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Let me see if I understand this... > The financial stakes are especially high for ESPN because it earns the most carriage fees of any TV channel, about $6.61 a

Let me see if I understand this... > The financial stakes are especially high for ESPN because it earns the most carriage fees of any TV channel, about $6.61 a month per subscriber I have no interest in televised sports. But if I had a cable package I'd be paying ESPN almost $80 a year? Whether I watch sports or not? Now I'm glad I don't have cable TV, just a cable modem. I'll take the $80 over those sports broadcasts I don't care about, thank you.

nhebb 11y ago
> The financial stakes are especially high for ESPN because it earns the most carriage fees of any TV channel, about $6.61 a month per subscriber That's not why the financial stakes are high. They're high because ESPN has fixed price contracts into the future for the rights to broadcast sports events. If their subscriber base falls, they're still on the hook for those contracts. The article "Is ESPN A Giant Bubble About To Burst?" [1] does a much better job of explaining the whole picture. It also gives a reasonable argument as to why subsidizing channels we don't watch benefits TV viewers as a whole. (I'm thinking about becoming a cord cutter myself, but the argument is still reasonable.) [1] http://www.foxsports.com/college-football/outkick-the-coverage/is-espn-a-giant-bubble-about-to-burst-071215 http://www.foxsports.com/college-football/outkick-the-covera...
- jamessun 11y ago
  > They're high because ESPN has fixed price contracts into the future for the rights to broadcast sports events. If their subscriber base falls, they're still on the hook for those contracts. If ESPN continues to lose viewers, their ad revenue will suffer. If ESPN revenue suffers, will they be able to pay the fixed price contracts they have with the largest, most viewed sports leagues, such as the NFL, MLB, and SEC (college football)? Seems to me that this is the first domino to fall...
  - Yhippa 11y ago
    Very good point. This has huge implications for conference realignment which seems to be driven by these contracts. If they can't make good on them what then?
  - nhebb 11y ago
    They're owned by Disney, so it's not like the bills wouldn't be paid, but if (when) the bubble burst, it would have a ripple effect through sports and television. Hypothetically, ESPN itself doesn't need to lose many viewers for this to happen. The ad revenues mostly just cover production costs. The bulk of their revenues come from the cable companies via cable subscriptions. Virtually all cable bundles include ESPN, so if cable subscriptions fell among non-ESPN watchers, it would still impact ESPN's bottom line.
- ascagnel_ 11y ago
  > It also gives a reasonable argument as to why subsidizing channels we don't watch benefits TV viewers as a whole. This is something a lot of people don't really think about. For example, Breaking Bad, while a critical success, was never a popular show until its final episodes. It and Mad Men mostly existed as a way to keep their parent network, AMC, in a more popular cable tier, so that it could continue taking in carriage fees.
- jandrese 11y ago
  I'm still not sold on "it's necessary that you subsudize channels you don't watch" argument. This policy just seems to lead to ever increasing cable bills and an even broader array of channels that we don't need. Do we really need a Cooking channel if we already have Food network? Most importantly, it incentivizes people to make channels with cheap but low quality content just to suckle on the teat of the cable bill. If there were true alacarte pricing options for cable channels, the channel would actually have to put an effort in for my dollar. Many channels would wither and die, but that's because they are offering an unappealing product. It would also give consumers a way to actually push back when a channel goes against its core subscriber base just because they found some cheap content that can fill the airwaves. I mean just look at the current state of the History Channel or Discovery or even Animal Planet. Maybe it is time for them to die off and make room for a younger competitor not so in love with reality programming.
x0x0 11y ago
Yes, that's how espn's economics work: every cable subscriber pays them $6.61 a month. That's why xfinity costs so damn much. And apparently only one in five watch, since the article claims espn would have to charge $30/mo to make the same money in an ala-carte model.
- Shivetya 11y ago
  It isn't just ESPN, many other channels are bundled and the costs are passed on. http://blogs.wsj.com/numbers/how-much-cable-subscribers-pay-per-channel-1626/ http://blogs.wsj.com/numbers/how-much-cable-subscribers-pay-... Still I find it ironic how many complain about the six dollar figure assigned to ESPN when many premium channels; hbo/showtime/etc are ten to fifteen dollars a month. I know quite a few who spent that for HBONow just for one show only to cancel as soon as the season for GOT was over. While I have no interest in sports its a matter of perception. Now ESPN and others have sued cable operators who have tried to slice up offerings to where customers could elect to not have specific channels. So while not defending cable and satellite companies it does come to the point where its cheaper to eat the bad customer feelings than spend the money on court cases. That being said, you would think with the drop in subscribers that the financials of that decision are turning around sufficiently that maybe they will push back harder
  - maxerickson 11y ago
    They aren't just complaining about the $6, they are complaining that it is hidden in the base package.
  - ascagnel_ 11y ago
    The major difference here is that you generally will always pay the ~$6.50 for ESPN with a cable package, while a $15 payment is required if you want the HBO package. ESPN splits its costs over the entire cable subscriber base, while HBO only has its subscribers.
iolothebard 11y ago
The base cable in my town doesn't have ESPN. So base is ~45/mo. With ESPN it's 80/mo minimum, you know because ESPN is 8 ESPN channels.

