Thursday, March 13, 2014

Sports Nets Have Hard Time Getting Carriage

The high costs of sports programming has led to cable operators unwilling to carry their networks.  And since their license fees are among the highest compared to other entertainment networks, cable and satellite operators have found that not carrying these channels hasn't led to subscriber drops while keeping their programming expenses lower.  Time Warner Cable and Dodgers owned SportsNet LA is facing problems getting launched on other cable distributors.  "Armed with information about their customers' viewing habits, other distributors say the data doesn't support paying such a high price for a channel that an overwhelming majority of their subscribers won't watch regularly."

And their network isn't the only one facing these same distribution problems.  "DirecTV, as well as AT&T and other pay-TV providers, also have passed on carrying a new sports channel in Houston. There, too, subscriber outcry and action has been minimal, pay-TV executives say."  College basketball net Pac-12 isn't being carried on DirecTv for the same reasons.

The solution may not be to fans liking.  By charging a per subscriber fee for a network, the costs, though high, are spread out among the entire base.  While a la carte may appear to be an option for carriage, the costs to subscribe by a particular household would be considerably higher.  As an example, a license fee of $4 per month per sub could translate to a consumer buying a la carte as high as $40 to $50 per month, if not higher.  Pricing would obviously depend on the percentage of homes to available homes that subscribed.  And at that level, only rabid fans would be likely to purchase.  Others might wait till later in the season and judging by the success of their team, to decide whether to commit to purchase such an a la carte pacakage. 

And so sports networks are not likely to agree to a la carte terms.  For Dodger fans, they might have to wait for the season to start to see what kind of appeal they bring as well as bring pressure for the cable operator to agree to these higher fees. 

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