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Posted: June 18, 2013

Sports biz: Kroenke’s duck call

Stan's a man with a plan

Stewart Schley

A delicious bidding war last month pitted Denver’s Kroenke Sports Enterprises against a media industry rival for control of a TV channel devoted to … ducks.

Well, ducks and people who like to shoot them, that is. Along with: fishing, hunting, close encounters with elk, more fishing, the work lives of federal conservation officers, white tail deer and how best to kill, gut and eat them, and more fishing.

The TV network is Outdoor Channel, a once-sleepy cable channel that has risen to prominence thanks to a laser-like focus on its outdoor-enthusiast audience and the subjects that are meaningful to them. Based in Temecula, Calif., Outdoor Channel is one of only a handful of well-established, broadly distributed television networks that is independently owned, which is to say, not controlled by one of the Big Five companies that pretty much own cable television in the U.S. (Most of what you watch on cable or satellite TV is brought to you by … recite after me … ABC-Disney, Discovery Communications, Fox, NBCUniversal or Viacom.)

Hunting for diamonds-in-the-rough like Outdoor Channel has become a sport unto itself. In another recent transaction, CBS Corp. bought up an obscure cable channel, the TV Guide Network, for the same reasons Kroenke Sports had its eye on Outdoor Channel. It’s all about scarcity. Today it’s almost impossible to successfully launch a new cable channel. The cable and satellite companies are already overfed on an expensive diet of programming that costs them (and you) dearly. Even the mighty ESPN (owned by ABC-Disney) has had trouble getting cable companies to pay for and offer a new regional sports channel, the Longhorn Network.

That makes independent networks like Outdoor Channel extremely attractive to buyers like Kroenke. Because it has contracts in place with almost all the big cable/satellite distributors, Outdoor Channel reaches a majority of the nation’s TV homes. So regardless of what type of programs it televises or how high its Nielsen ratings are, the channel and others like it are extremely valuable purely because of their existing reach. It would take a huge investment and lots of perseverance to replicate what Outdoor Channel already has – a locked-down presence in the U.S. television market. Last year companies like Comcast and Dish Network collectively paid $21 million for the rights to put Outdoor Channel on your TV screen. On top of that, Outdoor Channel sold $39 million of advertising to truck makers, beer companies and other advertisers.

That’s why Kroenke Sports owner Stan Kroenke upped the ante last month for control of Outdoor Channel to $241 million, edging past a bid from the investment firm InterMedia Partners, which owns a rival cable network called Sportsman Channel. InterMedia is headed by a former Denver-based cable industry executive, Leo Hindery. (Don’t you love these Colorado connections?)

The point is that Stan Kroenke, a developer extraordinaire who understands where the sweet spots are, recognizes the inherent value in Outdoor Channel and surely has a game plan to elevate its value. This isn’t to suggest Kroenke doesn’t love duck hunting or fishing. The guy’s from Missouri, and for all I know he can wing a goose on the fly with one eye closed.

But there’s no doubt that Kroenke has bigger ambitions for Outdoor Channel than simply continuing with the status quo. Like CBS with the TV Guide Channel, he may have designs on transforming Outdoor Channel into something that goes beyond tried-and-true formula shows like “White Tail Nation” and “Major League Fishing.” Kroenke Sports already is in the sports-television game with its Denver-based Altitude TV, and Stan Kroenke, the majority owner of the NFL’s St. Louis Rams, certainly understands the economic link between sports and television.

No matter who ends up with the Outdoor Channel prize, you can be sure a transformation is in store. Creating new value from existing assets was Kroenke’s modus operandi for buying up and combining the Denver Nuggets, the Colorado Avalanche and the building where they play. The same formula will apply to Outdoor Channel. Them’s just the rules of nature.

Stewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at stewart@stewartschley.com

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