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> 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 o
by 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 agoVery 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 agoThey'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.