Is the Live Sports Rights Bubble Finally Bursting?

[Mavric]

Over the past decade, television broadcasters have bet that DVR-proof live sports will remain highly profitable, and shelled out tens of billions of dollars to acquire broadcast rights to the NFL, NBA, MLB, Olympics, World Cup, college football and basketball, and all other sports imaginable. Fox, CBS, and NBC all created sports-only cable channels, and the Longhorn Network, SEC Network, Big 10 Network, and Pac-12 Network were all launched.

To a large degree, paying rights fees is an exercise in extreme speculation. In a recent example, CBS and Turner decided to pay $8.8 billion for March Madness rights that extend through 2032. By that time, the combined effects of cord cutting, a la carte, over-the-top, mobile, and other concepts we can barely conceive of (virtual reality?) will mean that the way television is broadcast, consumed, and paid for will be radically different. Agreeing to pay $1.1 billion annually—a 40 percent increase on what the rights used to cost—18 years out is a tremendously speculative bet on the idea that live sports will continue to generate vast amounts of money.

If you want a data point that argues against that, consider that the two biggest cable sports channels are already, right now, starting to struggle. ESPN has lost seven million subscribers in the past three years, while Fox Sports 1 has lost close to two million. ESPN laid off 300 employees six months ago, and reportedly needs to trim $100 million from its 2016 budget, while Fox Sports is undergoing buyouts and layoffs for the second time in the past year. (Rights fees are largely set for the next decade; production and salary costs are the largest budget items that can be trimmed.)

 

Deadspin

[Street Novelist]

Maybe, but paying for ESPN/Fox Sports, etc. as part of my cable package is still a helluva lot cheaper than going to a game. So unless people just stop watching sports entirely, they are going to need cable television.

[Guy Chamberlin]

Someday whatever we're calling cable or satellite will allow you to access and pay for only the networks and/or shows you want instead of the whole bundle.

 

But as long as live sports are tied to the package of cable offerings, I can't quit those overpriced bastards.

[husker98]

Broadcasting and journalism as we knew it in the last century is in its death throes.

Its why i got out of the business, the writing is on the wall.

All the husker games i watched over the past couple years i did so live on my computer with out paying anything other than my internet bill.

ESPN and the big networks will survive, but they will not be as profitable as they once were and likely will become almost entirely internet based if trends continue.

 

It will be interesting to see how this all unfolds and how it affects college football when that big TV money dries up.

[Enhance]

But, even those internet-based networks are requiring paid subscriptions in many cases. BTN, SEC Network, MLBTV... Even watching live Cricket games cost paid memberships now.

 

Broadcasting itself will never die. The mediums through which we view the content are the only thing that will change.

[wanderful]

Broadcasting and journalism as we knew it in the last century is in its death throes.

Its why i got out of the business, the writing is on the wall.

All the husker games i watched over the past couple years i did so live on my computer with out paying anything other than my internet bill.

ESPN and the big networks will survive, but they will not be as profitable as they once were and likely will become almost entirely internet based if trends continue.

 

It will be interesting to see how this all unfolds and how it affects college football when that big TV money dries up.

 

I mostly agree with this. It's the business model that's moribund -- cable companies having exclusive rights to the channels via packaging is a dying business model. Soon you'll be able to pay your $5 or $10 a month subscription directly to ESPN/Fox Sports/BTN to get their content on your devices. And you won't be paying for cable television (you will be paying the cable company for your internet, though, so they will continue to exist/be terrible). As of now, that direct-payment-streaming option doesn't exist for sports. You have to have a cable subscription for that. But once this option does exist, the networks will rebound financially because it will be the more attractive option than getting a free live stream of the game from some shady website located in an eastern European country. The quality of the stream will be better and you won't have to worry about your device getting viruses, so people will be willing to pay the $5 a month.

 

The whole TV industry is moving toward that model, not just sports. This option will be fully available for every network within 2 years. HBO Now is a perfect example of this: http://www.marketwatch.com/story/hbo-now-was-a-bright-star-in-time-warners-earnings-2016-05-04

[Red Dead Redemption]

Will MTV ever go back to actually playing music/videos?

[wanderful]

Will MTV ever go back to actually playing music/videos?

 

No. YouTube today is what MTV was in the 80s and 90s, in more ways than just this one.

[Red Dead Redemption]

 

Will MTV ever go back to actually playing music/videos?

 

No. YouTube today is what MTV was in the 80s and 90s, in more ways than just this one.

Dammit. I had one shot to be on Remote Control, and I blew it.

[teachercd]

 

 

Will MTV ever go back to actually playing music/videos?

No. YouTube today is what MTV was in the 80s and 90s, in more ways than just this one.

Dammit. I had one shot to be on Remote Control, and I blew it.

 

Oh man...great game!

Who was the host? Ken something? Kevin something?

[Red Dead Redemption]

 

 

 

Will MTV ever go back to actually playing music/videos?

 

No. YouTube today is what MTV was in the 80s and 90s, in more ways than just this one.

Dammit. I had one shot to be on Remote Control, and I blew it.

Oh man...great game!

Who was the host? Ken something? Kevin something?

Ken Ober ("the quizmaster of 72 whooping cough lane"), marisol/kari("KAR-i!!"), pre-snl Colin Quinn, and occasionally pre-snl Adam Sandler as the bishop in "beat the bishop"

[VectorVictor]

Will MTV ever go back to actually playing music/videos?

