Merger has brought no TV revenue growth
The current deal doesn’t expire until the end of next season, but the contract calls for the parties to discuss an extension starting this month.
Sources close to both sides said ABC/ESPN pays the IRL about $10 million annually, but getting that kind of guaranteed cash beyond 2009 could be difficult.
Still, network officials have made their interest in the series clear.
“We hope to continue the relationship well beyond next year," said George McNeilly, ESPN senior communications director.
While ABC/ESPN is likely to ask for a discounted or restructured revenue-sharing deal, IRL officials are likely to ask the network for increased promotions, including on-air and Web advertising, and possibly pre-race, post-race and other special IRL shows.
The differing demands could lead the IRL to shop its deal to other networks. Motorsports sources said NBC and Turner Broadcasting have interest in the openwheel series. NBC, sources said, would like to wrestle the Indianapolis 500 away from ABC, which has aired the race 44 consecutive years.
One thing is certain. Lots of people are watching the IRL’s TV ratings in what has become a critical year for the series. While the buzz around the series is growing, that hasn’t yet led to significant ratings gains, and some in the broadcast industry are growing impatient.
ABC/ESPN officials said they have seen no bump in advertising during race broadcasts this year despite the IRL’s unification with rival Champ Car, Danica Patrick’s recent victory, and Helio Castroneves’ exposure on the “Dancing with the Stars" TV show.
The IRL’s ratings have been mostly static since entering the deal with ABC/ESPN in 2004. In 2006, the average viewer rating for 14 races, including the 500, was 0.97, according to New York-based Nielsen Media Co. Last year, the average was 0.94 for 17 races. A 1.0 rating equals about 1 million households nationwide.
Ratings for the Indianapolis 500 have hovered around 5 the last five years. It was 4.5 this year, and 4.3 last year when rain delayed the race. The series’ TV ratings, which so far this year are down a bit, don’t give the series much leverage in its extension negotiations.
“I don’t think it’s any secret that the [IRL] is a money-losing deal for ABC and ESPN," said Jeffrey Cokin, a former NBC executive who now heads his own broadcast consulting firm, Connecticut based Cokin Communications. “You can bet they’ll be trying to negotiate that price down." More at IBJ.com