NASCAR MEDIA CONFERENCE
December 7, 2005
JIM HUNTER: Good afternoon, everyone. We're pleased you've joined us for a very special announcement. Although our season has ended, we're moving full speed ahead off the track. This afternoon's news will reflect that.
I'd like to thank everyone who participated in last week's Champion's Week activities in New York City. Along with Tony Stewart, our 2005 NASCAR Nextel Cup champion, our 25th year in New York, and of course the highlight being last Friday's awards ceremony. The coverage was unprecedented throughout the week. We're grateful for all of the media who made that happen.
Today I'm joined by Brian France, NASCAR chairman and CEO, who will have an open be statement followed by remarks from the key executives representing each of the broadcasters that will be NASCAR's partners beginning in 2007. Following these opening statements, we will open it up to questions from the media.
Brian, over to you.
BRIAN FRANCE: Thank you very much, Jim. We did say it was a special announcement. We didn't say it was a surprise announcement. With that, I am happy to say that where we've ended up is with three of the best media companies in the world. We've not only ended up there, but we've ended up with a new configuration of our packages that, in fact, is what we now call a mid summer package, of course, through our good friends at TNT exclusively for them.
We've also ended up at a place that will give continuity to the Daytona 500 by giving that to FOX every year. Their tremendous promotional platforms that they have in the fall and in the beginning of each year will be tremendous to light off our season. We're very pleased about that.
We're also pleased to welcome back the media partner that we started with in the very beginning, and that's ESPN and ABC. I can't tell you how excited we are to get the Disney company, the resources of the Disney Company, all the events, the Chase events, will be live on ABC. It will be a tremendous franchise for them and for us. We're excited about that.
Finally, we're going to be able to build on our relationship with the SPEED Channel with unprecedented amounts of programming for the SPEED Channel as part of the news corp arrangement. They'll have some special events that they didn't have before, marquee events. They'll have a good position with us, as well.
When it's all said and done, beginning in '07, for the next eight years, we couldn't be positioned better than with this arrangement. I'm excited. I know everybody in the industry is excited. We're looking forward to finishing, of course, '06 with our current arrangement. We do want to thank our good friends at NBC. They've been a tremendous partner and will be next year for us. I want to thank them for everything that they've done to make NASCAR in the position we're in today.
I'd say the final thing, the final point, is when we started with our consolidated package in 2001, there was always a question mark of, Could we become a franchise sport for broadcast carriers? I think no matter what happens, we've certainly proven that. Now with the new arrangement we have much to build on, so we're looking forward to the future. Thank you very much.
JIM HUNTER: Now I'd like to turn it over to FOX sports president Ed Goren. Ed, if have you some opening remarks.
ED GOREN: You know what, as Brian said, this is an exciting time for all of us. I think when you look at the major sporting events on a 12-month calendar, there's no question the Daytona 500 is one of those very special events. To know that we're going to be involved in broadcasting the Daytona 500 and Speedweeks starting in '07 every year is tremendously exciting for our organization.
There's no question that over the last five years certainly the growth of the NASCAR product has been dramatic. I'd like to believe that our production team has played a small part in that growth. The folks at NASCAR have just really put together a brilliant package over the last five years on every level. We're just looking forward to continuing that growth. By the time we finish our eight-year package, David Hill and I will be arriving at Daytona with our walkers (laughter).
JIM HUNTER: Ed, I'll probably be on one with you.
ED GOREN: We'll have a race (laughter).
JIM HUNTER: Now I'd like to introduce Hunter Nickell, the president of SPEED.
HUNTER NICKELL: Thank you, Jim.
I'd just like to add that since 2002, SPEED has been the home of NASCAR TV. This new agreement will extend that role well into the future. It ensures that SPEED will be at the track, on the track, all over the sport every week of the season and this year really more than ever.
The agreement also reestablishes SPEED as the home of the NASCAR Craftsman Truck Series, which is a series that's enjoyed double-digit ratings growth in each of its first three seasons on SPEED.
As Brian said, we're really fired up. Starting in 2007, SPEED will be the home of two huge Cup events, the Gatorade Duels from Daytona and the NASCAR Nextel All-Star Challenge. We're fired up about what we're going to be able to do with those events. Thank you.
JIM HUNTER: Thank you, Hunter.
Now I'd like to introduce Turner Sports president David Levy.
DAVID LEVY: Thank you. Let me start by thanking and congratulating NASCAR, particularly Brian and Dick Glover, as well as George Pyne and Paul Brooks for their work in helping make this deal happen. It's a great sport. As it continues to rise in growth and popularity, we plan to be there for many years to come.
