CART Media Conference
T.E. McHALE: Good afternoon. Welcome to a special CART teleconference. We appreciate all of you taking the time to be with us today. Our guests this afternoon are: Joe Heitzler, CART President and Chief Executive Officer. Rob Correa, Senior Vice-president of Programming for CBS Sports. Jim Liberatore, President of Speedvision Networks, Mike Trager, Chairman of Clearchannel Entertainment. Keith Allo, CART Vice-president of Broadcasting. Tom Carter, CART Chief Financial Officer. Gentlemen, welcome to all of you and thanks for being with us today. At this point I would like to turn the call over to CART President and CEO Joe Heitzler who has an announcement regarding CART's 2002 domestic television package. Joe, you are up.
JOE HEITZLER: First of all, thank you very much for joining us today. As promised several months ago, CART embarked on a program to create a broadcast coming environment that would enhance the exposure for our fans, our viewers, our sponsors, our promoters, and our investors. We are proud to announce this morning that CART has accomplished that goal in entering into a broadcast agreement with our new partners and CBS, and Fox Cable Networks Speedvision. Our goal at CART has always been to enhance our broadcasting package, and to bring an environment that has increased number of hours of coverage and we're happy to announce this morning that that coverage is going to increase by approximately 60 percent. We also, as a goal, to being in an environment where we truly had experienced partners and we believe that CBS over the years has proven that they have tremendous background in auto racing and we've all experienced the excitement that Fox has brought us in their first year of auto racing this year. We believe that these are two significant partners for CART and that we'll be able to be involved in the executive production, and the marketing and the programs that these two entities will join with us at CART to create. We think this is an environment that will be highly beneficial to our fans and our viewers and our sponsors. And we have been committed to taking an aggressive step to bring better broadcast coverage to our fans. And this morning, we believe that in this announcement the aggressive steps that we have taken and the initiatives that Fox and CBS have demonstrated during the course of our negotiations will shortly be realized for the benefit of our sponsors and our fans. Once again, we are committed to delivering the best and the most exciting open-wheel racing to our fans and all the constituents in the CART community and thank you for being with us this morning with this exciting news for CART.
T.E. McHALE: Thanks, Joe. Before we begin taking questions for our guests I want to set out a few groundrules. We would appreciate your cooperation. As our guests are joining us from all over the country and are on tight schedules, we would ask that you limit yourselves to one question and, at most, a brief and we emphasize "brief" follow-up. Also, in deference to the fact that the majority of our guests work in television, we would ask that you confine yourselves only to questions relating to CART's new television package. We have got a lot of ground together and not much time to do it so with that we're going to be taking questions.
Q. For the CBS guys, about talent, who -- where will the talent come from? Will it come from the people that have covered it the last few years? Would you guys like to incorporate your own people? Would there be a thing to bring in a person like Jim Nantz possibly to introduce the racing package at the start to try and get a little more high profile?
ROB CORREA: Talent is an issue that we're going to be addressing in the next month. And we just made the deal with CART, so we have some work to do with talent. But we're pretty open at this point, we really don't have anything to announce.
Q. Rob, following up, what about a night race, is it too early to talk about a night race? CART has never had one.
ROB CORREA: All our races we're planning to schedule in the afternoon.
Q. Just one clarification, what you announced look like seven races on CBS, which you will pay for the air time. The rest of the races covered on Fox Cable Network, so it looks like about 4.1 to 5.8 million in expenses, is that about correct?
TOM CARTER: That is basically correct. We're having the expenses for the production and the time buy on CBS and that would be all of our expense that we would be incurring.
Q. On the revenue side, you are only getting from the CBS broadcasts?
TOM CARTER: That's also correct.
Q. Do you know what the ad rate is on CBS to determine what you are going to need to break even or make money on that?
TOM CARTER: We have not determined that as of yet. It's a little too early in the process and once we get out in the market, we'll have a better idea of that.
Q. Two segments. One, the whole business of promotion and marketing, what kind of efforts will go into promoting your coverage? NASCAR has done obviously a very good job with -- or NBC with NASCAR this year. And the other thing, there's an interest in the international side, where that's heading, that is reverting to CART, any comments on those two points.
JOE HEITZLER: I am going to let the representatives from Fox and from CBS answer that. But I will tell you that during the course of our negotiations with both CBS and Fox, the most impressive aspect of the conversations was that these two entities wanted CART and they wanted us for reasons of inventory, yes, but they wanted us because of the exciting racing that we have and I am sure that they will answer that question after this. The second one on the international, we're in the process now of dealing with several entities and one of those entities is Fox International. Once we have completed those negotiations, we'll pass that information along. Perhaps Jim Liberatore the President of Fox Cable Network Speedvision could talk to the promotion and marketing.
