Money, continuity and exposure: Weighing IndyCar's upcoming broadcast decision
For years, Jon Miller saw the potential, but didn’t have the opening.
So when Miller, an NBC Sports executive, and IndyCar CEO Mark Miles announced the series' plans for an exclusive three-year deal with NBCthree years ago, it was cause for celebration on both sides.
For the series, it was a release from purgatory – a decade or so where its broadcast partners, NBC and ABC, never really bought in all the way. The latter was willing to show a handful of races each year for the right to air the Indianapolis 500, and NBC was willing to take the product Disney executives didn’t value.
But the 2018 news was a chance for NBC to get its hands on something they'd craved — the Greatest Spectacle in Racing — and programming packed with potential they leverage the 500 to help grow.
Though terms were never disclosed, the contract that began in 2019 and expires at the end of this year, likely ranks low on the list of major sports TV broadcast deals, simply due to where IndyCar’s TV ratings rank compared to NASCAR, NBA, MLB, NFL, NHL, college football and basketball … you get the picture.
Low risk, medium to high reward.
“We’re well aware of what a growing property IndyCar is,” Miller told IndyStar in March 2018 ahead of the announced deal. “But when you didn’t have the whole package, it made it difficult for us to really take advantage of all the success that was out there. We felt that if we had the entire package, we could do even more to grow it and build it and make it successful.”
So, after three years, has the trial run its course?
We’ll find out in two months.
Arguments for the negotiating table
Earlier this month, Miles told IndyStar he anticipated the series’ next broadcast deal would be wrapped up by “early this summer.” More recent reports have pegged that to the end of June.
That timing, though understandable given last year’s pandemic-plagued season and the relatively short time the two entities have been exclusive partners, paints this first half of the season as an audition of sorts for both sides, and the success of IndyCar’s first eight races – six of which will be on network television – could very well be a major factor in how these negotiations play out.
According to Bruce Martin of Speed Sport, NBC is prepared to renew the deal at the same rate for an unknown number of years, while series owner Roger Penske is looking for a sizable rate increase. Both positions make sense.
NBC executives have only gotten one season unaffected by the pandemic and what it did to Americans’ ability to attend and desire to watch live sports on TV. The pair’s first year together (2019) brought a 9% increase in average TV audience over 2018, when ABC broadcast five races and the rest aired on NBC Sports.
That bump, though, came with three more races shown on national TV, which you would expect to lead to higher ratings. And the Indy 500 in 2019 jumped from 3.1 million viewers in 2018 to 3.4 million a year later – which still falls below the 10-year average over 2010-19 of 3.75 million.
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With all its changes, 2020 did deliver a 2% increase in ratings (when not including the rescheduled Indy 500) in a year where several other sports saw a drop in viewing interest. But when you consider a slightly higher proportion of non-500 races on network (6 out of 13 in 2020 vs. 7 out of 16 in 2019), the jump is minuscule at best.
But NBC could want to buy in more – giving the series a record nine races on national TV in 2021 while diving head-first into creative promotional campaigns – and see where a few relatively normal seasons takes you.
"Let’s spend the next couple years building at the same price point to create a product ready for a bigger buy-in," they might tell IndyCar. "Nothing has proven to us that you’ve grown significantly, and we want to see how this sport takes off in a post-pandemic world. But don’t be mistaken, we want a front-row seat."
And Miles, bullish about the first concrete evidence of potential growth since The Split – the leadership of Roger Penske, a growing car count and a sport that has attracted big names from F1, NASCAR and Supercars – might say, "You think there’s big potential here, after you just freed yourself from a hefty deal with the NHL? We want more than fancy commercials and another race on NBC."
Here’s what Miles did say about NBC: “We think we’ve got the strongest schedule in years and it’s going to be well-covered on all their platforms. We’ve got great stars, including new names, so we can expect that our television audience will increase.”
It stands to reason that this year’s front-loaded IndyCar schedule, in terms of NBC broadcasts (six in the first eight, three in the final nine) allows both parties to be able to sit down in June, having seen how the Indy 500 is received on television, after a freefall in ratings a year ago in an unusual date (an average of 2.3 million viewers in 2020, 1.1 million fewer than the year prior) along with the rest of the NBC races without a substantial sporting calendar to compete with.
