Troubles at ESPN and perhaps other cable sports networks

[stever20]

I don't know anything about television right packages but this has to be a concern for those leagues anticipating a huge payday:

ESPN is paying $1.9 billion annually to air "Monday Night Football." That's $800 million more than the next closest competitor. Ourand says people are skeptical there was even another bidder within $500 million of that number.

After overpaying for the NFL, ESPN overpaid for the NBA, tripling its rate. It also doubled its rate for MLB rights.

A former employee said, "It’s been a total mismanagement of rights fees, starting with the NFL renewal ... We overpaid significantly when it did not need to be that way, and it set the template to overpay for MLB and the NBA."

I think NFL and NBA were largely to keep FS1 out of the running. Especially the NBA.

[NJRedman]

Fascinating. I'd actually love to see cable go a la carte. I pay like $100 a month to watch about 5 channels.

A la carte makes sense to everyone but the cable robber barons.

But don't you love having 100 channels of stuff you'd never watch?

No it doesn't actually makes sense to anyone who knows how the business works. Without the bundle most cable channels will disappear. Seriously, 80% if not more would disappear if ala carte was introduced. Just the stations you already pay a ton for will still be there costing a ton. ESPN will still cost a lot of money, FS1 will still cost a lot etc. All those channels that your wife/GF like will be gone. You'll essentially be paying the same amount for just those 5 channels. Also you'd be a fool if you think those people who run those channels would ever just let you cherry pick which ones you get. If you want ESPN youll have to get all the ESPN channels. If you want FS1 you might have to also get FX, FXX, FS2, FX Movies etc. Heck ESPN might make you buy ABC Family as well. Viacom would make you purchase a chunk of it's channels as well. You wont just get Comedy Central, youll also have to pick up MTV, VH1 and all the other crap channels.

You'll never just get to pick the 5 channels you want and pay a small amount for that. Also this idea of moving backwards in terms of TV back to when all we had is 3 channels is silly to me.

[Edrick]

Yes, the cable and satellite companies will disappear. That's what happens to technologies that have been replaced.

It is inevitable that sports programming will become subscription based (like MLB.TV) and/or PPV, as we move into the intermediate future. The day of the 'cable package' is quickly becoming the landline, and will eventually be the horse-and-buggy to streaming content's car.

We already have set top boxes that will be able to stream at 4k. The industry is dead man walking. It just got smacked in the head by Porter's Five Forces, with no hope of improving its lot.

[NJRedman]

Yes, the cable and satellite companies will disappear. That's what happens to technologies that have been replaced.

It is inevitable that sports programming will become subscription based (like MLB.TV) and/or PPV, as we move into the intermediate future. The day of the 'cable package' is quickly becoming the landline, and will eventually be the horse-and-buggy to streaming content's car.

We already have set top boxes that will be able to stream at 4k. The industry is dead man walking. It just got smacked in the head by Porter's Five Forces, with no hope of improving its lot.

Yeah thats not true at all. The TV industry isn't dead, it's far from being dead. Who is paying to make the streaming content? We're going to give up 500 cable channels for what? 6 streaming channels? Where is the money coming from to create content? Thats where your money goes when you pay your cable bill. Thats the money (along with selling AD time) that goes to creating original content.

Yes streaming is the wave of the future but it's current channels going to streaming. You are pretty much going to pay the same amount for less content. Yay you've won! Oh wait you didn't, you used to get more for less money but now you pay the same amount for less content. It's like the big conglomerates always win. Hey but at least you cut your chord right. Oh and the biggest providers of the internet are now cable providers so they are still getting your money. Yeah, you've won alright.

[handdownmandown]

I sit here wondering if Redman works in the TV industry.

[Xudash]

Yes, the cable and satellite companies will disappear. That's what happens to technologies that have been replaced.

It is inevitable that sports programming will become subscription based (like MLB.TV) and/or PPV, as we move into the intermediate future. The day of the 'cable package' is quickly becoming the landline, and will eventually be the horse-and-buggy to streaming content's car.

We already have set top boxes that will be able to stream at 4k. The industry is dead man walking. It just got smacked in the head by Porter's Five Forces, with no hope of improving its lot.

I see the technology evolving the way you see it. What we don't know - yet - is who the players, the lead stears will be as media unfolds through the next couple decades. Your analogy (buggy v. car) is excellent. Technology does evolve and it almost always is disruptive. But the players have to be factored into the mix here. You mentioned landlines and you were spot on to do so, but AT&T, as one example of a potential go-forward player - with a ton of cash, brand awareness and other resources - navigated its way into 21st Century relevancy (so far).

It gets back to what is widely understood: CONTENT IS KING.

[marquette]

Netflix generates some solid content. Orange is the new black is worth a marathon from time to time. I'm intrigued by some of the amazon prime stuff coming out.

[NovaBall]

Streaming is probably the future, but the content providers will likely be the same as the ones now. Not like some new start up streaming station is going to replace the traditional news or sports stations.

And since most people get their internet through their cable package, I don't see regular wall to wire cable going away.

[NJRedman]

I sit here wondering if Redman works in the TV industry.

I do, thats why i know this idea of just cheap TV is never going to happen. All those shows everyone loves costs money to make and the people making them aren't doing it for the love of it. They need to be paid competitive wages.

Everyone thinks that if ala carte comes to pass that all of their channels and shows will be the same and no drop off will occur. It's a fantasy world where people are actively pushing to pay more for less. Streaming will just be turned into what we have now but instead of cable it's through an internet signal. They already started putting commercials in shows on streaming sites.

[Jet915]

Just saw this pop up on my screen today. ESPN is hurting having just fired 300 people.

John Ourand at Sports Business Journal has the best explanation.

He says it comes to down two big problems for ESPN.
1.ESPN is losing subscribers.
2.ESPN is paying an obscene amount of money for sports.

ESPN is losing subscribers because of a critical mistake it made in 2012 when it was negotiating carriage deals with cable companies like Comcast, Cablevision, and Cox.

According to Ourand, ESPN was negotiating for a $6-per-subscriber fee from the cable companies. To secure that high of a fee, ESPN had to be flexible on its "penetration benchmark levels," or the number of homes that cable companies guarantee ESPN will be in.

At the time, ESPN was guaranteed to be in 90% of cable subscribers' homes. To get $6 per subscriber, ESPN lowered that threshold to 80%.

When ESPN lowered the standard, it allowed cable companies to start introducing new cable packages that excluded ESPN. People are signing up for those cable packages, leading to ESPN's losing 8.5 million subscribers over the past four and half years, according to Ourand citing Nielsen estimates.

This is great news for Fox. I cant imagine ESPN overbidding for the Big Ten. Price should be reasonable for their rights.