If you’re a longtime cable subscriber, you’ve probably noticed that your monthly subscription fee has been swelling faster than Charles Barkley’s waistline at a buffet. According to an industry forecast published in 2012, the average household cable bill is on pace to more than double by 2020, up from $86 per month to more than $200 by the end of the decade.
Fees for sports programming have played a significant role in the run-up, and an ongoing legal dispute involving industry bellwether ESPN has offered a peek into just how big. Based on information disclosed earlier this week in Dish Network’s lawsuit against the cable sports behemoth, ESPN is scheduled to receive $8 per subscriber per month by 2020 under the terms of its current deal with Time Warner Cable. That would amount to nearly $10 billion annually in subscription fees if other cable providers are subject to the same pricing model, according to MediaPost’s TVBlog.
Just how valuable is sports programming relative to standard television fare? Starting this year, TWC will be forking over $5.40 per subscriber per month to ESPN, a bump of roughly 7 percent from the 2012 rate of $5.06. For comparison’s sake, in the unlikely event that Fox could command the same rate increase for Fox News, which had the seventh-highest subscription fee in ‘12, the cable news channel would generate $.88 per subscriber per month this year.
From a strategic standpoint, the projections seem to validate dropping all that coin for live sports. For example, ESPN is paying the NFL $1.9 billion per year through 2021 for Monday Night Football. The network has also agreed to a deal for the rights to the college football postseason from 2014 to 2025 valued at a shade under $500 million annually. Those are just two of the network’s pricier contracts, and they sound exceedingly rich until you realize that the Worldwide Leader is about five years away from collecting more than $8 billion in subscription fees alone. That’s before it sells any of the most valuable advertising space in existence.
On the other hand, the explosion in ESPN subscription fees and subsequent growth in costs passed on to consumers crystallize the building tension within the cable industry. Namely, at what point will subscribers who don’t watch sports reach their breaking point? All things being equal, the current lack of robust alternatives to cable make the prospect of subscribers “cutting the cord” in droves seem fairly remote. Shelling out $200 per month for cable has a way of encouraging the emergence of lower-cost options, though.
At what point does the smart play for teams and leagues become seeking a broadcast-heavy strategy, sacrificing short-term dollars to capture the cord-cutter, a la carte, and no-sports-package audience?
I have not paid a cable bill in close to 10 years. Just because the Worldwide Follower of twitter overpays for programming, doesn't mean I have to.
I'm passed the breaking point and no longer pay for service and I love sports in particular and TV in general.
A la carte is not a pancea... Do you think CNN (57 cents/month) is going to allow a sizable cut in their income if more than half of cable subscribers don't pick them in an a la carte world? No way. They would double their monthly fee to make up the difference. Every niche network would do the same.
A la carte would end up being way more expensive for the typical cable subscriber who wants more than a handful of channels.
@Geneseo98 Maybe. But, I watch CNN. I would pay $1/Mo to subscribe. Right now I pay for a 250-channel package to see the 20-odd channels I actually watch. Not a bargain to me.
@MattZemek_CFN thanks, Matt. The a la carte thing is interesting to me, because what we have now is so grossly inefficient
. @BlatantHomerism @MattZemek_CFN there are so many entrenched interests behind current model, esp. since cable co's now own many channels
@cfn_ms @MattZemek_CFN it will eventually change. entertainment is an inherently "a la carte" economic activity. current model is outmoded.
. @BlatantHomerism @MattZemek_CFN it is interesting, but it'd be a radically different business model, and there's little support right now
@MattZemek_CFN @BlatantHomerism It's a semi-annual ritual: cable companies being ass raped by ESPN w/o benefit of a courtesy reacharound.
@MattZemek_CFN The 2012 Olympics tape delaying events taught me how to watch stuff illegally for free. Oops. Guess who doesnt pay 4 cable.
Eventually what I see happening is Cable Companies getting regulated and capped at $50-$100 per household that would put an end to monopolies like Concrap and others!
At some point the bubble will burst and that will hurt ESPN and other places. It just sucks that because sports is a different animal we won't see more online offerings of live events so people can avoid giving an arm and a leg to ESPN.
@BlatantHomerism @awfulannouncing How much higher can they go? I'm already paying $200 a month with Comcast. Jesus Christ