Commentators on Sunday afternoon football games always give plugs to the evening schedule, and the CBS Sunday evening line-up of 60 Minutes, followed by Murder, She Wrote has benefited enormously from following football - and being plugged during the games.

Analysts point out that this effect is worth even more to Fox than to the longer-established networks, since it has more need to familiarise viewers with its schedule, and get them used to switching on to its channel.

And from the advertising standpoint, companies such as beer manufacturers or auto makers will now be attracted to Fox by the important demographic group of males aged between 18 and 45, who make up the biggest slice of the football audience. 'What Fox is doing is creating more valuable inventory than they previously had,' says Mr Dixon at Paine Webber. An advertiser which liked the audience for The Simpsons, but found it to be a small media buy standing alone, can now allocate a large slice of advertising dollars to Fox in return for a mixture of football and other programming slots.

American football is very big business. Advertisements during the Superbowl, which is being carried this year by NBC, cost a staggering dollars 900,000 for a 30-second slot. And earlier this week, Wayne Huizenga, chairman of the Blockbuster Entertainment video store chain, agreed a deal that will give him control of the Miami Dolphins and price the franchise at around dollars 160m.

Fox has taken an expensive gamble, but there is a lot to win.

(Photographs omitted)

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