Broadcasters fear losing free sports telecasts

When FOX dropped out of the race to retain broadcast rights to the BCS college football championship series games late last year, broadcasters became fearful of what appears to be an inevitable trend. Major sporting events are quickly migrating away from free, over-the-air TV to pay television.

ESPN took the four-year rights to the BCS games for $495 million. FOX, who carries the games until 2010, offered $385 million. FOX said it simply couldn’t compete with cable with only ad-based revenue streams.

The NAB, the main trade group for the broadcasters, is taking aim at the move of the BCS games to ESPN. After the FOX move, it voted to adopt a resolution advocating “free access to major televised sporting events.”

“Broadcasters continue to support the rights of all Americans to have free access to telecasts of major sporting events, particularly those of publicly funded educational institutions,” the NAB resolution said.

In simpler times, members of Congress and the FCC might have taken a harder position in favor of free televised sports. But now, with the towering economic struggles and other world problems bearing down, sports television is a relatively small issue.

Besides, ESPN, one of the most popular pay television services, is already in 90 million homes. That number is expected to increase after Feb. 17, when analog television is turned off in the United States.

With the steady migration of programming and viewers to pay television, it is probably too late for the NAB to be much help anyway. “The NAB Television board of directors hereby directs NAB staff to work with policymakers to educate them on the importance of ensuring that no segments of society are disenfranchised from this highly valued programming,” the board said.

after watching that fox broadcast debacle last nite it cant happen soon enough.

after watching that fox broadcast debacle last nite it cant happen soon enough.

Wonder if you would say the same thing if ala carte happens and ESPN runs upwards of $50+ a month to bring the same type of schedule they have now.

With the ESPN contract, can't we expect that some of the BCS games could end up on ABC?

No Bodenheimer flatly said the games (other than the Rose Bowl games) will be on ESPN.

Wonder if you would say the same thing if ala carte happens and ESPN runs upwards of $50+ a month to bring the same type of schedule they have now.

There's never going to be mandatory a la carte. At worst a small decline in users under elective a la carte might cost ESPN part of its massive bargaining edge.

No Bodenheimer flatly said the games (other than the Rose Bowl games) will be on ESPN.

Even the Rose Bowl could go to ESPN. From what I hear part of the ABC contract states that, if any of the other BCS Bowl Games goes to cable, ESPN can move the RB from ABC.

Wonder if you would say the same thing if ala carte happens and ESPN runs upwards of $50+ a month to bring the same type of schedule they have now.
If a la carte happens, we'll see those events migrate back to broadcast TV. Without the revenue that comes from extracting that $4 monthly fee out of every cable and satellite household (including those that never watch ESPN), there's no way that ESPN would be able to continue outbidding the broadcasters.

There's never going to be mandatory a la carte. At worst a small decline in users under elective a la carte might cost ESPN part of its massive bargaining edge.

It probably wouldn't take many cancelling users under elective a la carte -- if just 10% of households receiving ESPN declined to continue paying for it, the resultant revenue loss to Disney would be over $400 million/year (based on 9 million lost subscribers at $4/month each). I suspect that the loss would actually be much greater, more like 25% of those who are currently paying for ESPN, and that would amount to revenue loss of $1 billion/year.

Of course, Disney could try to make up the difference by jacking up the fee for ESPN, but that would just accelerate the loss of subscribers.

Wonder if you would say the same thing if ala carte happens and ESPN runs upwards of $50+ a month to bring the same type of schedule they have now.

If ESPN goes to >$50 per month it becomes very easy to drop ESPN a la carte and just walk to the local sports bar that provides HD for the few games I care that much about every month. If I have a choice between a fifty dollar bar tab that month and giving $50 every month to the greedy SOBs at Disney, I'd rather be sociable and support my local sports bar.

At $5 to $10 per month a la carte I may consider keeping ESPN.

Given that well over half the nation's viewers never watch any ESPN (or RSN) channel, one would certainly think they might be interested in saving a total of close to $10 a month by electing not to pay for those sports channels.

In some major markets with two (or more) RSNs, the bill could ruin somewhat higher.

In the current -- and apparently future -- economy, it is hard to see how resisting some form of elective a la carte will be beneficial to politicians.

If poor folks are having trouble coming up with $40-$50 for digital converters, why wouldn't some benevolent legislator like to be credited with givng folks back $10 every month?

Given that well over half the nation's viewers never watch any ESPN (or RSN) channel, one would certainly think they might be interested in saving a total of close to $10 a month by electing not to pay for those sports channels.
..and there lays the rub.

