K-1 Forced to Buy Airtime for Dynamite

http://www.fightopinion.com/2010/11/25/k-1-nye-pay-for-play/

If K-1 has to do a pay-for-play deal for NYE, it would be disastrous

By Zach Arnold | November 25, 2010

Japanese MMA photographer Dan Herbertson dropped a big item this morning:

FEG is paying to broadcast this year’s Dynamite!! on TBS. I don’t have time to check right now but I believe this is the first time.

I was taken aback by this because this would be the ultimate story of 2010 in the Japanese fight landscape if true. Later on, Dan revised the item and found out from a source that K-1 and TBS are currently negotiating the terms of their deal for New Year’s Eve.

But what would happen if K-1 was forced into a pay-to-play deal with TBS for their New Year’s Eve event? Considering this a what-if article.

It would be devastating news that could very easily spell the end of K-1 as we know it.

Pay-for-play is something that we have seen done in recent years in Japan with the smallish TV-Tokyo network. Promotions like All Japan Pro-Wrestling, ZERO-ONE, Hustle, and Sengoku all paid for air time on the smallest of the free-to-air broadcast networks in Japan. None of those companies who bought time ended up making any substantial progress from doing so. It’s (generally) a money-losing concept.

In essence, buying time from a broadcast network for a pay-to-play transaction puts you in the same standing and regard as an infomercial. Except, infomercials are mostly profitable. When I say that pay-for-play puts you in the same standing, what I mean is that the TV network is taking a check from you for air time and is taking zero risk. You buy the time, you sell the advertising, you handle the matchmaking (mostly), and the risk is on you.

Pay-for-play situations on broadcast networks are extremely expensive, even if we’re talking middle-of-the-night time buys. However, what if your time buy is on a major television day like NYE in Japan and it’s in ‘golden time’ (prime time)? I asked one long-time office source in Japan to estimate to me what kind of price tag it would be to buy time in such a slot and the source estimated a price tag of $4 million USD.

For the sake of argument, let’s assume that K-1 has to pony up the cash and is $4 million USD in the hole. What about advertising? K-1 will be forced to sell their own advertising and that is simply not the company’s usual standard operating procedure. There will be enormous stress placed on everyone working for the company to not only lean harder on their current sponsors but to also try to attract new sponsors within a month. To put this into perspective, let’s look at how past NYE shows worked on major TV platforms like Fuji TV and Tokyo Broadcasting System. As a promoter, you work closely with a major sports TV executive producer. You come up with a general frame work for a card by mid-September, early October at the latest. You work with one of the major ad agencies in Japan (Dentsu the largest, followed by Hakuhodo and Asatsu) and give them about three months to start selling ad time and attracting clients. The TV network executives help shape a card that they think will draw the best ratings and end up paying a rights fee to the promoter in exchange for ownership rights to the footage and (sometimes) production.

In a pay-for-play scenario, K-1 has to handle all of these aspects and do so within a compressed time frame. Almost impossible to achieve without financially taking a gigantic hit. In many respects, K-1’s NYE 2010 event could end up as a much more costlier version of DREAM where it’s on PPV to buy and a shortened version on broadcast television with limited sponsorship support.

If the ad agencies told Tokyo Broadcasting that there was enough sponsor support/demand for K-1’s NYE show, the network probably would continue doing business-as-usual with K-1.

On pay-for-play time buys with broadcast networks, network support for such programs (like infomercials) is very limited. Granted, TBS would want to draw good ratings on NYE because NYE has become the biggest day of the year for the ratings war in Japan. However, if K-1 is paying them for the time and it’s a disaster, TBS already got the money and can simply cut ties with K-1.

Without the generous television money to back their show, K-1 would not be able to pay for big-name talent to appear at their Saitama Super Arena event. Not having stars on the show would mean a show that attracts low ratings and that in turn would seal K-1’s fate with Tokyo Broadcasting, if not Fuji TV as well.

If K-1 has to buy time on Tokyo Broadcasting System, this will in effect be the end of Kazuyoshi Ishii’s grand ‘pipeline strategy’ plan. When PRIDE collapsed, K-1’s big strategy to control the entire fight business in Japan was to control the major broadcast networks. If you wanted to be on a network (think: Yarennoka with former DSE staff), you had to work with K-1 and do business on their own terms. K-1 collected the rights fees from television and let the promoters collect whatever they could for the live gate. It was a dominant position for them to be in. It also kept the competition away from acquiring a substantial television deal (ask Sengoku) and created a strangle hold. However, that strangle hold is only as strong as the ratings that K-1 attracts and their product has gone completely cold with the public. Both their kickboxing and MMA properties have failed to appeal to the Japanese television audience.

By having to do a pay-for-play situation with Tokyo Broadcasting System, K-1’s pipeline plan is killed. K-1 losing television means significantly more than a vacuum being created. It would mean that the fight business would encounter ‘ghost town’ status amongst television executives looking for programming to attract ratings. When the Reconstruction period happened, Rikidozan was the major star on Nippon TV. The next generation was Antonio Inoki and Giant Baba. In the 90s, wrestling declined and older TV executives who used to be big backers of the fight game faded away from supporting the product. Newer executives came into power and fewer of them have the same kind of sentimental thoughts about fight programming that their predecessors had. This lead to New Japan and All Japan airing on network TV at 2 AM in the morning. It led to a decline in interest for house shows and ratings, resulting in a collapse of the pro-wrestling industry. The same thing is happening for K-1 now and the erosion process is very hard to stop, let alone reverse.

If K-1 ended up doing a pay-for-play scenario for their NYE event on Tokyo Broadcasting System, they would be paying for their own corporate funeral — a very expensive one at that. The funeral wouldn’t feature Gilbert Melendez vs. Shinya Aoki II, either.