Battle for the Buses

Shocking Fact: Two national outdoor advertising companies control the content placed on public transportation in nearly every major metropolitan area within the United States.

 At the moment, these companies are currently battling to secure a contract with the Los Angeles County Metropolitan Transportation Authority.  CBS Outdoor Group, the 32 year incumbent contractor, has offered a slightly lower bid than newcomer Titan Outdoor. After being outbid in several other cities, Titan hopes to secure the LA Metro by offering a higher guarantee plus a share of their revenue over the course of the 5 year contract.

 

The ethical decisions that each company has made during the recent economic recession will definitely be considered during the bidding process. Although CBS Outdoor failed to cover minimum annual guarantees in the current contract, Titan Outdoor also experienced similar contract struggles during but renegotiated with the transit authorities when they are unable to meet obligations.  By winning against the incumbent, Titan would become the most powerful outdoor advertising company in metropolitan transportation seeing as the company currently holds contracts for 5 of the 8 largest transit authorities. Since CBS Outdoor is responsible for 13% of its parent company’s annual revenue, CBS Corp stakeholders could interpret losing this contract as instability and previous talks of selling the division may reemerge.

Each company has a lot at stake but regardless who wins, the rivalry between CBS Outdoor and Titan Outdoor has helped facilitate industry wide growth and highlights the advantages of outdoor advertising. According to the Wall Street Journal, outdoor advertising has grown 17% since 2009. Much of the growth for this medium is attributed to the fact that advertisers have a captive audience while people are riding on subways and buses. Even though we are living in the digital age, it is reassuring to know that traditional media outlets are still profitable and effective when targeting urban dwellers.  

 

http://online.wsj.com/article/SB10000872396390443890304578010800059502028.html

Classic Sports or Classic Mistake

Although the Classic Sports Network was started in 1995, ESPN was intrigued by the concept before the cable networks creation. ESPN programmed archived sports footage numerous times on its current cable networks but was uncertain this was a profitable niche market. Since Classic Sports Network was able to reach 11 million subscribers within the first two years of operation, ESPN was convinced that this was a profitable venture to pursue. Having the rights to an expansive sports library featuring games from NFL Films and ABC’s Wide World of Sports, the sports programmer intended to optimize the stations content and distribution. Costing $175 million in 1997, ESPN added its fourth cable sports network, paying homage to the former Classic Sports Network by incorporating part of the network’s logo into its own. Upon this acquisition, Time Warner cable agreed to carry the product and increase its reach 4 million subscribers. Bundling all four of ESPN’s cable networks when making distribution deals provided ESPN Classic the opportunity to reach a subscriber base that otherwise would be unachievable, roughly 60 million subscribers in 2010. Although live sporting events have been aired on ESPN Classic, the cable network started to put heightened emphasis on original programming around 2005 as a result of other networks airing classic sporting events. ESPN no longer airs original programming but occasionally will feature a live sporting event. Regardless, ratings have been consistently low for the cable network over the past couple years.

 

I would argue that the acquisition of Classic Sports Network was an initial success for ESPN, providing an outlet for its large quantity of archived sporting events and increasing the presence of the ESPN brand within the cable and sports communities. Having a fourth cable network devoted to sports programming gave ESPN a clear advantage over competitors when bidding on sports rights. Unfortunately, due to the increased availability of classic sporting events, popular interest in ESPN Classic peaked relatively early in its life cycle and since then has been virtually stagnant. The overwhelmingly majority of ESPN subscribers passionate about sports did not prove loyal to ESPN Classic when watching past sporting events. The technological revolution and diversity of multimedia platforms has hurt the classic sports network. The internet has met consumers need for on-demand footage. Without original programming anymore, ESPN was able to reduce the expenses associated with ESPN Classic but consequently devalued their product. The remaining programming is also publicly mocked through a series of skits produced by Saturday Night Live. In order to regain interest for the cable network, consumer insights need to be closer matched with the increasing dependence on digital video. The initial success earned in the 1990’s has tampered and long-term analysis proves that the acquisition of Classic Sports Network may not have been in the ESPN’s best interest.