If nobody is watching ESPN, but still paying for it, doesn't it make sense for them to use all that money to add content that will make the channel worth having for those that aren't watching?

The fact is, that high fee didn't come out of nowhere. A lot of channels are distributed the same way as ESPN, but get nowhere the same fee. If all that was required was shrewd negotiating and a demand for more money, don't you think other channels would be getting more dollars? If there wasn't demand for the channel, would the cable companies really suck it up and pay the freight? Several of them have proven they are will to let entire blocks of channels drop over fees.

Not only that, ESPN has been commanding a higher fee than other channels well before being under the Disney umbrella - way back when ESPN2 was still called "The Deuce" and ESPNews, ESPN Classic and ESPNU simply didn't exist.

Either ESPN has somehow pulled one heck of a magic act, or at least half the people who say they don't ever watch ESPN are flat out liars.

..and there lays the rub.

If nobody is watching ESPN, but still paying for it, doesn't it make sense for them to use all that money to add content that will make the channel worth having for those that aren't watching?

The fact is, that high fee didn't come out of nowhere. A lot of channels are distributed the same way as ESPN, but get nowhere the same fee. If all that was required was shrewd negotiating and a demand for more money, don't you think other channels would be getting more dollars? If there wasn't demand for the channel, would the cable companies really suck it up and pay the freight? Several of them have proven they are will to let entire blocks of channels drop over fees.

Not only that, ESPN has been commanding a higher fee than other channels well before being under the Disney umbrella - way back when ESPN2 was still called "The Deuce" and ESPNews, ESPN Classic and ESPNU simply didn't exist.

Either ESPN has somehow pulled one heck of a magic act, or at least half the people who say they don't ever watch ESPN are flat out liars.

Squeaky wheels get the grease.

Of course much of the early negotiations gave cable/sat the right to ABC O&Os along with the hefty ESPN sub fees.

ESPN delivers young males to advertisers, and that is not an easy task these days.

But the fact is that no amount of MLB, tennis, rodeo, NCAA football or basketball or even NFL games is going to seduce non-sports folks into watching the ESPN networks.

And why should Disney care if it is pocketing their money anyway?

I would have to (most respectfully) disagree with you, Network TV.

It was only under the Disney umbrella that ESPN's fees rocketed.

Take a look:

ESPN: 1997 $0.73
ESPN : 2006 $ 2.91
ESPN: 2007: $3.26
ESPN: 2008: $3.65

Main Source: SNL Kagan Research

..and there lays the rub.

If nobody is watching ESPN, but still paying for it, doesn't it make sense for them to use all that money to add content that will make the channel worth having for those that aren't watching?

The fact is, that high fee didn't come out of nowhere. A lot of channels are distributed the same way as ESPN, but get nowhere the same fee. If all that was required was shrewd negotiating and a demand for more money, don't you think other channels would be getting more dollars? If there wasn't demand for the channel, would the cable companies really suck it up and pay the freight? Several of them have proven they are will to let entire blocks of channels drop over fees.

Not only that, ESPN has been commanding a higher fee than other channels well before being under the Disney umbrella - way back when ESPN2 was still called "The Deuce" and ESPNews, ESPN Classic and ESPNU simply didn't exist.

Either ESPN has somehow pulled one heck of a magic act, or at least half the people who say they don't ever watch ESPN are flat out liars.


ESPN's own figures show that only roughly 12% of cable/satellite/MSO subs ever view any of the ESPN Channels. ala carte means well over 80%+ of the subs disappear and that <$5 fee then goes to $50 to keep status quo....and then what happens to the others who cannot afford the $50 a month fee (btw, bars will end up with inflated commercials rates as well, just as they get hit much more for NFL ST.)

If ESPN goes to >$50 per month it becomes very easy to drop ESPN a la carte and just walk to the local sports bar that provides HD for the few games I care that much about every month. If I have a choice between a fifty dollar bar tab that month and giving $50 every month to the greedy SOBs at Disney, I'd rather be sociable and support my local sports bar.

At $5 to $10 per month a la carte I may consider keeping ESPN.

And thus many bars will be unable to afford the over the top ESPN rates either at that point.

Given that well over half the nation's viewers never watch any ESPN (or RSN) channel, one would certainly think they might be interested in saving a total of close to $10 a month by electing not to pay for those sports channels.

Aren't you extrapolating from data here? Just because ESPN has never pulled more than 50 million viewers has no bearing on how many people watch ESPN in a given year. ESPN airs different sports. Different people watch different sports. MNF has its followers; the NBA has its followers; the MLB has its followers; etc., etc.

