Bears fans might not have been too eager to turn on the TV yesterday to watch the NFL game against the Detroit Lions from Soldier Field, but realizing their disgruntlement is a temporary condition they ought to know about an excellent article that examines the future of sports on television.
The current edition of Sports Illustrated (dated December 22) has a story by L. Jon Wertheim with a title of, “Bundle of Questions” and a subtitle of, “Sports has long been the essential ingredient in the cable-driven media market. But as more viewers cut the cord, what will happen to sports?”
Wertheim says the average subscriber watches only 17 of 189 available channels, but they’re still paying for others because of the bundling of cable TV packages:
Don’t have kids? Too bad, you’re still paying for Nickelodeon. You’re a socialist? Sorry, you’re buying a slate of financial networks.
The bundle concept flies in the face of current media trends that allow people to have individual songs, movies, etc., delivered to personal devices. According to the story, the future is to: “consume media a la carte, picking and choosing and paying for only the programming we desire.”
ESPN, the sports giant, is sitting in a good spot for the future because except for the Olympics, the NHL, and English Premier League soccer (all NBC properties) it has contractual agreements for live games with every other imaginable sport. Wertheim explains ESPN’s advantages:
Today, cable viewers pay about four times as much for ESPN as for any other non-premium channel [like HBO or Showtime], roughly $6 per month thanks to the network’s near monopoly position.
Before selling a single commercial unit, the network earns around $7 billion in annual subscriber fees.
By the way, college administrators harbor a love-hate relationship with the “Worldwide Leader in Sports.” They are grateful for the income and exposure but despise that the network is terribly inconvient to live football crowds by often forcing Saturday kickoffs at 11:00 a.m., especially in the Central Time Zone.
Still, how many consumers would voluntarily pay for ESPN [if sold separately from bundled cable]?
A consumer survey showed only one-third would drop their cable carrier if it didn’t offer ESPN. Sounds good for ESPN until the converse shows that two-thirds could care less. With 67 fewer million homes, ad revenue would be lost. But, not so fast, my friend. ESPN enjoys enormous loyalty from advertisers’ most desirable audience: males aged 18-49. The guesstimated solution from industry insiders for a stand-alone ESPN would be a monthly fee of $30 per cable subscriber, and all feel ESPN easily could demand such an a la carte fee.
So what sports entities might lose in cable’s nervous future? Regional sports networks like Fox Sports Arizona, Root Sports Pittsburgh, and CNS Houston can thrive now at a $2 or $3 charge to a cable bundle. But, the vast majority would likely suffer because, in the case of Fox Sports Arizona, live game broadcasts plus pre- and post-game analysis shows of the Diamondbacks, Suns, and Coyotes still can’t come close to filling 24 hours of a broadcast day. Their live-game ratings rarely crack 100,000 viewers, so experts believe only a small percentage of subscribers would pay voluntarily.
WGN, Chicago’s super-station, is in a more solid 24-hour position. It maintains news broadcasts and airs popular syndicated shows when the Cubs, White Sox, Blackhawks, and Bulls aren’t on the air.
Another Midwest bell-weather, the Big Ten Network, might be in trouble:
It will be interesting to see how the unbundling of cable will affect college-conferences networks — and, in turn, college sports. For instance, each eligible Big Ten school will reportedly make $30.9 million this year, thanks mostly to the Big Ten Network, which is in 60 million households nationally…Yet based on ratings [Think about the meager interest in, say, Indiana vs. Maryland football.], only a small fraction of cable subscribers would pay to order the network. If conference networks can no longer rely on bundling, they will struggle to replace that piece of the revenue pie, which will have a huge impact on athletic department budgets.
The SI story covers much more, so we encourage Bears fans to stop crying into their Jay Cutler-autographed beer mugs and read this story. It will affect everyone who watches sports.
In the meantime, we’ll stay on it like a rottweiller on a pork chop.