Friday, July 26, 2013

More Sports Networks, More Fees, More Problems

While Time Warner Cable is balking at the fee increase proposed by CBS, the real worry may be the rise of new sports networks and the associated fees that eventually get passed on to the consumer.  In today's Wall Street Journal, they describe the race to license sporting events and compete head to head with the leader ESPN.  Now we have Fox Sports 1, NBC Sports Network (formerly Versus), and the CBS Sports Network, along we each sports' own network including MLB and NFL. 

For original programming, Fox Sports is developing series that compete head to head with ESPN's Sportscenter.  "The 38-year-old (Jay) Mr. Onrait said his show, "Fox Sports Live" is striving for a more lighthearted approach than SportsCenter, while still tackling hard news."  NBC Sports, on the other hand, is busy licensing live events.  "NBC recently acquired the rights to English Premier League soccer in a three-year $250 million deal, and this week it announced its cable and broadcast networks will televise Nascar races alongside Fox beginning in 2015, taking over those rights from ESPN."  With Fox, NBC, and CBS competing for content, the increased demand will only lead to higher pricing to outbid the competition.  And those higher fees will be paid for through higher subscription fees.

According to the WSJ, ESPN license fees are more than $5 per subscriber per month.  The next highest is NBC at $0.33.  Once NBC, Fox, and CBS bring more programming and viewers to their channels, their license rate will no doubt get pushed higher too.  They can only salivate at the possibility of achieving a $5 per sub fee from cable operators.  Of course, those fees are direct costs to the cable operators.  They no doubt make sure to add their own reseller income margin to the consumer.  So yes, without sports in a cable line-up, fees to consumers can drop significantly. 

Now I am a big sports fan and would hate to see sport networks dropped from cable.  But the high costs of sports extend far beyond TV to the tickets to the game.  Why are seats in ballparks empty; families can't afford to go as often if at all.  Kids have found alternative interests including online gaming.  And it is the loss of the next generation of sports fans that will ultimately kick sports to the curb.  Maybe not now, but it may just be a generation away.