JIM LIBERATORE: Yeah and again -- we haven't specifically gotten into that. However I think you can tell from our perspective how important the 14 live races and the repeats will be to us. And I think it is safe to say that we will have promotion and marketing that is going to represent the importance that the live and eight or seven races are going to have on our network.
ROB CORREA: Much like Speedvision, I can't tell you specifically how we're going to promote CART but it is our entree back into the auto racing business. It is a terrific sport, deep in tradition and history, and we very much plan on telling our audience when races are going to be on.
JOE HEITZLER: Following up, if Jim could mention that presently we're structured as the only live racing that will be on Speedvision at this time. I think that comment was made and in addition to that, you will see that the number of hours have increased approximate 60 percent so a lot of marketing and promotion will go around that environment.
Q. I have a question for Joe. I guess I am kind of curious about the state of open-wheel auto racing today in general, specifically -- and also where CART is and where you are trying to go and how does this television package specifically meet your agenda?
JOE HEITZLER: In the first part of the question is I think that this television package meets the criteria of the aggressive growth of exposure we wanted to bring to our fans. And those steps of our sponsors, and the quality of the television coverage, that is the most intriguing aspect of this new partnership with CBS and with Fox Speedvision. So I think with the issue relative to how this will be presented, the races will be presented in their entirety. On Speedvision there will be three-hours races on the street in road and four hours on the 500 miles. In addition, there will be 24 one-half hour shows entitled: This Week In CART, I think, that's -- Jim, that is the preliminary name that we have given it?
JIM LIBERATORE: Yeah, it is.
JOE HEITZLER: So I think for the general base of open-wheel racing this is going to give open-wheel racing a tremendous advancement as it relates to exposure. This is going to approximately, with reruns, and the timing of the reruns, it is going to be in the neighborhood of about eleven half hours a week of open-wheel racing, CART Open-wheel Racing, so we think that's a very aggressive direction to improve our sport and we think it will take us to a higher level of visibility and reputation, and we're just pleased that we have got two experienced networks that have a tradition in auto racing. So we look at that as only a positive for open-wheel auto racing.
Q. Following up to one of the prior questions, based on current TV ratings, what would you anticipate selling 30-second spots for both on network or cable? Joe or whoever would want to answer that question. Then secondly, what is the ramp-up of the races that will be on CBS for '03 and '04? This is?
TOM CARTER: Regards to the first part of that question, as far as the average ad rate is concerned, having just signed the deal I think it is a little early for us to comment on that and know what the market will be for that. Your second question as far as number of races on CBS and the exceeding years, plan to be either seven or eight race.
Q. With the contract signed here, we should be seeing the '02 schedule soon?
TOM CARTER: We're still working on a few items and trying to nail down the '02 schedule and as soon as we have that completed, we'll have another announcement in regards to that.
Q. How will the two partners handle rain delays and is that an additional purchase of time or will you have to work within that timeframe? Exactly how will that be handled?
MIKE TRAGER: We have talked about it between the two parties and overruns are always a problem on network and having a cable partner like Speedvision I think is going to help us a lot. I think we're going to have meetings on that. We haven't revolved those issues. Those are normal issues that everybody confronts on a regular basis on the weekend whether it is golf, auto racing, or anything else. So I don't think we have a specific answer other than to say that we recognize the situation and we're already discussing how we're going to handle it.
Q. Following up on the question that every seems to be driving at, if the Fox folks are going to be doing the selling of the advertising, could they comment on what the current rate of this spot advertising is without regard to your product specifically, give us some sort of range for sports programming.
JIM LIBERATORE: That's a hard question to answer given current advertising climates. A lot of that changes base off of what is going on economically. We have just started looking at a lot of this right now. This was, you know, we really -- it was a short process in finalizing the deal. So this is not really to skirt the question, I really just don't have an answer right now.
Q. This is a question for CBS. IÃ¢ï¿½ï¿½d like to know if you believe that you have to spend more energy promoting CART on CBS than ABC will spend on promoting IRL?
ROB CORREA: I can't really speak for what ABC. Is doing. That's ABC. But I can say that it will be important for us to promote CART on CBS because we recognize it is important, that's what we're going to do.
Q. Following up, what is the acceptable level of ratings for CART events on CBS next year?
ROB CORREA: That is a tough question to answer. We're just going to have to get into it. I think in today's day and age, any ratings growth in many sports staying flat from year to year is considered positive. I think any ratings growth that we can achieve in CART next year on CBS from this past year will be considered a resounding success.
