Indy Racing League Media Conference

Topics:  Indy Racing League

Terry Angstadt
Jamie Davis
October 10, 2009

THE MODERATOR: At this time I'd like to make a couple of introductions and then we can talk a little bit about the inaugural season of the IndyCar Series on Versus television. Closest to me obviously Terry Angstadt, president of the commercial division for Indy Racing League. Next to Terry someone who a lot of you have not had an opportunity to meet yet, and that's Jamie Davis, the president of the Versus Network. We'll start off with a quick comment from Terry.
TERRY ANGSTADT: Thank you guys for being here as always. Wanted to just -- just a couple of very brief comments before kind of turning things over to Jamie, and that is we just are needless to say excited about the show we're going to put on tonight and appreciate the following and the coverage and all the positive things that for the most part you guys write about us, so we appreciate that.
Just to touch on, as I think all of you know, but just to remind you that the decision to go out a year early and seek a new television and broadcast partner, especially in cable, was a strategic decision and one that we continue to feel not only good about but absolutely elated. We think we have found the right brand fit, the right strategic direction, the guys to make this sport bigger and better, and I think they've demonstrated that every day.
I think that most of us would agree that increased programming will lead to more people following and understanding our sport. Needless to say, the increase in that is dramatic versus what we were experiencing before.
And again, at the end of the day, do we want more households broadcasting and available to our fans? Of course we do. And that's Jamie's job, and I couldn't feel better about suggesting that it is in very capable hands. So from a league perspective, we feel good. Do we want it to be better? Of course, that's our job. We have a number of ways to attack that and feel good about that direction.
We thought the ability to hear directly from Jamie was important, and again, without further ado, Jamie.
JAMIE DAVIS: Thank you very, very much. Now you know the challenges I have with that name Versus, when you say versus Versus all the time.
On behalf of the network, we could not be happier with how this first season has gone, and working with the league, working with the team owners, working with the drivers, it's been absolutely fantastic and a real success for us.
One of the things that we do, and a lot of people, that differentiates Versus from the other sports broadcasters is we try to find sports that have passionate fan bases and then go out there and what we call super-serve them, i.e., give it more coverage than it has ever received before, and that is exactly what we've done this year with the IndyCar Series, is that we have gone out, and every time we have a race we put it in a seven -- we do seven hours of coverage a week, which is compared to what used to be only two hours before, and that fact -- on the back of that, that has been really able to build the momentum that we have with this, not only for the network that we have done it, as well, but also for what we're going to do for the years to come with the IndyCar Series.
Versus is the fastest growing of the national cable sports networks out there. We were up 24 percent in growth in 2008, and that momentum has continued even this year. When you look at other sports as a case study like the NHL, NHL's post-season this year on Versus was the highest rated since 2002 on cable anywhere. We only took it over in 2005. So that momentum of us, again, finding a partner with a sport that has a passionate fan base and being able to grow that, hockey is a fantastic case study to show how that's been able to work together.
When you look at what's actually happened this year, what we've been able to do with the IndyCar Series and with the league itself is we've had not only to our coverage an overwhelmingly positive response from the league, from the drivers, from the fans, et cetera, but also from the people who are actually watching. We've had more people watch the IndyCar Series programming on Versus this year, and we still have tonight to go. We've had more people watch. We had 27.6 million viewers have tuned into it on Versus this year, and that's more than tuned in to ESPN and ESPN2's coverage all of last year. And again, we still have another night to go, as well.
The only other thing I really want to -- and as I said, I think it's going to continue to grow in years to come. I openly want to bring up one topic that is probably a question on people's minds that I'd rather just openly address it and then answer my questions, is the DirecTV dispute that we're currently having with them. Just to give you a little bit of background, tell you where things stand right now and then certainly open up if anyone has any questions on that.
