At this point, it’s a hoary old saw that sports networks and broadcasts of live sporting events are one of the main reasons your pay-TV bills continue to rise. We all kind of “know” that sports are expensive, and that the costs come through to everyone else… but as millions of dollars in charges and fees become billions, are consumers and viewers going to stick around?
That’s what the Los Angeles Times is asking today, after a look at the best-available numbers.
Since 2005 — so, in just over a decade — the amount of available sports programming across broadcast and cable networks has gone up 160%, to more than 127,000 hours per year, the L.A. Times reports. And people are watching what’s on offer: we collectively spent 31 billion hours watching sports on TV last year, a 40% increase over the last decade.
Every single one of those hours is lucrative for the teams and leagues that play: the NFL, for example, gets paid about $7.5 billion per year from media companies, including Disney (owner of ESPN), DirecTV, and broadcast networks NBC, CBS, and Fox.
Compare that to 20 years ago and the growth (even accounting for inflation) is astronomical. In 1993, Fox bid $395 million a year to get Sunday afternoon football games on their network. In 2016 dollars that’s more like $660 million — but this year, Fox is paying $1.1 billion for football. CBS, the Times says, is paying $1.4 billion, and NBC another $1.2 billion.
And that’s where it starts to come down onto consumers — all of us. Because in order to pay those bills and generate growing profits, the networks need to pass through their costs.
Not only does the bundle price you pay on your bill go up, but so too do $10 or $20 worth of ancillary line-items, like the “broadcast TV fee” and “regional sports fee” tens of millions of subscribers get on their bills.
Using data from analyst firms SNL Kagan and S&P Global, the Times estimates that in 2013, the existence of sports cost most pay-TV subscribers somewhere around $12 or $13 per month — and that going into 2017, that average is going to be more than $18 per month. In some regions that average is even higher, around $20 or $25, because of regional sports channels’ costs.
In one sense it’s not news; ESPN has been the most expensive part of your cable bill for years, for example, whether or not you watch it.
So why does anyone still put up with it? “Teams have rabid fan bases, and they have generations of loyal fans,” a Tennis Channel exec told the Times. “These are all the ingredients that make for hit TV.”
But the tipping point where the wallet wins may be coming, the Times surmises. Cord-cutting is indeed a real trend: pay-TV subscribership peaked in 2009, and has been on a slow but accelerating decline in the years since. Since 2010, cable staples like ESPN have lost more than 8 million subscribers.
So what’s an industry that wants to make bank to do, when faced with a public that has cottoned on to the whole “charge everyone lots money all the time” model and wants no part of it? Well, they’ll go where everyone else is, the Times says: digital. CBS just got a big deal to be allowed to stream their NFL games on their $6 All Access online service. Amazon is hunting for sports to put on Prime streaming. And the rumor mill says everyone from ESPN to Major League Baseball is chasing new streaming deals to deliver content directly to consumers without a cable company in the middle.
And when you look at it that way, it makes perfect sense why all the pay-TV companies already are or want to be content companies too.
by Kate Cox via Consumerist
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