Q. Rob, can you talk about what commitment you have got, in other words, can you drop that number of races that you are covering from seven or eight down or conversely, can you increase it if the ratings show up? And presumably since you have no stake in the advertising, do you have any stake in anything other than selling the time at this point?
ROB CORREA: The first part of the question, in terms of number of races, it's really a function of our sport schedule in many regards and the CART schedule. Obviously we have football and NCAA basketball and golf commitments, but we are going to work with CART to do as many races as we can and to do as many races as they want on network; whether, you know, in years 2003 and 4, if that's more than seven and that can work out for all parties, that's what we're going to try to do.
Q. Does that mean that could you also do less than seven if you wanted to?
ROB CORREA: It is our intent to do a minimum of seven.
Q. Tied into somewhat with that, Joe you had talked for some time about bringing the production in-house. Can you go through the decision to have Fox Cable do the production and apparently the sales rather than doing either of those in-house and how that ties in with your ability to sell sponsorships?
JOE HEITZLER: That's a good question. I think the most demonstrable way to answer that is to reflect on what Fox achieved this year in their NASCAR production. And I think that it would have been remiss of me as the Chairman and CEO of CART to try and feel that we could do a better job of that. And so with Jim Liberatore and Jeff Shell and David Hill, there was a convincing conversation relative to their expertise and that conversation was a very short one because it is so obvious that they - CBS set the bar for many years in that field and Fox last year certainly took the mantle of that challenge and raised the bar yet again. And I think with that kind of talent that David Hill and Jeff Shell and David Hill bring to this, we felt that as being the co-executive producers of the show that we would be able to bring the things to our sponsors that they are looking for. And that is the number of increased hours and that's the number of off-air race programming that we're bringing. And we feel that the production values of CART are going to be greatly enhanced by virtue of these two relationships.
ROB CORREA: Point of clarification from the CBS end, just so everybody is clear, we will be responsible for our own above-the-line. In other words, we're going to produce and direct the CART shows on CBS as well as hire our own talent. I think it -- very clearly, it is very important to us that we have a distinctive CBS look. We're thrilled that the Fox people are going to be supplying facilities because that is absolutely crucial in auto racing. But again, I just want to make it clear that our shows will have a CBS imprint on them.
Q. Jim, you have got here that -- I mean, just from the outside, from looking at it, there's a lot more time that CART is going to be on television, but a bulk part is going to be on your network and your network is really reaching a minor portion of the country right now, I mean, you are looking to try and get 50 million households by 2002. No. 1, I'd like you to discuss what kind of plans you have set to reach that goal and get beyond that. And No. 2 it's almost a well known fact that that channel was purchased by Fox to be intended to become the NASCAR channel and from my understanding almost 50%, if not more of the programming on Speedvision, is set to be NASCAR-oriented programming and most of us know too that NASCAR fans are definitely not CART fans and vice versa. How do you reconcile that?
JIM LIBERATORE: To answer the first on the number of homes I think if you look what's happened in the last few month, Speedvision as it was known is going to be a completely new entity from the graphic packages, to promos, marketing, this is a Fox Network and this is going to look and act and feel like one. Now, the network, and there was some talk, I know months ago about the NASCAR issue, nobody wants this to be a NASCAR channel including NASCAR. Everybody understands that a network like ours has to be vertically and horizontally programmed. And what I mean by that is you need, in order to make sure that you are gaining clearances with the affiliates, you need to really make sure you are still satisfying those niche markets; whether it's the motorcycles or some of the other programming. But the amount of programming we have and the dedication that we're going to have toward this CART package will not affect what the plans are for NASCAR. Yes, the plans are we are definitely going to be doing a lot more NASCAR programming but when you -- the percentages are not agreed upon or finalized, but when you are a 24-hour network obviously 50% may seem like a lot but that still leaves a lot of quality time for other things. So I just want -- that's kind of -- since my announcement just came out this week that's a question has come up a lot is that is this is not going to be a NASCAR-only channel and this arrangement, I think, speaks to that. And the fact that Speedvision received over 40,000 e-mails and petitions asking not to become NASCAR-only you know, we hear that and that's the direction that this channel is going.
Q. A quick follow-up, we all know Fox and NBC did a great job of cross-promotion between the two networks. Should we expect that kind of promotion between the two networks or is it going to be totally two separate ball games?
JIM LIBERATORE: I think from our perspective obviously we'll be promoted throughout the Fox Cable Network side. That's one thing we have talked about and I know that this -- you know, anything that goes on this network or any Fox Network is going to have that the type of support that you have seen. Past that, we haven't had any conversations with -- nothing has been described exactly with CBS or during their races.
