(10-31-2019 12:13 AM)BatonRougeEscapee Wrote: (10-30-2019 09:13 PM)Frank the Tank Wrote: I think ESPN’s $7 per month subscriber fee is a pretty good indicator of where its price point would be: it’s going to have to be several multiples of that number to be financially viable. Once again, the types of shows that are on Netflix or Amazon Prime were generally the fodder that would have otherwise been on $1 per month or less basic cable channels. We’re talking about many times more that for any sports channel, particularly ESPN and any regional sports network with a critical mass of pro sports. Plus, you’re taking collecting those fees *automatically* from 80 to 100 million people under the cable bundle, whereas you’re going to have a lot fewer subscribers in an a la carte world with a whole lot more *active* costs to obtain and retain subscribers. Anyone that thinks that true premium sports (top NFL, NBA, MLB and P5 games) that ESPN has a large hold over is going to get the $5 per month ESPN+ treatment or even the $15 per month HBO Now treatment are going to be sorely mistaken.
If anyone here actually worked at Disney and saw both how much ESPN makes off of the cable bundle combined with the costs of obtaining live rights, I believe that we’d quickly realize, “Oh crap - we could *never* sell ESPN a la carte.” ESPN is paying over $100 million PER GAME for Monday Night Football - that’s simply not getting covered by a low priced a la carte service. I don’t disagree that most people wouldn’t want to pay more than $10 per month a la carte for ESPN, which means that ESPN simply won’t ever be offered a la carte. Disney won’t provide that choice in the first place no matter how much people ask for it.
Call it the sports fee bubble. It's going to burst like everything else.
You can't really think the Big 10 sports package is really worth what they get paid (well you probably can). It's not going to keep going up.
I'd rather pay more for what I want than give money to people I don't want to get it (cough, Big 10). That's what will happen once the bubble bursts. Reverse realignment.
This is a common statement... but people have been talking about the "sports fee bubble" since the 1980s and they have gone nowhere but up. The fact is that sports are actually more valuable than ever in today's streaming era.
So, yes, I absolutely believe the Big Ten sports package is worth what they get paid. As much as you'd like to think that these things are irrational, both ESPN and Fox (with a sprinkle of CBS for basketball) aren't giving away nearly half a billion dollars away per year to the Big Ten as an act of charity... and remember that they signed this latest contract with the Big Ten with cable subscribers dropping already in full swing as a known problem.
When you look at the ratings and demographics that the Big Ten continues to receive on weekly basis, they're actually underpaid when you compare their rights fees to the NBA and MLB. This isn't just the Big Ten - I clearly believe that your SEC sports package is worth *more* than what they get paid and is totally undervalued due to when they signed their contracts. Power Five college football games are still actually a great value in terms of ROI for the networks compared to their pro sports counterparts.
The NFL has the highest rated programs on all of television (both over-the-air and cable) every single week. The NBA playoffs win the age 18-49 ratings demo (and typically the overall ratings) virtually every single night from April through June. College football has become the second most watched sport after the NFL.
Just look at this past week: the top 11 highest-rated shows on all of network TV were ALL sporting events and programs (including NFL, MLB and college football games):
https://tvbythenumbers.zap2it.com/weekly...1-27-2019/
Note that this is only for prime time. The college football Saturday afternoon and NFL Sunday afternoon time slots often rate even higher than their prime time counterparts.
On cable this past week, the top 5 highest-rated shows and 13 out of the top 25 were all sporting events and programs (including the NFL, NBA and college football):
https://tvbythenumbers.zap2it.com/weekly...1-27-2019/
3 of the other top 25 cable shows were WWE events, which you may or may not loop into the sports category.
Sporting events have three inherent advantages over any other type of programming on television that provide them long-term value: they are (1) exclusive, (2) inelastic and specific in terms of demand and, most importantly, (3) LIVE.
Point #1 regarding exclusivity is critical in this streaming era. You can watch most shows on TV on multiple platforms owned by different parties (whether on linear TV, streaming or downloads) at any given time. That's simply not the case for sports. If you want this week's LSU game, then you *have* to go to ESPN or CBS (or whichever specific network has rights to that game) and even if you technically watch it on a different platform (e.g. streaming on your mobile device instead of watching on your linear TV), that platform is still controlled by the applicable rights holder.
Point #2 regarding inelastic and specific demand means that the LSU fan is NOT going to be placated with some other random SEC or other college football game as a substitute. The fact that there's an over-the-air SEC game of the week on CBS or a Big Ten game on ABC or Fox for free is irrelevant to that fan if LSU isn't playing in that game. This means that the fan is going to pay for whatever channels that will provide those LSU games, whether they personally like ESPN's commentators or politics or not.
Meanwhile, even the most popular shows on TV eventually come to an end. Seinfeld, Friends, The Office, Game of Thrones, Big Bang Theory... they all eventually end. In contrast, LSU football is the TV program that NEVER gets cancelled and its fan base will keep coming back year-after-year. No one would sign a 10-year contract for even the most popular shows on TV because interest always inevitably wanes. Yet, 10-year contracts get signed by sports leagues all of the time because it's a fairly good bet that those fans will still be there 10 years from now.
Finally, on point #3, it goes without saying that sporting events are LIVE. As noted earlier, other types of shows are watched on many different types of platforms and/or time-shifted on DVRs. This means that viewers increasingly never watch commercials for those shows, which is still the bread-and-butter revenue generator for TV networks. Sports don't have that issue - they are watched live by the vast majority of viewers, which means that they are generally the only real group of people that still actually watch commercials. This increases the value of sports programming since TV networks can continue charging higher ad rates in a way that they can't for other TV programs anymore.
The upshot is that networks will pay a premium for (1) exclusivity, (2) long-term predictability and stability in terms of viewers and (3) live events where viewers will actually watch commercials. When you put all of those three things together, networks will pay a super-premium for them. What's the only type of program on television that consistently combines all three components above? Sports.
Now, does it mean that the delivery method of sports will always be the same? Certainly not. Maybe ESPN will have to shift its model more drastically than what I believe will be necessary. However, anyone that thinks that there's some type of sports rights bubble isn't looking at the context of the entire TV industry and the unique advantages of sports programs compared to everything else. Sports are the most valuable types of programs on TV... and it's not even close. The gap between the value of sports versus other types of programming is actually widening more and more every single year. There is no sports rights bubble and that's great for all sports leagues (both pro and college).