Our deal with DirecTV expired at the end of August; August 31, 2009. We spent the summer having fruitful, productive conversations with them trying to renew the deal. We were discussing things on August 31, 2009. At midnight that night, without telling us in advance, DirecTV turned off our signal and came out and put a slate on the channel saying that because we had piggish, they called up piggish, and outrageous demands, that we were demanding way above market rate and it was going to be impossible and they were unwilling to pass on these unreasonable demands to their consumers in this tough economic time.
What DirecTV did was completely cloud the issue. The price that we have offered it to DirecTV at is exactly the same price that they were paying, not a penny more, so there was no extra cost to be able to pass on at all to the consumers.
What DirecTV didn't tell and they haven't put up on the slate on their network was that they were insisting they could re-tier our network, and what I mean by that is they wanted to take it off where it was, take it away from over 6 million existing subscribers to go back and charge them more, and that's what this whole dispute is about.
We're the fastest growing national sports network out there, and we were unwilling to allow great fans of the IndyCar Series to then have to go back and have it taken away from them in this economic environment. All we wanted to do -- one of the things Terry and all of our partners have asked us to do is to continue to grow our distribution, certainly not to go backwards at a time when we have great momentum. So that's what it's really about.
In addition to that, DirecTV came out and insulted our programming, that same day on that same slate. We were having a negotiation that night and they called our network nothing more than paid programming and infomercials which we found completely insulting, not really to us as a network but really to or partners, that they were calling the IndyCar Series -- they were calling it paid programming and infomercials. They were insulting the fans of the IndyCar Series.
And really what they're saying is everyone knows DirecTV is the self-proclaimed leader in sports; well, honestly if it's the thinks that the IndyCar Series, if they think that the best college football, nationally-ranked college football games on every day, if they think that the best Tour de France up over 100 percent year on year with Lance Armstrong's remarkable comeback, if they think that the best NHL post-season since 2002 with a couple of rounds back over a decade is paid programming and infomercials, I honestly question whether they're the leader in sports, as well.
That being said, we've had great feedback, not only from other operators, because DirecTV, who we lost 14 million subscribers as a result of them turning us off, we've made back over 10 million of the subscribers within 48 hours after going off the air on Direct, 9 million coming from Dish and another 1 million from other operators around the country who recognize the value of Versus programming.
In addition, we've received over 120,000 calls and emails to advertising that we've had out there of fans of Versus who are asking us for help in getting us to be able to get back on DirecTV, of which we've offered two solutions. One, we can correct them directly to DirecTV customer service, which we've done. But in addition to that on our home page right on the front of Versus.com, we have a place for DirecTV subscribers to click. All they need to do is enter their Zip Code and we can simply help them find an alternative service provider like dish or someone else in their neighborhood so they don't have to miss Homestead and other great events. I'm hopeful we can get this resolved; talks are ongoing, but right now DirecTV is unwilling to budge on this distribution issue, which is something that is really at a standstill. As I said, I'm hopeful that we can get this resolved.
But when it comes back to the overall relationship, things couldn't be better, and in fact, despite being off DirecTV, September 2009 was the most watched month of September ever on the Versus Network. We compared it to how it did compared to 2008, because one of our concerns, of course, as a broadcaster was how will this affect the advertising, how will this affect sponsors of our partners, things like that, is the viewership going to be way down because of the fact that it's no longer on DirecTV.
Well, in September 2009 compared to September 2008, our prime time was up 26 percent, our total day was up 24 percent, and our weekend afternoons were up 50 percent year on year despite being there. So the momentum of Versus has continued despite.
That being said, I do want to get this resolved because I feel very -- honestly frustrated for our DirecTV fans that are there and hopeful that we can get it resolved so they don't have to miss it.
I guess we'll open it up to questions.

