Thursday, March 29, 2012

More Sports Cable Networks Really Mean...

Before cable ruled the TV landscape, if you wanted to watch a football, baseball, or other professional sport, you turned to broadcast TV.  Cable networks opened up the platform for more sports to be shown.  That new competition enabled teams to pay more for athletes and soon the costs were passed on to higher TV rights fees. Broadcast initially relied on ad sales to pay the  bills but cable networks allowed license fees to add another revenue lift to the bottom line.  And as costs got higher, so did the networks' license fees.  Now these same professional games are moving off broadcast as more and more networks pop up.  Now there are regional sports networks like MSG, YES, Sportsnet and others, and unique professional sports networks like NFL, Redzone, MLB, and NHL.  And don't forget sports on ESPN - 1,2,3, Golf, Versus (now NBC Sports Net), Speedchannel, Fuel, and others.  So more sports on more sports cable networks really mean more that these cable networks will keep raising license fees and these fees will be passed on as higher cable bills to the consumer.

Where once sports was accessible and free, now it costs more and more to watch as different leagues are available on different channels.  Sports programming has spread out to too many channels and costs rise at a quicker pace.  "'The success of all these networks will depend on the quality of their sports rights,' David Joyce, an analyst at Miller Tabak & Co. in New York, said in an interview. 'There’s been a lot of competition for those rights and that’s driven up costs.'”

More networks means more bidding wars for the top programming.  NBC will be aggressive to make its Golf Channel unit more valuable by pushing better events on the channel; the same will happen with its former Versus network, now called NBC Sports.  And Fox is likely to do the same to make their channels more competitive and more expensive.  And to compete, ESPN, with 3 channels to fill, will have to pay more for the sports that they want to obtain or retain.  

To pay the higher costs, ad rates and yes the license fees to cable operators will only rise.  The fights that we see between sports networks and their parent companies and cable operators will become more nasty and the consumer will see dropped channels eventually come back on the lineup and lead to further increases in our monthly cable bill.  

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