 

Actually, yes, but not in the way we remember music videos being played in the 80s:

 

http://www.indiewire.com/article/mtv-wants-to-bring-the-music-back-to-music-television-20160421

 

Good to see they're getting back to their roots, slowly. And MTV News and Unplugged would be good for the channel to invest in again.

 

---

 

As for the topic of the thread, the only bubble that burst is that of the author's own premise for the article. Yes, there's a downturn, but the top teams, conferences, and sports will still get top dollar--the only difference is that the industry is being more discretionary about their spending, both in the length of contracts *AND* what they pay for.

 

Frankly, the B1G's deal for $250m/year/six years for HALF of the ESPN inventory currently shows that there is no bubble, per se. Just ESPN overestimating their ROI on named talent and some of their questionable acquisitions (e.g. Longwhorn Network) and paying the price for it. Hell, if the rate holds up for the other half of ESPN's B1G Tier 1 inventory, the B1G will make in six years that the SEC will garner in 15 (~$3b/15year deal from 2013). That's a hell of a disparity in our favor compared to the SEC schools, and everyone else in college football for that matter.

 

And thanks to the FCC wisely choosing to regulate ISPs as utility providers, we're going to see traditional television providers (e.g. Comcast, Verizon, Frontier) be marginalized in favor of multiple ISP-delivered television subscription choices, like DirecTV's offering, Sling TV, or Sony's Vue. All of those TV-over-IP subscription offerings have competitive rates and as close to a la carte programming as we can get currently.

[Dagerow]

Someday whatever we're calling cable or satellite will allow you to access and pay for only the networks and/or shows you want instead of the whole bundle.

 

But as long as live sports are tied to the package of cable offerings, I can't quit those overpriced bastards.

Agree

[Red Five]

A la carte might not be as good of a deal as it seems on the surface, especially for sports fans.

 

Stand alone ESPN seeking to produce the same revenue would cost at least $30 a month, or twice what HBO costs and three times what Netflix costs a month. Some sports fans would still consider ESPN to be a bargain at that price, but keep in mind you'd also have to pay for ESPN2 and ESPNU and the SEC Network and FS1 and NBC Sports Network and whatever additional regional cable channels carry your favorite local team's games. The net result would be most sports fans would pay over $100 a month just for sports channels. If you're a dad, like I am, you'd have to pay additionally for kid's channels. Your wife probably watches different channels than you do too, add on those costs too. Pretty soon you're paying more for less. That's why a la carte isn't a great deal for sports fans. In fact, it's a worse deal.

And how many sports fans can afford those kind of monthly costs for standalone ESPN and additional sports programming? As if that wasn't enough, keep in mind that fewer ESPN subscribers means less viewers, which means less advertising dollars as well. Now, the likely result for the entertainment channels would probably be scaled back offerings. More reruns, less risky original programming. Is AMC going to green light a show about a chemist who becomes a drug lord? Maybe, maybe not. With less risk taking, there's a lower chance of hit shows like "Breaking Bad" ever being made. Does a show I love, like "The Americans," make sense for FX without over 90 million people who aren't watching helping to defray the cost of original programming? Maybe, maybe not. But that's all for original programming, cutbacks, while painful for those of us who love this era of television, are relatively easy there.

 

 

 

http://www.foxsports.com/college-football/outkick-the-coverage/is-espn-a-giant-bubble-about-to-burst-071215

[knapplc]

A la carte might not be as good of a deal as it seems on the surface, especially for sports fans.

 

Stand alone ESPN seeking to produce the same revenue would cost at least $30 a month, or twice what HBO costs and three times what Netflix costs a month. Some sports fans would still consider ESPN to be a bargain at that price, but keep in mind you'd also have to pay for ESPN2 and ESPNU and the SEC Network and FS1 and NBC Sports Network and whatever additional regional cable channels carry your favorite local team's games. The net result would be most sports fans would pay over $100 a month just for sports channels. If you're a dad, like I am, you'd have to pay additionally for kid's channels. Your wife probably watches different channels than you do too, add on those costs too. Pretty soon you're paying more for less. That's why a la carte isn't a great deal for sports fans. In fact, it's a worse deal.

 

And how many sports fans can afford those kind of monthly costs for standalone ESPN and additional sports programming? As if that wasn't enough, keep in mind that fewer ESPN subscribers means less viewers, which means less advertising dollars as well. Now, the likely result for the entertainment channels would probably be scaled back offerings. More reruns, less risky original programming. Is AMC going to green light a show about a chemist who becomes a drug lord? Maybe, maybe not. With less risk taking, there's a lower chance of hit shows like "Breaking Bad" ever being made. Does a show I love, like "The Americans," make sense for FX without over 90 million people who aren't watching helping to defray the cost of original programming? Maybe, maybe not. But that's all for original programming, cutbacks, while painful for those of us who love this era of television, are relatively easy there.

 

http://www.foxsports.com/college-football/outkick-the-coverage/is-espn-a-giant-bubble-about-to-burst-071215

 

The premise is that this is what these services HAVE TO cost, and that's not the case. That's what ESPN wants people to pay, but they're not going to get that if people can't/won't pay that much.

 

ESPN is full of bloat and crap, most of which is unnecessary. Too many personalities that require branding and high salaries, too much money spent on production and huge sets. They want to charge so much because they don't want to tighten their belt, and because they want to keep spending money like water and passing the bill off to us.

 

I have no sympathy for these guys. They'll learn, as soon as TV goes a la carte, that their business model will have to change or they'll die. It's business Darwinism, and I'm fine with that.