And to prepare for those sitdowns, Miles said IndyCar officials are doing their due diligence to see how the series is viewed by the broadcast TV and streaming community at-large.
“We won’t conclude a deal without having a pretty clear sense of the appetites of all the broadcasters and the streamers,” Miles told IndyStar. “So we’re having conversations to understand what levels of interest there might be related to IndyCar. We have a great relationship with NBC. They’ve been a really good partner, and there’s no question they’d like to extend.”
When rumblings about potential IndyCar conversations with the likes of Fox, CBS and ABC/ESPN surfaced weeks ago, segments of the fan base took it as a boyfriend eyeing other suitors before a breakup. But whether it’s house buying/selling or corporate dealings, any side of the negotiation table will want to come in equipped with the proper firepower to leverage the best deal.
And where IndyCar can come in with potential other offers, NBC can boast having just about everything IndyCar is looking for, besides maybe a willingness to pay significantly more for what they may view still as unproven growth potential.
When it comes to streaming, Miles said the series has spoken to out-of-the-box suitors like Amazon and Apple, but admits that a streaming-heavy deal, or one that splits the package into two partners – one to stream some races and another to broadcast them on linear TV – isn’t likely in the cards.
“If you made an arrangement where a streaming partner is your primary media partner, I think you’d be hard-pressed to have linear exposure," Miles said. "It’s more how they compliment each other, so is it conceivable you could have streaming along with network broadcasts, where the streaming platform is owned by the same as the linear yes? Yes.”
A case for NBC and IndyCar
What Miles described is precisely what NBC and Peacock can deliver. For the 2020 season, as NBC phases out NBC Sports and shuffles some of that content to live Peacock streams, it’s preparing for a 2021 and beyond where fans of NBC sports properties will watch events either on “big NBC,” Peacock or USA Network.
Though not sounding like your traditional cable sports channel like ESPN, ESPN2 or FS1, USA Network is in 86.2 million homes, as of January according to John Ourand of the Sports Business Journal. That’s a higher number than NBC Sports (80.6 million as of January), ESPN (83.5 million as of November), ESPN2 (83.4 million in November) and FS1 (80.5 million in November).
If you’re IndyCar, what you lose in a catchy name for your off-network races you gain in a potentially wider audience pool.
The threat of losing any races to Peacock remains, though, if you’re NBC, it makes more sense with a sports property with a higher level of interest – like NASCAR. Such a move isn’t about trying to gain audience as it is getting more people to buy $4.99/month streaming subscriptions. IndyCar diehards have already likely done so to watch practice and qualifying.
For races on broadcast TV, with NBC, you’re competing for spots on a network that just lost the NHL, doesn’t have NASCAR until the latter half of the year, airs the Olympics once every four years, Sunday Night Football in the fall, a handful of PGA Tour events, and a smattering of other live sports shows.
Fox makes you a competitor with NASCAR early, NFL and college football late and MLB all season-long. Disney puts you back with a suitor who all-but gave up on you a decade ago and only seemingly held on for the 500. IndyCar would also be a tadpole in the ocean against the NBA, NHL, MLB, college football and basketball, and highlight shows that only touched on your race a couple weeks back because Jimmie Johnson was on the grid.
CBS boasts an even bigger unknown: a network that hasn’t shown much motorsports interest until recent additions of Formula E and this summer’s six-week SRX Series.
That’s a lot of unknown against a familiar commodity that brings the same question marks about the future of streaming that any network will.
The deal, it appears, will be decided on whether IndyCar may be willing to settle for less money than it wishes, sign TV’s version of a “prove it” deal and continue on this path, or take the momentum it’s built these last 18 months for a fresh start somewhere else for what may be a larger check.
“The financial aspects of an agreement are obviously important,” Miles said. “And for our sport, we very much believe we’re in the early stages of renewed growth, and that makes exposure very important. Those are the two things (most important to us).”
Which weighs more? Only Roger Penske knows.
Email IndyStar motor sports reporter Nathan Brown at nlbrown@gannett.com. Follow him on Twitter: @By_NathanBrown.