Thursday, December 15, 2011

Content is King Especially For Sports Programming

Attention NFL Football fans, their TV deal has been renewed and pro football will remain on "free" television. "The broadcast networks will pay a total of nearly $28 billion in fees over nine years under the new contracts, which take effect after the NFL's 2013 season." Oh did I say free, I doubt it because ultimately those fees will be paid by a rise in cable subscription pricing. Broadcast networks will seek higher retransmission deals for carriage and those fees will be paid by increases in our basic cable bills. Advertising revenue will also rise as networks will demand higher fees for each :30 spot. And companies that pay higher fees will eventually price higher their goods and services to the consumer. It is the trickle down theory hard at work.

Occasionally operators push back on cable license fees but ultimately find agreement at some higher amount. Today that fight is occurring between Time Warner Cable and MSG Networks; their deal expires at the end of the year unless a renewal deal is reached. The likely scenario will be that no deal gets done at midnight of December 31 and the network is dropped. Other networks, print, and radio will blare messages from each side blaming the other for loss of programming. Fans of the network holler and ultimately some weeks or maybe months later, a deal is finally reached and the network is back on the air. It is then quickly forgotten until the next cable bill increase arrives in the mail.

Ultimately content is king and sports especially remains high on the list. How price elastic is this model remains to be seen. It may simply cause additional cord cutting by those no longer able or willing to pay for what they don't want to watch.

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