Q. Is today kind of a milestone day in terms of coverage for the network, because not only do you have an IndyCar championship, it's going to be followed by a No. 1 ranked football team playing a No. 4 ranked football team in prime time? If you could talk about that.
JAMIE DAVIS: You know what, we have a fantastic lineup today. We also have a lot of WEC fights, so it's just a fantastic day between our college football, between this race, between the WEC fight, just a fantastic day of programming. But really what's happened is we're not a one-trick pony, we're not a one-weekend pony. We have the NHL, and the NHL we have on every Monday and Tuesday night going straight into when we again super-serve the fan through the post-season of the NHL where we do double and triple headers every night and do exclusive coverage of games 3 and 4 of the Stanley cup. You know, that's really worked.
If you look at how the success and how I know it's going to work with the IndyCar Series as that continues to grow, as well, game 3 of Stanley Cup on Versus this past year, we were the No. 1 cable network across the country in all the demographics, bar none. So that momentum is out there, and it's going to continue on days and nights like today but throughout the year.

Q. And also, how engaged has the NHL been in the DirecTV situation as far as trying to maybe give them some help from the NHL in trying to influence DirecTV to try to resolve this?
JAMIE DAVIS: Honestly all of our partners have been fantastically helpful. Gary Bettman and our partners at the NHL have been very supportive. We've had extensive conversations with them. I know Gary has had extensive conversations with DirecTV, as well. The NHL is partners with both of us. They have the NHL Network carried on DirecTV.
That being said, Gary Bettman clearly came out with a statement the weekend before opening night, which was October 1st, where he encouraged DirecTV subscribers to change providers so they wouldn't have to miss it.
It's been very clear that Gary Bettman understands that we were not trying to get the price increase, because honestly, I don't think Gary and I don't think Terry and I don't think any of them really care about the economics of our network, and if we were out doing that I'd be getting punched pretty hard by them. But they do know we want only to grow our distribution because growing the distribution of Versus is good for the network, but more importantly it's good for growing the great partners in sports that we have on, and that's the No. 1 priority. Terry, do you have any follow-up?
TERRY ANGSTADT: There's just no question that that has been -- it's been written a lot about. We feel the exact same way. We have a history with DirecTV, as you all may recall a year ago, so we have found at times a challenging environment with the same group.
You know, at the end of the day, we want what is not only right for our sport but right for our broadcast partner. As you know, it is long-term relationship, and I do think a very sincere effort has been made, and if at the end of the day it is time to encourage people to switch, that's probably the right thing to do.

Q. You talked about super-serving the fan and the seven hours a week. As you grow are you going to be able to keep IndyCar that high in the pecking order and keep that many hours on television?
JAMIE DAVIS: Absolutely. We are not about trying to get as many sports on the air and try and figure how we can squeeze them all in and jump to and fro. That's a different model. Some people do do that, and there's a good business out there in doing that, but that's not one of our businesses.
The reason why I think we are the fastest growing of all the national sports cable networks is because of the fact that that super-serving model has worked. We're three years young, and in that three years that momentum is continuing.
An idea would be, certainly if there's other sports that we can bring in that will not in any way get in the way of us super-serving the ones we have, we'd like to do that because one of the things that's been successful is -- for example, take the IndyCar Series, right; IndyCar Series has been fantastic for the network because as we bring in a new sport like we have with IndyCar Series, as long as we stay true from what we want to do and we will never divert from what we are doing because it's working, but we super-serve them, but in addition to that we cross-pollinate them. We introduce our hockey fans to the IndyCar Series. We take our WEC fans, college football fans, Tour de France fans over there, and because of that it brings it all up, and that's why I think we're having such momentum.
So no, we have a long-term agreement with these guys, at which point we will continue to super-serve them for ten years and I'm confident beyond.