Turner Broadcasting and TNT in particular is proud to continue our long partnership with NASCAR, and by the end of this deal we will air NASCAR Nextel Cup races for 31 years. Our company values long-term partnerships, and NASCAR certainly sits on top of that list.
As for our relationship, it's among the longest ever in sports. One of our goals with this NASCAR deal from the beginning was to have a consistent and concurrent schedule and also to get marquee races. This arrangement will get both.
In this deal, we'll have six consecutive races, as Brian said, the mid summer package. Fans will know to come to love TNT every week in that period, which is also a major benefit to our marketing, our cable operators and our viewers.
The July Daytona race is at the center stage of our package and is a signature-type event, which as we all know, Daytona is basically the sacred ground of NASCAR. The rest of our schedule will include some great tracks, as well.
We're thrilled to be extending a partnership with NASCAR and with their family and we look toward to a great future. Thank you.
JIM HUNTER: Thank you, David.
Now we'd like to hear from ESPN and ABC Sports president and co-chairman of Disney Media Networks, George Bodenheimer. George.
GEORGE BODENHEIMER: Thank you, Jim. Thank you, Brian, for the kind words about our company and the deal. I also want to second comments made by David, thanking the NASCAR staff for all their excellent work on completing this deal.
It's an understatement to say that we're delighted to rekindle our relationship with NASCAR. ABC Sports and ESPN share certainly a storied history with NASCAR. We are very well-positioned to further grow NASCAR with this content-rich deal that we're announcing today.
We've acquired two powerful TV packages here, broadcast and cable, covering 52 races and over 400 hours of programming annually. In our minds, NASCAR's Chase for the Cup is an absolute crown jewel in the sports world and a major asset for our company overall and ABC Sports in particular. As for the Busch Series, we really feel like it's the jewel in the rough. It will instantly become the highest-rated series on ESPN-2 when it debuts in '07.
In addition, all the assets of this deal are a clear illustration of the growing strength of ESPN and ABC Sports. I really look at this deal as another in a series of agreements with new media rights that fuel all of our platforms. In fact, we have 18 different businesses that will enjoy NASCAR product and help fuel their growth.
Most importantly, we want to serve the fans as we go forward wherever and however they wish to consume the great sport of NASCAR.
So to all the NASCAR officials, all the owners, all the drivers, and most importantly to all the NASCAR fans, the millions of them out there, we say, "Welcome home." John Wildhack and I look forward to taking any questions you may have.
JIM HUNTER: Thank you, George.
What we're going to do now, John Wildhack, who is the senior vice president at ESPN, is also with us. So is Dick Glover, NASCAR vice president for broadcast and new media. Now we're ready to accept some questions.
Q. Brian or Dick Glover, are reports of a nearly 40% increase over the $400 million dollar a year average contract?
BRIAN FRANCE: We never get into the financial aspects of any of our agreements. Just can't comment on that.
I will tell you that the promotional value that all three companies have committed to is unprecedented. The amount of programming, as said earlier, is going to be quite a benefit to our NASCAR fan base. Just can't get into the financial details.
Q. For Dick or Brian, how important is getting ESPN involved with their all they can give you on different levels of exposure and so on, just how much did that play into this deal?
BRIAN FRANCE: Well, I think it's very helpful, obviously. No. 1, we started with ESPN back in the '80s when they were just growing up. Now they're, of course, a major company. Also the fact that the Busch Series is going to have an incredible amount of continuity, which is already the No. 2 motorsports series in this country. Now with the muscle of ESPN-2 and ABC, we like where that series is going to go. In fact, we can really develop that into its own unique franchise.
On a personal note, we've always had such a great relationship and have admired all the things they've done lately with new media, the way they're reinventing ABC Sports, the different channels they've launched, what they're doing with new technology, we'll be a part of that. As George Bodenheimer said, we'll be a big part of that.
I will tell you it really finished off our plan in a perfect way.
DICK GLOVER: I would also add that with all the partners, new media is an important part of deals obviously to FOX and SPEED Channel, it's a very important part of what they're doing. We've had a long-standing relationship with Turner on interactive services, so that as we charted the course and wanted to see how do we maintain the kind of growth we've had over the last several years for the next eight, one of the things which was very important was to be able to provide opportunities for the telecasters to do more than just show a race.
