The Fight Over Fees for TV Channels
What Would Have to Happen for Contracts to Blow Up
Arent Fox San Francisco Managing Partner Richard L. Brand spoke with Business Insider on the sports-media industry and how COVID-19 is impacting TV network deals.
The article discusses how network deals could change under the stress of COVID-19, noting that it would take 12 months without live sports to “topple” most agreements.
Business Insider quoted Rich stating that “a lot of it depends on how long this lasts. If we go through a year without sporting events on TV … that’s going to have significant consequences all the way down the food chain.”
The article notes that ESPN’s deals call for “marquee” live-event programming hours over a 12-month period. Quoting Rich, the article adds “the terms would differ for every deal. But if ESPN failed to meet its minimum guarantees at the end of the period, the contract could call for a reduction in fees the distributor has to pay, or “make goods,” such as extra live events, in the next year of the deal.”
Diving into more specifics Rich notes that “under that structure, ESPN would likely have until the end of the year before distributors could try to use “force majeure,” a contractual provision that protects the parties from unforeseen circumstances, usually including “acts of God,” to try to get fee reductions.”
Business Insider goes on to quote other experts in the sports-media field concluding that many “are skeptical this moment will lead to a reckoning that pushes US sports networks out of the basic bundle. But the longer sports remain off the air, the more of a possibility it becomes.”
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