Truck Vendors Remain in High Gear: CEO Roundtable, Part II

To Read CEO Roundtable, Part I, CLICK HERE.

CE Support
Nonetheless, consumer-electronics companies looking to sell 3D sets — notably, Sony, Panasonic, and LG — have kept 3D sports production alive during its infancy by sponsoring 3D networks and 3D one-off events. This has allowed 3D remote production to mature under the supervision of vendors NEP (which has two 3D units dedicated to ESPN 3D and n3D) and All Mobile Video (Epic is used primarily for entertainment shows).

“We are extremely happy about the relationship we have with ESPN and DIRECTV in supporting their 3D efforts and definitely believe there is a future there,” says NEP Supershooters President Mike Fernander. “Look what happened with ESPN carving out 3D as part of the Monday Night Football deal. I think that is an indication that people see this as a long-term market. Will it look exactly like it does today? Probably not, but I think there definitely is a future for it.”

Work Stoppages Mean New Challenges
Network and mobile vendors alike narrowly avoided a potentially disastrous scenario when the NFL owners and players finally inked a new labor agreement in July. Unfortunately, the same cannot be said of the NBA, which has already lost a significant chunk of the season to a prolonged lockout.

While every truck company does its best to plan for work stoppages, each has its own strategy. Mobile TV Group, for example, allocates a small portion of the revenue from every show to a “rainy-day fund.” With cash reserves on hand, MTVG has pledged to its employees that there will be no layoffs as a result of the NBA lockout.

“I realize that work stoppages hurt everyone, but there are few other industries that are hit as hard [by a lockout] as the mobile-production industry,” says Garvin. “We have payments on our trucks, and those payments don’t stop just because we just lost a bunch of NBA or NFL dates. We still have to make those payments every month.”

Game Creek and NEP, among others, do their best to rebook trucks on alternative events, but, in the end, there is no way to make up for 100% of the revenue lost.

“After looking at the [2004-05 NHL lockout] and initially thinking it was going to be absolutely devastating, clients ended up finding alternative programming to fill their airtime,” says Sullivan. “Was it as lucrative as doing a full NHL slate? No. And that’s something that we have to expect. But I believe that, if there is a long-term NBA work stoppage, there will be alternative programming that will prevent us from just getting zero revenue out of the whole situation.”

The biggest concern for many companies during a work stoppage is the impact that a major influx of available trucks will have on the market’s supply and demand dynamics.

“The loss of NBA dates doesn’t hurt us much because we don’t do a whole lot,” says F&F Productions founder/CEO George Orgera. “What is going to hurt us is that there are going to be a lot of extra trucks around looking for work and competing for those middle-of-the-week one-offs that are our gravy business.”

The F Words: Fuel Prices and Financing
Among the biggest concerns for several mobile-production companies over the past three years has been an inability to obtain financing to build new trucks and the chaotic price fluctuation of diesel fuel.

The remote-production industry was hit especially hard by the recession of the late 2000s. Companies suddenly found themselves unable to raise funds to build new trucks and, often, to pay for the trucks already on the road. Since then, the truck-financing landscape has leveled off but has yet to return to the glory days of the mid 2000s.

“It’s not as easy as it was in 2007, but it’s definitely getting better,” says Corplex President Scott West. “For our new truck, Chromium [rolled out in September], it took a lot longer to put the dollars together in order to do it. You’ve seen more people building. It’s not crazy building, but they are building. That is up from basically no building in 2009.”

With banks and private financiers taking a far more conservative approach to the industry, smaller, younger truck companies face major roadblocks in their efforts to make the HD leap.

“Smaller companies are now having troubles with financing,” says Farrell. “The same deals that financiers made available before are no longer out there. They want guarantees and do not want to build a truck on [speculation]. That is definitely hindering the rollout of new HD units and the overall transition from SD to HD. We have a couple companies who are trying to make the move to HD, but it’s not that easy.”

Once the new trucks hit the road, it is more expensive than ever to transport them from venue to venue. Just like the consumers who watch the sports they produce, truck companies have been hit hard at the pump. Although the cost of fuel has leveled off slightly in recent months, the threat of a sudden jump continues to plague mobile-production companies, which often face hundreds of miles between events.

“The [cost of fuel] is key,” says West. “We are trying to be smarter about what jobs we take and how we take them. We don’t typically take a job out west [Corplex is based in Lake Bluff, IL] unless we’re contracted or we can put enough shows together to make it worthwhile.  So, yes, it’s a factor but not nearly as much as it was at its peak a few years ago.”

The Bottom Line Is Up
Even with fluctuating fuel costs, a conservative financing landscape, and tumultuous labor situations, the mobile-production industry is in far better shape than it was three years ago. With ratings, ad revenue, and rights investments reaching new heights, major networks and RSNs are more willing than ever to spend on remote-production resources, opening the door for mobile-production companies to boost revenue and continue to expand and upgrade their fleets.

“I’m not sure about the [immediate future] of the overall economy, but I think sporting events are something that people are always going to want to watch,” says West. “The demand in our industry is going to be strong for quite a while, so I’m very optimistic about the next few years.”

Additional reporting by Brandon Costa