nhebb 11y ago

> The financial stakes are especially high for ESPN because it earns the most carriage fees of any TV channel, about $6.61 a month per subscriber That's not why the financial stakes are high. They're high because ESPN has fixed price contracts into the future for the rights to broadcast sports events. If their subscriber base falls, they're still on the hook for those contracts. The article "Is ESPN A Giant Bubble About To Burst?" [1] does a much better job of explaining the whole picture. It also gives a reasonable argument as to why subsidizing channels we don't watch benefits TV viewers as a whole. (I'm thinking about becoming a cord cutter myself, but the argument is still reasonable.) [1] http://www.foxsports.com/college-football/outkick-the-coverage/is-espn-a-giant-bubble-about-to-burst-071215 http://www.foxsports.com/college-football/outkick-the-covera...

jamessun 11y ago
> They're high because ESPN has fixed price contracts into the future for the rights to broadcast sports events. If their subscriber base falls, they're still on the hook for those contracts. If ESPN continues to lose viewers, their ad revenue will suffer. If ESPN revenue suffers, will they be able to pay the fixed price contracts they have with the largest, most viewed sports leagues, such as the NFL, MLB, and SEC (college football)? Seems to me that this is the first domino to fall...
- Yhippa 11y ago
  Very good point. This has huge implications for conference realignment which seems to be driven by these contracts. If they can't make good on them what then?
- nhebb 11y ago
  They're owned by Disney, so it's not like the bills wouldn't be paid, but if (when) the bubble burst, it would have a ripple effect through sports and television. Hypothetically, ESPN itself doesn't need to lose many viewers for this to happen. The ad revenues mostly just cover production costs. The bulk of their revenues come from the cable companies via cable subscriptions. Virtually all cable bundles include ESPN, so if cable subscriptions fell among non-ESPN watchers, it would still impact ESPN's bottom line.
ascagnel_ 11y ago
> It also gives a reasonable argument as to why subsidizing channels we don't watch benefits TV viewers as a whole. This is something a lot of people don't really think about. For example, Breaking Bad, while a critical success, was never a popular show until its final episodes. It and Mad Men mostly existed as a way to keep their parent network, AMC, in a more popular cable tier, so that it could continue taking in carriage fees.
jandrese 11y ago
I'm still not sold on "it's necessary that you subsudize channels you don't watch" argument. This policy just seems to lead to ever increasing cable bills and an even broader array of channels that we don't need. Do we really need a Cooking channel if we already have Food network? Most importantly, it incentivizes people to make channels with cheap but low quality content just to suckle on the teat of the cable bill. If there were true alacarte pricing options for cable channels, the channel would actually have to put an effort in for my dollar. Many channels would wither and die, but that's because they are offering an unappealing product. It would also give consumers a way to actually push back when a channel goes against its core subscriber base just because they found some cheap content that can fill the airwaves. I mean just look at the current state of the History Channel or Discovery or even Animal Planet. Maybe it is time for them to die off and make room for a younger competitor not so in love with reality programming.

x0x0 11y ago

Yes, that's how espn's economics work: every cable subscriber pays them $6.61 a month. That's why xfinity costs so damn much. And apparently only one in five watch, since the article claims espn would have to charge $30/mo to make the same money in an ala-carte model.

Shivetya 11y ago
It isn't just ESPN, many other channels are bundled and the costs are passed on. http://blogs.wsj.com/numbers/how-much-cable-subscribers-pay-per-channel-1626/ http://blogs.wsj.com/numbers/how-much-cable-subscribers-pay-... Still I find it ironic how many complain about the six dollar figure assigned to ESPN when many premium channels; hbo/showtime/etc are ten to fifteen dollars a month. I know quite a few who spent that for HBONow just for one show only to cancel as soon as the season for GOT was over. While I have no interest in sports its a matter of perception. Now ESPN and others have sued cable operators who have tried to slice up offerings to where customers could elect to not have specific channels. So while not defending cable and satellite companies it does come to the point where its cheaper to eat the bad customer feelings than spend the money on court cases. That being said, you would think with the drop in subscribers that the financials of that decision are turning around sufficiently that maybe they will push back harder
- maxerickson 11y ago
  They aren't just complaining about the $6, they are complaining that it is hidden in the base package.
- ascagnel_ 11y ago
  The major difference here is that you generally will always pay the ~$6.50 for ESPN with a cable package, while a $15 payment is required if you want the HBO package. ESPN splits its costs over the entire cable subscriber base, while HBO only has its subscribers.

iolothebard 11y ago

The base cable in my town doesn't have ESPN. So base is ~45/mo. With ESPN it's 80/mo minimum, you know because ESPN is 8 ESPN channels.