For example, if you never watch sports, you might be better off not having to pay for ESPN, which charges the highest carriage fee of any basic cable channel. But Mr. Byzalov estimates that sports channel carriage fees would more than triple under unbundling, as most subscribers opt out and only die-hard sports fans buy in. Consumers who don’t care about sports at all would be better off, but casual sports fans would be worse off: They wouldn’t find it worth paying $37 for an unbundled cluster of sports channels, even if they would have paid the roughly $9 that it costs to get those channels as part of a bundled package.
via Why Unbundling Cable Would Not Save You Money – NYTimes.com.
4 Replies to “Why Unbundling Cable Would Not Save You Money – NYTimes.com”
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metspolice IDK if I would buy ESPN.. SNY, MLB Network, History, H2, Doscovery and I’m good
metspolice IDK if I would buy ESPN.. SNY, MLB Network, History, H2, Discovery and I’m good
I normally find that Josh Barro has cogent analysis, but he’s missing a big piece here.
ESPN and the other sports networks (including YES and SNY) rely on two revenue streams. One is subscriber fees, but the other is advertising revenue. Ad revenue is dependent on viewership, and factors in casual viewers, based in part on the number of homes in which a channel is received.
If ESPN were to need to set a price for the channel that would be charged directly to consumers, who would have a choice of whether or not to pay that price, they would likely not set the price high enough to get all of the subscriber revenue they get under the current system. The reason is simple: they would get zero casual viewership, which would kill their advertising revenue. They’d have to play around with the pricing, but ESPN’s ratings are dependent on some number of casual sports fans tuning in from time to time.
SNY, YES, and MSG would have an even more compelling case to keep subscriber fees low. Those three networks are essential marketing tools for the franchises whose corporate parents own them. It’s always going to be somewhat expensive to go to a game, especially for a family. The teams cannot afford to price casual fans out of the broadcasts, as it is only through watching the broadcasts that casual fans become more dedicated fans.
That said, forcing a la carte cable would also completely change the rest of the broadcast rights landscape. Teams and leagues no longer get anywhere near the revenue they got in the past for broadcast rights. (Keep in mind that right now, a major driver of sports broadcast fees is the fact that every non-sports fan in the country who subscribes to cable pays money to the networks that pay those rights fees.) But cable carriers would also have a lot less leverage. It would likely open the door to being able to subscribe directly to WatchESPN without needing a cable subscription. Similarly, the online streaming packages operated by the various leagues would likely start to drop blackout rules. Suddenly, a cable subscription wouldn’t be the only way to get live sports, and let’s face the fact that everything on cable other than live sports can be gotten in other ways these days.
There would be lots of problems in the transitions. The ones that would get screwed the most are the regional sports networks that have signed long term rights agreements with franchises, followed by the regional sports networks that are owned by their teams. In fact, a la carte cable would probably force the Wilpons to sell a lot sooner than they would otherwise, because they could no longer use SNY to prop up the rest of the team’s operations. For that reason alone, Met fans should be in favor of a la carte cable…
metspolice Surprised that people still don’t get it, this was old news years ago. Look at all the fighting over carrying sports networks.