Q. Mr. Bodenheimer, will the Busch Series and Cup Series have separate broadcast crews? Will there be one crew that does both sets of races? The new media stuff, also the fact that SPEED Channel is going to have shoulder programming, so will ESPN, Turner has all the Internet content, has that coordination been part of this negotiation?
GEORGE BODENHEIMER: I'll answer your second question first. Yes, it's been an extensive part of our negotiation. Also extremely collaborative on the part of all the parties included. I believe that all the television partners will be working together here for the benefit of motor racing fans and for NASCAR fans. I don't see any difficulty there. I think there's enough great content to go around and fuel the multimedia aspects that Mr. Glover was referring to here.
As far as talent is concerned, we're obviously going to be working hard on our talent lineup. No decisions have been reached except for one. Mr. Jerry Punch has remained with us all these years. Jerry will certainly play a role in our future telecasting of NASCAR.
Q. For Ed Goren, does the fact that you'll have Daytona every year give you a chance to make NASCAR work financially for the network in a way that it's not been able to work in the previous years that you've had the package?
ED GOREN: Well, I think that's part of it. But I think in all fairness, we said this when we started, we felt that NASCAR was an important product. But the reality is, it took a couple years for Madison Avenue to buy into that. Over the last five years, our regular-season ratings have grown by 20%. We just came off our highest-rated season ever, averaging a 6.0 rating. You look at the Daytona 500, we didn't sell out that first year of the Daytona 500, yet over the last five years the Daytona 500 has averaged a 10.5. In '05, we had 35 million viewers. It was seen in more homes than any NASCAR race in history. We did a 10.9 rating.
I think it's just taken a while for Madison Avenue to catch up with what we all believed in five years ago. I think we're starting from a much different base, number one. But certainly in addressing your question about Daytona, it's a wonderful launching pad. When you combine that with our NFL post-season every year, starting in '07 the BCS, I think in all reality we will dominate the network sports scene for January and February.
Q. Brian or Mr. Glover, one of the larger concerns in the garage anyway about the last television package was kind of how the money breakdown worked. From how we understood it, the vast percentage of that breakdown went to tracks and NASCAR corporate. Can you lay out for us just bare bones how the new percentage breakdown might work?
BRIAN FRANCE: We don't necessarily have a new percentage breakdown. That is something that's not likely to change. We like the way it's allocated currently, which is 65% to the tracks, 25% directly to the teams, then that little left, that 10%, to the fine folks that I work for. It all works out. It's typically worked out fairly well.
Obviously we'll look at it as we go along, but we're pretty comfortable with where we are now.
Q. When you have a package like this that has so much money involved, it really does open the eyes of everybody around that you are up there with the NFL. Do you think during the life of the package you could actually exceed the NFL in viewership?
BRIAN FRANCE: No, we don't think anyone is going to do that. But we're real pleased with our growth model, where we're at today. We're a franchise, all year long, 10 months a year. We'd love to get better. We will get better. I don't think anyone is approaching the NFL. We're certainly not. We're happy with our position in the world of sports.
Q. How many hours overall a year can people expect to see?
DICK GLOVER: I don't think anybody's added it up, but we'll go back and do that. It was never really predicated on number of hours. The key is obviously the live race coverage and then all the ancillary programming around it, whether it's SPEED or ESPN or Turner, that the fans will have everything they need.
Q. Brian, I don't see anything in the press release I've gotten about video on demand. Does ESPN get the opportunity to run their events and ABC's on VOD, or SPEED channel does theirs on FOX? Where does video on demand stand on the equation?
BRIAN FRANCE: Dick, I'll let you field that question.
DICK GLOVER: There aren't specific grants on VOD that every telecaster, FOX their races, SPEED on their races, Turner on their races, ESPN on their races, owns the window exclusive to them, that they will then determine how to exploit it.
Q. One thing that has been mentioned is the in demand interactive venture that won the Emmy a couple of times. Where does that process stand in light of these deals?
DICK GLOVER: That agreement is also up at the end of the 2006 season. We are having conversations, and there will be clearly a successor program. When we have that done, we'll announce that as well.
Q. George, how are you going to make this work financially? It's no secret that NBC lost money. What is different about you guys? How can you be sure this is going to work economically for you?
GEORGE BODENHEIMER: Well, as I mentioned earlier, we have upwards of 18 different businesses that are going to benefit from our relationship with NASCAR. If you just, in effect, start from the top down, obviously having a hundred percent of the Chase, really there's no other entity that has a hundred percent of the post-season, if you will, of the playoffs of a major sport. We're going to have a major advertising opportunity there.