Q. Needless to say, Nielsen ratings, that's a yardstick for everybody, whether it's viewers or whether it's sponsors. You guys are talking about viewership growing and that sort of thing. How do you match that or substantiate that against what people see as lesser Nielsen ratings than IndyCar used to get? That's a big question for a lot of us, I think.
JAMIE DAVIS: I think you have to look at everything in the first year it's on. It takes time for the viewers to find where it is whenever you have a new home. If a restaurant were to move three blocks away, it takes time for people to find it. They go to the old place where it was and they say I can't find it and then they start learning. There's an education that happens there, as well.
But we can use hockey as a great case study, and that's why I believe that the success we've had with hockey will continue on. In hockey, we started broadcasting -- we're in the beginning of our fifth season with them, okay. As I said, hockey in year one, it took time for people to find it on Versus. As the network continues to grow and get more momentum, more and more people find it, as well.
But in addition to that, as that happens, as the network grows and we continue do that cross-pollination I said, we'll continue to introduce more and more fans of our own, as well, and if we do go and get another sport, as well, that's a new group that will find Versus that hadn't found it before that we'd be able to introduce over to the IndyCar Series.
When you look at the success that hockey has had, again, just to reiterate what I mentioned a couple minutes ago, that was the end of our fourth season with them. We had the highest ratings on cable in post-season hockey since 2002, and we only took it over in 2005. And two of those runs, the Stanley Cup, the conference semifinals and finals, were the highest since 1997 and '98 respectively. And again, it will take a little time, don't get me wrong, but we're very happy with how we did this year.
In fact, this year, as I mentioned earlier, more people already because of that super-serving, more people actually watched IndyCar Series programming on Versus this year than watched it combined last year on ESPN and the Deuce, and remember, we still have tonight to go.

Q. Two things, with Direct and your little problem you're having, are your people out looking for other places to get the pick up Versus and make it part of their basic package? And how are you allowing or promoting the fact -- how are you spreading the gospel as to where you are? I get emails from people constantly saying, We didn't even know we had Versus, didn't know it was there. What are you doing to enlighten the sporting world that you're here?
JAMIE DAVIS: Two questions, I guess. The first was on the DirecTV and the second one was just knowing Versus itself, right?
The first one, as I mentioned, over 10 million additional homes have come in, 9 million from Dish and another million from cable operators across the country on a free trial basis for three months, and we are working on trying to get as much of that to be on a permanent -- we call it a melt -- as possible, so that the overall base will continue to grow on Versus, and hopefully when we are able to resolve our dispute with DirecTV, to be able to continue to grow the overall base.
The second question is, as I said, we're three years young, but when you look at the momentum of the network and you look at the ratings that we're getting on things like the hockey, the Tour de France, the IRL, we're happy how with it's started in year 1, college football, our WEC fights. When we have our WEC fights on, I watch them. Every time we have a live fight on, we are consistently the No. 1 cable network across the country in the key male demographics. Game 3 of the Stanley Cup finals, we were the No. 1 cable network across the country. 46 million viewers across the country watched the Tour de France on Versus. People are finding it.
The numbers don't lie. Viewers are finding it. I think it's just going to become more and more into daily consciousness as it continues to grow.
The other thing is in December of 2008, we launched a 24/7 Versus HD channel, and that's made a big difference in the way we cover it because I think people more and more want to watch their sports in full HD, and we do 100 percent of our races and IndyCar coverage all in full HD. But in addition to that, many people at home, the way they watch TV is they take their remote control and they hit their HD button and surf within that HD environment. There's a lot less channels in that HD environment than there is in the overall environment, so more and more people are finding us, because remember, we're dealing with a legacy of used to being OLN and now we're Versus, so we're migrating from what was a niche sports programming network to now a mainstream sports network, and in doing that in the HD environment, that also is making it easier for more and more people to find.

Q. Is not Versus owned by Comcast?
TERRY ANGSTADT: It is.

Q. Is Comcast doing the same thing? Are they putting on -- their outlet is No. 1 in the world all over the place, say, hey, check IndyCar on Versus -- of course they don't say that, but are they putting calls on to promote the racing and the other sports that you carry?
JAMIE DAVIS: What you're talking about is what we call violators. It's a lower-third graphic that comes across, and that's exactly what I was talking about with the cross-pollination between. We will do that during a WEC fight, say watch the IndyCar Homestead race tonight or, for example, we'll do it during hockey or vice versa. In the Homestead race tonight we're going to be promoting some of the other programming like the fight and college football, et cetera.
So that's exactly what we do. And Comcast, of course, within the Comcast systems, as well, we also -- Comcast, not me, I work for Versus, but Comcast itself, there's the Golf Channel, there's E!, there's Style, there's ten regional sports networks, there's G4. So we even use the arsenal of different channels, as well, to cross-promote programming between them to continue to grow the pie and be able to inform audiences.

