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Sports is perhaps the most critical issue in cable pricing. A large percentage of cable subscription costs are due to the exorbitant cost of licensing sports ne

Sports is perhaps the most critical issue in cable pricing. A large percentage of cable subscription costs are due to the exorbitant cost of licensing sports networks like ESPN, who, in turn, pay a fortune to license leagues and teams. Basically, a lot of non-sports fans have to pay a fortune for sports, whether they watch sports or not. Sports fans have to pay more and more for sports, as local teams (and regional sports networks) demand billions for their broadcasting rights. On the whole, live sports is probably the one category keeping cable in business. But it's getting so expensive as to threaten the whole model. Shameless plug, but I wrote about this topic recently for Slate. My prediction is that certain providers (cable or otherwise) will try to unbundle sports from non-sports in order to offer extremely low-priced service to non-sports fans. Meanwhile, cable networks and providers will cater more and more of their business to sports fans. http://www.slate.com/articles/business/the_bet/2014/03/local_sports_without_cable_how_standoffs_between_cable_companies_and_sports.html http://www.slate.com/articles/business/the_bet/2014/03/local... Some other good write-ups on this topic: https://medium.com/off-the-field/1d7043ed024b https://medium.com/off-the-field/1d7043ed024b http://priceonomics.com/the-couch-potato-subsidy/ http://priceonomics.com/the-couch-potato-subsidy/

valleyer 13y ago
ESPN costs ~$5/subscriber/mo. per that article, and it's, as you mention, a huge outlier. Cable bundles often cost in the $80 to $100 range. I'm no fan of bundles, but I think the cable companies themselves (and specifically their lack of competition) are bigger factors in their prices than channels' subscriber fees. P.S.: The medium article says, "Hockey, NASCAR, and soccer are the only major sports that ESPN doesn’t own". ESPN doesn't "own" the NFL (most of which is on CBS and Fox) or Major League Baseball (most of which is on regional sports channels, the majority of those in turn owned [I think] by Comcast and Fox). A small point maybe, but it hurts overall credibility.
- jonnathanson 13y ago
  The Medium article is fairly accurate on the whole, with maybe a few minor inaccuracies here and there. Its word choice in "own" is unfortunate in that circumstance, but I don't believe the author actually intended to suggest that ESPN "owns" the NFL, the MLB, etc. Reading the rest of the article, I get the general impression that he knows what he's talking about. At least on a high level, if not necessarily 100% of the minutiae. In my article (the Slate one), I state that ESPN was an outlier -- but that everyone else sort of recognized as much, then wanted in on the action. Nowadays, RSNs (regional sports networks) have fees as high as, and in some cases higher than, ESPN and its sister networks. "I think the cable companies themselves (and specifically their lack of competition) are bigger factors in their prices than channels' subscriber fees." It's a very significant factor. So is the lack of competition among the networks licensing to the cable companies. So is the lack of competition within the major sports leagues. So is the lack of competition within any given city for any given sports franchise. In general, you've got an agglomeration of oligopolistic markets -- resulting in a sort of "powers-of-ten" [1] increase, at every step of the value chain, in programming costs. The consumer is left footing most of these bills. [1] I use "powers of ten" here in the metaphorical sense of that old science video, and not in the literal sense.

valleyer 13y ago

ESPN costs ~$5/subscriber/mo. per that article, and it's, as you mention, a huge outlier. Cable bundles often cost in the $80 to $100 range. I'm no fan of bundles, but I think the cable companies themselves (and specifically their lack of competition) are bigger factors in their prices than channels' subscriber fees. P.S.: The medium article says, "Hockey, NASCAR, and soccer are the only major sports that ESPN doesn’t own". ESPN doesn't "own" the NFL (most of which is on CBS and Fox) or Major League Baseball (most of which is on regional sports channels, the majority of those in turn owned [I think] by Comcast and Fox). A small point maybe, but it hurts overall credibility.

jonnathanson 13y ago
The Medium article is fairly accurate on the whole, with maybe a few minor inaccuracies here and there. Its word choice in "own" is unfortunate in that circumstance, but I don't believe the author actually intended to suggest that ESPN "owns" the NFL, the MLB, etc. Reading the rest of the article, I get the general impression that he knows what he's talking about. At least on a high level, if not necessarily 100% of the minutiae. In my article (the Slate one), I state that ESPN was an outlier -- but that everyone else sort of recognized as much, then wanted in on the action. Nowadays, RSNs (regional sports networks) have fees as high as, and in some cases higher than, ESPN and its sister networks. "I think the cable companies themselves (and specifically their lack of competition) are bigger factors in their prices than channels' subscriber fees." It's a very significant factor. So is the lack of competition among the networks licensing to the cable companies. So is the lack of competition within the major sports leagues. So is the lack of competition within any given city for any given sports franchise. In general, you've got an agglomeration of oligopolistic markets -- resulting in a sort of "powers-of-ten" [1] increase, at every step of the value chain, in programming costs. The consumer is left footing most of these bills. [1] I use "powers of ten" here in the metaphorical sense of that old science video, and not in the literal sense.