It's going to fuel the value side of our ESPN and ESPN-2 businesses that we're obviously looking to continue to grow, on down the line, from ESPN 360 to Mobile ESPN, all of our businesses are going to benefit from this relationship. We will undoubtedly make this work. We're very confident that we've got an extremely great value here. As I said earlier, over 400 hours of product for the lineal networks, 52 races. We're going to build the Busch Series like it's never been built before. It's just going to be busting out.
We are very excited that we'll be able to make this a great financial opportunity for us.
Q. David Levy, how did the idea of a mid-season package start and evolve? Is there something about that particular window that appealed to Turner?
DAVID LEVY: It evolved when our partner to date, will be our partner through the '06 season, NBC, had decided this was not going to be something they wanted to continue to pursue. We were trying to figure out a way, with the NASCAR folks, Brian and Dick, George and Paul, to find a way for both companies to still stay in a partnership. As I said before, we've had a relationship for 20 years, and we were trying to continue that relationship. They felt and we felt it was a good partnership, one, because of the marketing capabilities that we have and the reach-ability that we have with our networks, with TNT, TBS, Cartoon, Adult Swim, all of the channels that help promote and market NASCAR.
The other thing we mentioned also was to have some type of way that we had a consistent schedule. In order to give FOX what they needed, I guess the relationship they wanted to build with ESPN and ABC, the best area for us, really what meant the best for us, too, based on where our programming lineup lines up with everything else we have, we were looking at that mid summer. We started talking specifically about that to NASCAR prior I think to them talking to anybody else to try to figure out a way to get that done.
As I said in the opening statement, we're proud to be able to accomplish two things: a consistent schedule and to keep some marquee races and Daytona, the July Daytona, which we believe will be a very marquee race for TNT.
Q. All the television executives. Gentlemen, you've had experience working with the NFL where you can control the action. On the playing field with NASCAR, it's quite a different story. Could you address the situation we've seen happening more and more this season, cramming in commercials during yellow flag cautions and missed restarts. Also, is there some consideration being given to using split-screen technology, which ABC and ESPN has used with the IRL quite successfully.
DAVID LEVY: We always are concerned to the viewers and the audience about the commercial loads. We have looked at numerous different opportunities, one being not having any commercials in the last 40 minutes of the race. We also went with a split screen as well. We will continue to talk to the advertising community to see what's going to best work for everyone, the advertisers as well as the television viewer.
We're open-minded and we certainly work with the NASCAR folks as well as our other broadcast partners to try to find the best solution.
JOHN WILDHACK: Your question really comes down to storytelling. Every single week of NASCAR, it will be our production team's objective to do the best job of documenting the races, telling the stories of each individual drivers, of their teams out there, and providing that value to the NASCAR fan. We're also working for our advertisers and provide them the value they covet by being associated with our coverage as well.
It's something we feel very confident that we can serve our fans and also provide great value to our advertisers, not only with our race coverage but across all our multimedia offerings, across all our qualifying, practice, shoulder programming and more.
ED GOREN: Unfortunately, with everything that you can throw in there, the reality is if a race is under green for any significant time, you have to take a commercial. I'm convinced that by taking a commercial, 50% of the time it triggers a yellow, so it pulls the field back up together. It just seems to happen that way.
It's the reality of the business. It's not a heck of a lot different in its own way with the PGA TOUR. They'll come out of commercial, have to show you something on tape, a Tiger Woods shot that took place while you were in commercial.
I wish there was a better system. But this has been an issue ever since people started broadcasting NASCAR events. It will continue. Commercials, that's the only revenue we get on the network side. It's not a bad deal. You're getting the Daytona 500 as a viewer in effect for free. The only way we can pay Brian and his folks what they need is to run commercials.
Q. Ed, what will the last race be on FOX in 2007? Right now it looks like it would be Dover. Has there been talk of changing it around to get a more marquee event for your swan song each year?
ED GOREN: We really haven't. I believe that's quite accurate, that for '07 the current plans are Dover.
Q. Is it tough taking a shorter schedule? Was that a tough decision?
ED GOREN: I think it's a pretty good trade-off. Again, number one, the Daytona 500 every year is significant. The reality is, I fully expect that our NASCAR Nextel season will show a ratings increase over our current ratings because historically we've gotten out of the chute very, very well and maybe given back a little bit down the stretch.
We're very comfortable with this schedule. I think it's going to work for everyone. It's going to work for us. It's great for the folks at Turner, continuing their relationship. To have ESPN and ABC back, I think it's a win-win for everybody.