Q. Terry, sounds like we've got two different things. If you go network, you're kind of getting a broader reach with the marketing, and when you come to Versus you're getting the niche as you say. Explain to me how you're training or educating your teams how to sell sponsorships based on those two different things because if you go strictly by Nielsen numbers then you're thinking your way down, and that may not appeal to those that don't understand the competitive reach because you're on two and a half times as long, but how are you helping the teams find sponsorships in what's already a difficult market and kind of a different world?
TERRY ANGSTADT: Well, as you know, sponsorship development is a big task. It's a hard job. It takes a lot of dedication and research and a lot of hard work to do it. And ratings is an important part of it. It's not the only part of it. But I do think that when we, again, made the decision to go out a year early that it really was to keep the balance or to keep the Indy 500 and extend the 45-year relationship with ABC Sports, with ESPN. But we really did enjoy the balance of, so it's not we're all in on one direction; it is a balance between a good, strong broadcast partner with a lot of history and heritage behind it, but yet this young, aggressive, more edgy partner to super-serve our fans.
So once again, we think a really good decision, and I do think in balance, as we've said, we think part of our story being told in an extended way is a big part of raising the overall value. We wouldn't have known. It was kind of the definition of insanity; keep doing the same thing, expect different results. We made a decision. We think it's a great decision, and that will prove out or it won't. They've made a big bet on us, we've made a big bet on them, believe me.
And again, for year one, it's where we thought it would be. Do we always want to make it bigger and better? Of course we do. We think we're with the right partner to do that. We just finished a meeting with our team owners so they could hear directly from Jamie the strategy, the growth plans.
And again, I think we've got a great group of owners. They recognize the effort the league has made in not only investing in individual and direct sponsorship sales tools to help them be successful, but I absolutely feel they buy in with the long-term plan.

Q. To follow up, will Target, Honda, Apex obviously, what is the sponsors' reaction to the current environment? What's the feedback you're getting from the big TV buyers basically?
TERRY ANGSTADT: Once again, it really is. If they have a budget, does it go a lot longer and further and more coverage and more spots and carry the message more consistently? That's a good thing. And I think there's no question that are we attracting a different sponsor base when you see the IZOD spots, when you see the Apex spots; those are all brand new this year. Do we think you will see more of that in the future, and are they buying into the direction, the consistency, the increase in programming, absolutely.

Q. The series is close to signing a title sponsor. How much will that kind of help move the dynamic even further?
TERRY ANGSTADT: It's critically important, and we have been very up front that that has been one of our softer spots. Again, we are very close to making that announcement, and that's not only important for our broadcast partners, because believe me, that comes with a big television buy, both on broadcast and on cable. But I think more importantly to allow us to promote outside of motorsports is critical. That is where we will attract what we think is a much broader base and raise the overall value of our series. And we could not be more excited about that development. That is a huge, huge development for our business, and again, when we all hear that probably within a couple of weeks, I think you will be as excited as we are as to what that can mean for our business.

Q. You mean as far as having a title sponsor?
JAMIE DAVIS: Obviously fantastic. We want nothing more than the strength of our partners, and as Terry mentioned, any type of deal like that, any good sponsor will want to activate that accordingly with their broadcast partners, with both us and ABC. And therefore obviously we'd like to see -- I think that's a testament to the fact that what we're doing together is working, the fact that if this momentum continues to go that way, it's a testament that the advertising community and the sponsors are interested in that.
THE MODERATOR: The green flag is about to drop on the GrandAm race, so out of respect to that I think we'll close this down for now, and maybe the guys can hang around for a few minutes for some one-on-ones if that's appropriate.