"The Sports Cable Bubble"

July 14, 2013 at 2:51p    by Johnny Ginter    
15 Comments

Relevant bit about the BTN:

Take the Big Ten, which recently added sports non-powerhouses Rutgers and Maryland. Why? To broaden the conference's geographic sports tax base. The Big Ten Network currently reaches a reported 53 million pay television subscribers and charges a monthly affiliate fee that ranges from $0.15 for subscribers outside its core markets to $0.80 for subscribers inside those markets. As Pete Thamel of Sports Illustrated explains, welcoming Rutgers and Maryland means potentially welcoming an estimated 15 million additional pay television households in the New York, Philadelphia, Baltimore and Washington, D.C., markets, many of which would be considered "core." If the network can get on to basic cable in those same markets, the conference could end up pocketing as much as an additional $200 million annually. Even if far less than 15 million cable and satellite viewers ever bother to watch a Rutgers-Maryland football game.

A la carte cable subscriptions aren't going to happen anytime soon, if ever. But it will be very interesting to see what happens when cable providers start offering packages that give subscribers more flexibility than they currently enjoy. As the article points out, 65% of ESPN's profits come directly from cable subscriptions, which in an age of internet TV and so on, may not be sustainable long term.

With that said, given the live nature of sports programming and the fact that ESPN already implements things like ESPN3 to counteract this, it may be up to the consumers to take the initiative and call for any real change.


15 Comments

Comments

AndyVance's picture

Basic cable television is a fascinating business model to study anyway, let alone when viewed through the lens of big-time college sports. The interest in collegiate football and basketball doesn't appear to be waning, and the trend of fewer butts in stadiums likely portends sustained television viewership in the long run. The impact of internet viewership, however, appears to be something of a wildcard that I don't know anyone can claim to accurately quantify or predict at this point.

yrro's picture

ESPN and BTN would literally be the *only* reason I would buy cable. So I don't. I am willing to give them money directly, though, if they will ever let me. In the mean time I can live with supporting my local sports bars.

Nick's picture

Yeah I don't understand why you can't stream any tv channel live on the internet by now it will happen soon though. 

yrro's picture

It really kind of amazes me that Time Warner and Comcast have that big of a pull on ESPN, NBC, and BTN.

harleymanjax's picture

I'm just happy I get BTN here in Florida on UVERSE!

"Because I couldn't go for 3"

sharks's picture

Cheapest Dish package with BTN costs $65.  With Netflix, we really don't watch much regular television.  Turns out my dad has BTN through his DirecTV plan.  Turns out you can stream BTN to go through a HDTV with a smartphone and a $7 adapter.  Turns out I'll never pay Dish more than the $20 I'm paying now for the basic tier because I found a way around them.

The postgame show is brought to you by... Christ, I can't find it. The hell with it...

Orlando Pancakes's picture

Ball four.....ball eight....low and Vaughn has walked the bases loaded on twelve straight pitches. Geez, how can guys lay off pitches that close?

DJRoss926's picture

Apple and Time Warner Cable are nearing a deal that would bring new channels to the computer maker's set-top box, Apple TV, for subscribers of the cable television service, Bloomberg reported Tuesday citing people with knowledge of the talks.

A deal would bring the set-top box a significant influx of channels, and its first flood of live ones.

Could be interesting to see how the deal between Apple and Time Warner shakes out. If live TV does come to Apple TV, I know I'd strongly consider getting rid of cable
(Via)

Michibuck's picture

I'm getting ready to buy a big screen HDTV, and find these developments very interesting.

Deshaun's picture

At first, the concept of a la carte channel subscriptions sounded great. Take that list linked in the article ($5.06/month for ESPN, $0.67 for ESPN2, $0.80 for BTN, etc) outlining what the cable/satellite companies pay the networks and and simply add up the costs for the channels I want. How great would it be to spend around $15/month for the channels I watch without the overhead of channels like QVC, Boomerang, and Fuel?

Then I realized these channels would simply set prices to match demand and within a year consumers would be paying $15+/month for ESPN. Also, whereas games are now placed on ABC, ESPN, ESPN2, ESPNU, etc based on a tiered approach of marketability, companies like Disney would likely scatter games of the most marketable teams (Ohio St, Texas, Florida, Oklahoma, etc) among its holdings to entice consumers to buy every one of their networks. In the past 5 years, Ohio St has played on ABC 34 times, BTN 20 times, ESPN 17 times, ESPN2 four times, and Fox twice. Under the a la carte system, networks would be incentivized to make those numbers far more balanced, with a few games on ESPNU and ESPN Classic thrown in as well.

Sure, we would not have to pay for the channels we would never watch (such as E! and TLC for me), which would feel good in principle. But paying $20ish for ESPN, $8 for ESPN2, $7 for BTN, $7 for the History Channel, $6 for AMC, etc. could quickly exceed what I currently pay to have access to all the channels I want.

AndyVance's picture

This is absolutely the right way of thinking about a la carte - you have to be careful what you wish for, because you might just get it.

hail2victors9's picture

A la carte would just be one programming option, though, right?  Consumers would still have bundling options, I'd assume.  I wouldn't be surprised to see the companies make it a no brainer to chose a package over a la carte, sooner rather than later.

Those who stay will be CHAMPIONS!

~Bo Schembechler

Deshaun's picture

That is actually the direction a lot of people consider more likely. By bundling a few channels, the companies can charge the higher dollar value to match consumer demand, while pushing less desirable channels to the consumer base. Going back to the ESPN example, Disney could offer a package of ESPN, ESPNU and ESPNews for $27/month. But, if you want ESPN2 for the upcoming Ohio St game, Disney may require you to buy the package of ESPN, ESPNU, SEC ESPN, ESPNews, ESPN Classic, the Longhorn Network, and ESPN2 for $45/month, on a 12 month contract.

The goal is to attach more at-risk properties to items of value with high demand. The Big Ten could potentially have been positioning itself for exactly such an environment with its recent addition of Rutgers. This was obviously covered in detail months ago, so here is the brief recap of the hypothesis: Maryland delivers BTN on expanded basic cable/satellite packages in DC and Baltimore. Rutgers does not, in and of itself, have the demand to deliver NYC. News Corp (who owns half of BTN) buys the Yankees' YES network to bundle with BTN in NYC.

If the a la carte bundle concept comes to pass, we could see a bundle with BTN, YES, Fox Sports 1, FX, MSG, and possibly a Fox News type channel. A bundle like that could do very well in New York, creating the desired windfall for the Big Ten.

steensn's picture

The Internet is going to take over media at some point. Cable can only survive if everyone pays for a set of stations that a mixed bag of people want. As someone stated above, going to an ala-cart will only raise the cost of the stations you want eventually costing you more than what it cost today. Reason being everyone else is chipping in to pay for the shows you want to watch, even if they don't watch them.
At some point, the internet will play a bigger role. I know that I don't even watch regular TV anymore unless it is a sporting event. I have Netflix and Hulu, which is significantly less than the cost of cable TV will basically all the same shows, movies, and more on demand. I'll gladly pay $5 to watch an HD steaming OSU game each Saturday if given the chance.

ScarletGray43157's picture

I'd throw down $5 each week for that as well.  

In old Ohio there's a team that's known throughout the land...