Posts Tagged ‘ESPN’
Nothing Lasts Forever
- Published on Friday, 09 December 2011 12:31
- Pete Putman
- 0 Comments
Earlier this week at an investor conference sponsored by UBS in New York City, the chief executive of Liberty Media decried the rising cost of sports programming on pay television. And he may have inadvertently lifted the cover on Pandora’s Box by doing so.
Greg Maffei was quoted in the Wall Street Journal as saying that the average $4.69 per household subscription fee for ESPN and all of its affiliated networks amounted to “a tax on every American household” and asked, “what happens to the bundle of cable if you keep pushing [the price] higher and higher?”
He’s not alone in wondering if Americans are reaching the breaking point with ever-escalating costs of pay television. There is no question that a small segment of the population is disconnecting from pay TV services and opting instead to keep broadband connections only. This movement is 100% driven by cost – the average tab for a digital TV package of channels, voice over IP, and broadband now exceeds $150 on many cable systems. That’s $1,800 a year!
To put things in perspective, the average subscription (retransmission) fee for cable networks is about what it costs you to park for an hour at a meter – 26 cents.
Viacom’s CEO Philippe Dauman also put the spotlight directly on ESPN for driving pay TV costs through the roof. He stated that ESPN by itself in many systems costs twice as much as of all their own networks combined.
The problem with rising costs for ESPN is that it usually comes as part of a bundle. Yet, many American viewers have little or no interest in sports programming, at least not to the extent that they need a 24/7 ‘fix’ of scores, talk shows, and specials.
Those rising charges are driven mostly by deals that ESPN has negotiated directly with major sports leagues. For example, the Bristol, CT-based network has also managed to get exclusive broadcast rights to the major college football bowl games (the Bowl Championship Series), taking them away from their traditional homes on free broadcast networks.
More than one pay TV system operator has speculated out loud that sports channels could soon migrate to premium tiers instead of being bundled with basic or extended digital channel packages. That would in turn allow pay TV MSOs to lower prices on TV channel packages, which are increasingly seen by futurists as ‘obsolete’ with the increased penetration of high-speed Internet access, the use of DVRs, and the growth in streaming services like Netflix.
Until the past year or so, cable and satellite TV executives were mum on the issue of ever-escalating monthly service charges. Now, one of the culprits has been called out, and it will be interesting to see if MSOs will make noise about moving ESPN and other costly sports networks like Fox to add-on tiers where HBO and Showtime currently reside.
In the meantime, you can still watch plenty of sports for free over the air, including (but not limited to) NFL games on CBS, Fox, and NBC, major league baseball on Fox and local stations, the NBA finals on ABC, college football on CBS, NBC, and ABC, golf and tennis on all the major channels, the NCAA basketball men’s and women’s tournaments and selected games on CBS and ABC, and of course next year’s Olympics on NBC.
Enjoy them while you still can…
Are Pro Sports Leagues Killing The Golden Goose?
- Published on Thursday, 08 September 2011 17:50
- Pete Putman
- 0 Comments
An article in today’s Los Angeles Times asks if the TV broadcast rights fees paid to sports leagues are reaching the breaking point for many subscribers. Currently; CBS, Fox, and ESPN are forking over $3.1 billion a year to broadcast 16 games, preseason, and playoffs, plus the Super Bowl. And those contracts will be up for renegotiation in two years.
For those of you who don’t know, the most expensive pay TV channel in terms of per-viewer fees is ESPN, which commands nearly $5 per subscriber in some markets (about $4 per sub here in the Philadelphia market). The pile of cash generated by those per-subscriber fees is what has allowed ESPN to cover last year’s World Cup in 3D, not to mention lock up the exclusive rights to the Bowl Championship Series (BCS) college football games.
It also allows ESPN to bid aggressively against conventional TV networks to secure rights to the top sporting events. Recently, ESPN snatched away the TV rights to the Wimbledon tennis tournament from NBC, which had broadcast it for the past 43 years.
“OK, what do those two things have to do with each other?” you’re thinking right now. Simple: As ESPN takes in more money from subscribers, it has more to throw on the table for future rights negotiations, ensuring that more and more HDTV coverage of professional sports will migrate to pay channels from free networks.
And Comcast is getting into the act with its Versus channel, which now carries NHL games and is expected to be a major bidder in the future for TV coverage of pro sports. Not only that, each of the major sports leagues now has its own TV channel (MLB, the NFL Network, NBA TV), and a select number of games are available on each channel for an additional per-subscriber fee.
Even colleges are joining the fun, with the University of Texas, the Big 12, the Pac 10, and the Big Ten all operating or getting ready to launch TV channels.
A few years ago, I predicted to my old college roommate that eventually, ALL sports would wind up on pay TV channels, whether they be within the ESPN family, Versus, or one of the league TV channels. It looks now like that day isn’t too far off.
The Times article quoted representatives of cable and satellite TV networks as saying that we’ve reached the breaking point with regards to per-subscriber charges, and that subscribers are dumping cable and satellite packages accordingly to cut costs.
Another reason that TV broadcast rights have gotten so expensive is because ratings for just about everything else on TV have diminished. It’s a classic application of the law of diminishing returns: As the number of pay TV channels increases, each program attracts smaller audiences.
On the other hand, sporting events draw big numbers, particularly NFL games, each of which drew an average of 18 million viewers last season, mostly men ages 18 to 34. And advertisers will pay plenty to reach those viewers. (Think beer and car ads.)
Representatives of Mediacom (a small cable TV system operator) and DirecTV both believe that sports programming should be carried on a separate, premium tier. If viewers want to ante up the big bucks to see the Longhorns play the Sooners, or UCLA and USC duke it out, then let them. But don’t force other subscribers to foot the bill, too.
The various sports entities don’t want to discuss such an approach, as it would seriously dilute the number of subscribers and put a dent in revenue. Yet, we are seeing increasing evidence that average viewers think pay TV is just too darn expensive and are either dropping channel packages or ‘cutting the cord’ by moving to Internet video and terrestrial HDTV to save money.
The irony is that many of the collegiate bowl games will involve publicly-funded universities, and the taxpayers who subsidize those universities won’t be able to watch unless they pay extra for the privilege.
Keep that in mind as you enjoy your Sunday and Monday NFL games in HD this fall. You may not be able to do that for too many more years.