Or is there a survey out there that actually found 50% of viewers never ever ever watched ESPN in an entire year?
I would have to (most respectfully) disagree with you, Network TV.

It was only under the Disney umbrella that ESPN's fees rocketed.

Take a look:

ESPN: 1997 $0.73
ESPN : 2006 $ 2.91
ESPN: 2007: $3.26
ESPN: 2008: $3.65

Main Source: SNL Kagan Research

No, I think this is just a tacit nod to the fact that we live in a DVR world now. Live sports bring in eyeballs that network programming doesn't. And while NBC, CBS, and ABC have to justify to advertisers that people are watching their ads and not fast-forwarding through them, ESPN doesn't have that problem. This makes ESPN's product much more valuable than Fox and CBS, especially since ESPN programming isn't available over the Internet. (Just look at TWC's complaint about Viacom in their recent Jan. 1 dispute.)

FWIW, many of the games shown on ESPN networks are available for free online through ESPN360.com for users of participating ISPs (including FiOS :D). There are occasional blackouts (mainly when a local broadcast outlet is carrying the game), but I've seen plenty of national ESPN/ESPN2/ESPNU games being simulcast, games not shown locally when they do regional coverage (e.g. 3:30PM college football games), and ESPN Plus games.

I would have to (most respectfully) disagree with you, Network TV.

It was only under the Disney umbrella that ESPN's fees rocketed.

Take a look:

ESPN: 1997 $0.73
ESPN : 2006 $ 2.91
ESPN: 2007: $3.26
ESPN: 2008: $3.65

Main Source: SNL Kagan Research
Except it was $0.73 over ten years ago. Name more than a couple other (non-Disney) channels that even get that even NOW.

Of course negotitating through Disney jumped the price up much quicker. That was to be expected. However, note that the second price was nearly 10 years after the first rate and the first price would still be a kingly sum at its time.

ESPN's own figures show that only roughly 12% of cable/satellite/MSO subs ever view any of the ESPN Channels. ala carte means well over 80%+ of the subs disappear and that <$5 fee then goes to $50 to keep status quo....and then what happens to the others who cannot afford the $50 a month fee (btw, bars will end up with inflated commercials rates as well, just as they get hit much more for NFL ST.)
Do you have a link for those figures?

I'm pretty sure any language I've seen through ESPN has said 12% at any given time.

Considering they are in just shy of 100 million households and have draw well more than 12% of that just on MNF alone, I find your figures to be suspect.

It's also on par (or better) with the broadcast networks, which are in 3 times as many homes (or more).

Ala Carte would be a disaster. Easiest way to look at it is to compare the channels to your towns services (schools, fire departments, police departments, etc). You might not use all the services, but it's best to have everyone chip in and keep all the 'basics' around. Start trying to itemize it like that and it will be a disaster.
As for the OP subject, it is sad to see things moved away from the free airwaves to cable/satellite. I've read different numbers, but something like 15 million people are OTA only, many elderly. Seems awfully cold hearted to start removing these traditional avenues of entertainment from them because they don't/can't pay for the luxury of cable/satellite.

...

And thus many bars will be unable to afford the over the top ESPN rates either at that point.

Coincidentally, I was in my local sports bar a couple of days ago and the owner was there talking to another guy at the bar about his ESPN rates. IIRC, he mentioned a number in the $3K/year range and how he had to work with the local fire inspector to make sure that his max occupancy rating stayed below a certain size in order to keep his ESPN fees down.


He was also saying how he'll never carry pay-per-view fights since they often cost as much as his yearly rate and he can't draw enough business to cover the cost.

Do you have a link for those figures?
Yes, that would be nice.

after watching that fox broadcast debacle last nite it cant happen soon enough.

Wonder if you would say the same thing if ala carte happens and ESPN runs upwards of $50+ a month to bring the same type of schedule they have now.

yea because then i could drop history channel, animal planet, discovery & all the other boring channels....so my bill would still be the same.

As for the OP subject, it is sad to see things moved away from the free airwaves to cable/satellite. I've read different numbers, but something like 15 million people are OTA only, many elderly. Seems awfully cold hearted to start removing these traditional avenues of entertainment from them because they don't/can't pay for the luxury of cable/satellite.
But then we get back to the crux of the issue of Ala Carte: being forced to subsidize content you don't want. Unlike the cable model, the OTA model offers few choices for those who do not wish to watch sports when the networks air them. It's much easier for people with cable to simply change the channel and find something else to watch. With OTA, if the other networks are airing repeats or programming the viewer does not find interesting, they essentially have no TV programming on nights when sports pre-empt the regular schedule.