Q. Joe, is that something that you'd like to see happen?
JOE HEITZLER: That's something I'd like to see happen. And I have a meeting next week with Rob and -- we just concluded this agreement about 8:30 Saturday night so that Jim could keep his marriage intact by making it to the 10 o'clock movie. So we have only had since Saturday around 8:30, 8:45 to have these conversations. So these conversations will be ongoing the next several weeks with Michael Trager, myself, and CBS and Jim at Fox.
Q. This one I guess goes to Joe. Do you know how many races are going to be on Speedvision and how many will be on Fox?
JOE HEITZLER: I believe right now we plan on either fourteen or fifteen on Fox Cable Network Speedvision and seven/eight on CBS. we're going to have those conversations yet in the next week to ten days.
Q. Following up with Jim with Speedvision, of the current markets in which CART races, how many of those have Speedvision?
JIM LIBERATORE: That's a hard question to answer based off of -- you know, the distribution you could have some distribution in a given market and it's a percentage. Tell you the truth, I don't know the answer to that question: That's part of -- we move forward with NASCAR and CART obviously that's why we're going to make this such a priority to us because that's how we continue to grow in our distribution.
Q. I just want to be 100% clear, so the races that aren't on CBS will be on Fox Speedvision.
JIM LIBERATORE: Right and that is the other thing I want to clarify too. The plan right now is that this is Speedvision deal. It is open and available for us at some point if we want to expand that or move it to the other Fox Cable Networks, but the idea and the concept right now is this is a Speedvision and it's not going to be quite the same way as some of the NASCAR programming is, I mean, all of this programming, it has been contemplated, will run on Speedvision and we'll have the option and opportunity to look at the other cable networks, but this is clearly a Speedvision deal.
Q. Joe, figure out how this is a net gain for someone who would be a CART fan in this market, for example. By my count in the last in this year's package not Texas aside from are 20 races, 11 on ESPN, 8 on ABC, and one on ESPN-2. All of those entities are available to over-the-air and cable subscribers here in the Milwaukee market. Now, under this new package the races on CBS will be available, the seven you are talking about, but Speedvision is not in the market. Isn't that a net loss for the CART fan here?
JOE HEITZLER: I think that what we're trying to do is we're trying to put an environment together that for the long-term growth of CART and its fans, and its viewers and its sponsors, that we can be in an environment that we are participating in on a programming end and that we believed in our conversations and we have no doubts on the Fox Speedvision side that they are making an enormous commitment financially and programming-wise, to becoming a very predominant motor racing driven environment. We believe that with the NASCAR programming also they have the same goals of getting into those markets that right now may not have it. So as I said we just finished this on Saturday and these are lots of conversations that we'll be having, but I think the net gain is a long-term issue of people. Once we solve the distribution and the footprint that we're going to have an enormous benefit of working together in building this with Speedvision and we think that in the long run is going to benefit our viewers.
JIM LIBERATORE: Remember also through direct TV and Echo Star that we are technically available to anybody who wants it. Because of the demographics of this audience, because of the size of this package, we really are truly available to anybody who wants it; just not through their traditional cable channels.
MIKE TRAGER: I think the one thing you are forgetting is two things - you refer to NASCAR but remember NASCAR also put a considerable amount of programming on FX knowing that FX also was in a similar position Speedvision is in not have full coverage. The minute that certain programming that was desirable to the audience appeared FX had an inordinate growth in a very short period of time. I think we're expecting Speedvision to have that same kind of growth with CART and NASCAR programming being added to the schedule which currently doesn't exist on the network now and so you are making a presumption that what you see today is what it is going to be in 2002 and I think that's erroneous.
Q. Suppose you can get down to the brass tax of this until you round it out, your ladder series but does this contract hold any provisions for the possible broadcast of, say, the Superfeeder series or whatever, the Atlantics Lights, thing gets turned into next year.
JOE HEITZLER: This does specifically allocate time and coverage for our
Q. Mr. Liberatore, interested in that, something you'd want to show live or is it con -- are there things in the contract that you have to do with the ladder series?
JIM LIBERATORE: Yeah, we are going to be doing some of those series but again this is all -- has happened relatively quickly so we haven't decided but that is part of the arrangement that we will do some of those series.
T.E. McHALE: We're going to wrap it up for the afternoon. We want to thank our Joe Heitzler, Rob Correa, Jim Liberatore, Mike Trager, Tom Carter and Keith Allo for being with us this afternoon. Gentlemen, thanks for joining us and best of luck with the new TV deal. Thanks to all of who you joined us on the call this afternoon. We wish you a pleasant good afternoon and we'll talk to you down the line.
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