Q. Has the current contract accomplished what you were hoping for for FX, because it doesn't look like they'll be part of the things going forward?
ED GOREN: In the case of FX, I think it brought eyeballs to FX. But if you look at their programming development over the last few years, The Shield, Nip Tuck, they have some of the most exciting dramatic programming in all of television. Their viewership, their ratings, have increased dramatically over the last five years. Some of that it was exposing their product to a NASCAR audience week in, week out, but that's not enough. You have to develop programming that's going to bring people back, and they've been able to do that.
Q. What will be the second truck race on FOX?
ED GOREN: It will be a truck race. We have until '07 to figure that out.
HUNTER NICKELL: The information got edited, but I know one piece of information said that the -- the season-opening Daytona truck race will be on SPEED as it has been.
Q. The opener will be on SPEED in the future?
HUNTER NICKELL: That's correct.
ED GOREN: That's a great event for SPEED. Put that in the category of marquee. George was talking about the hidden jewel being Busch. They have two hidden jewels because the dramatic growth of the Truck Series is something that has been as exciting as anything over the last five years. That's going to continue, I'm sure of that, with the folks at SPEED.
Q. Any plans to provide some kind of crawler or updates on the NFL scores, especially as the NASCAR season winds down and the NFL season starts up?
JOHN WILDHACK: As part of our network service, we provide 18, 58 updates, twice per hour, of all major sports in progress. In ESPN-2, we have the continuous bottom line. We also update on ESPN.com. With the launch of Mobile ESPN, people will be able to get their sports scores through all sorts of offerings from ESPN.
Q. Ed, something you said earlier, and maybe George, David, you can jump in, talking about the ad revenue, sort of getting the word out to Madison Avenue about how well NASCAR does, its demographic, obviously, perception a few years ago of the audience for NASCAR versus what it may be. How is that going? You mentioned five years ago you couldn't sell out Daytona. How have you managed swing that around?
ED GOREN: As I said, we at FOX believed in it. The folks at NASCAR preached it. It was just a matter of Madison Avenue catching up. It was really in black and white. All they had to do is see the ratings that NASCAR was generating on FOX, whether it was the Daytona 500 or any of our Nextel races, and for that matter the Busch races.
Not only did we not sell out that first year, we didn't sell out at very low rates. The bottom line is that we have seen significant rate increases year in, year out for our NASCAR product. I fully expect it to continue as we continue to grow the sport.
DAVID LEVY: I wear two hats here at Turner, president of Turner Sports and the ad sales group. NASCAR has come a long, long way over the last couple years with first of all the demographics are extremely strong. They're younger demographics. Obviously, the male side as well, but the female side has grown as well.
What we've seen is we've not seen the typical NASCAR advertiser, meaning the ones that are sponsoring the cars, but we've also seen a cross-section of a whole bunch of new advertisers that have come on board in support of this event. That's key, financials, things of that nature.
It has reached Madison Avenue. It has become a mainstream, if you will, from an advertiser's perspective. But the key here is there's still a tremendous amount of growth. I think there's still a lot of growth in the ratings side. I still believe that there's going to be more and more advertisers, as you see the ratings grow, become more attached to this sport.
Q. You mentioned financials. Any other categories that have stepped up?
DAVID LEVY: Movie companies. Home entertainment.
GEORGE BODENHEIMER: I just want to add, the bottom line is NASCAR is a national sport with very large ratings. That's kind of square one you start with. Secondly, obviously the sport is extremely fan friendly and sponsor friendly. They're doing everything they can from their side to help us all fulfill the sales expectations that we hope for.
From our side, NASCAR is going to be a year-round sales opportunity for our sales staff and a multimedia opportunity as well. As you see some of the trends in advertising that your publication has reported on, that supports directly the ESPN/ABC sales effort. It's not just a TV buy any more. We're very bullish on the sales prospects of this property.
BRIAN FRANCE: I'll finish off and add one thing, the whole thing on the advertising market. When we started this consolidated package for the first time in 2001, we had a recession, we had 9/11. We launched in a real headwind. Through the hard work and the consistent efforts between FOX and TNT and NBC, they've proven to the ad market that they can build a ratings and a fan base week in and week out. We don't have that headwind, fortunately, none of us do. Now we also, as everybody on the call has said, they've turned the corner on some disbelievers just on the merits of the size of the audience and demographics.
With that, I'd also like to thank everybody who joined us today and we'll certainly be available down the road. But we're excited. We finally got our package completed. Looking forward to 2007. Thank you all for joining us.
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