I think MORE sports should move to cable so those who wish to view it can choose to subscribe to a multi-channel service. Even further, I'd like to see sports, children's programming, news channels and other specific subject channels move into better defined tiers rather than have those channels mixed in to basic tiers.

Essentially, the basic tier would end up being locals + major entertainment channels (USA, TNT, TBS, etc.) + those channels that are either free to the providers or pay to be there. Everything else would become an add on. That would create a lower priced basic tier with the option to pay what we're paying now if we want the same package.

Of course, we shouldn't rule out the option for channels to negotiate a lower fee in return for basic carriage.

I think if providers were able to offer better tier packages, the whole Ala Carte thing wouldn't have nearly the amount of steam it does.

Of course with OTA you are not forced to pay cash, you pay by (supposedly) watching commercials.

ESPN gets it both ways, which would be fine if so many weren't forced to pay for content they don't want.

And while we are at it, why should people have to pay for any content they don't watch or even find objectionable -- whether it be MSNBC, Fox News, MTV or any other channel -- just because it is the cable "business model".

I think if providers were able to offer better tier packages, the whole Ala Carte thing wouldn't have nearly the amount of steam it does.

That's exactly the way I feel, I advocate ala carte, but if there were better tier pkgs like you mentioned, I wouldn't have a problem at all, it's the all or basically nothing way it is now that has me so peeved.

Of course with OTA you are not forced to pay cash, you pay by (supposedly) watching commercials.

ESPN gets it both ways, which would be fine if so many weren't forced to pay for content they don't want.

And while we are at it, why should people have to pay for any content they don't watch or even find objectionable -- whether it be MSNBC, Fox News, MTV or any other channel -- just because it is the cable "business model".
Which is why I'm in favor of better "subject" tiering. I tune into CNN maybe twice a year - and only when someone is comparing something airing on multiple channels at once. I never watch the other news channels at home. I also don't watch sports except the superbowl. I can't remember the last time I even tuned to a music channel (either the MTV-type networks or the XM/Sirius channels).

On the other hand, I'd probably spring for a "Family Pack" (Disney, Family Channel, etc.) a "Movie Pack" (TCM, MGM, HDNet Movies, etc.) and maybe an "Educational Pack" (TLC, Discovery, History, etc.).

That's exactly the way I feel, I advocate ala carte, but if there were better tier pkgs like you mentioned, I wouldn't have a problem at all, it's the all or basically nothing way it is now that has me so peeved.
That's my main gripe: it seems providers are concentrating more on tiering HD content than providing tiers for other programming. Right now, most providers don't offer more than 3 tiers for programming (not counting premium channels, of course). You go from nothing to something like 50 channels for close to $60.

Yes, that would be nice.

If you search the archieves from when ala carte was discussed several years ago you will find it. iirc, freda posted the story in the thread. Also, it might have been 13% or 11%, but it was roughly half of the 25% that indicate any interest whatsoever in sports, which is why it stood out and I remembered it.

Or easier, just call ESPN saying you want to buy TV Advertising only across their channels and ask them what their reach and frequency total persons is on an annual contract. The reach will give you the number.

Do you have a link for those figures?

I'm pretty sure any language I've seen through ESPN has said 12% at any given time.

Considering they are in just shy of 100 million households and have draw well more than 12% of that just on MNF alone, I find your figures to be suspect.

It's also on par (or better) with the broadcast networks, which are in 3 times as many homes (or more).

Don't confuse 100 Millions households with 12 Million Total Viewers (not households). Shouldn't someone in Network TV know that?

Many of you are writing 'Ala Carte', so I have to chime in here. It is actually written 'a la carte', and is derived from French, as I am sure many of you know.

Many of you are writing 'Ala Carte', so I have to chime in here. It is actually written 'a la carte', and is derived from French, as I am sure many of you know.

well, if you want to be absolutely correct it its really à la carte, but variations abound.

But ESPN cannot be tiered.

Disney insists it be on "Basic" to get everyone to pay.

Essentially, the basic tier would end up being locals + major entertainment channels (USA, TNT, TBS, etc.) + those channels that are either free to the providers or pay to be there. Everything else would become an add on. That would create a lower priced basic tier with the option to pay what we're paying now if we want the same package.

Of course, we shouldn't rule out the option for channels to negotiate a lower fee in return for basic carriage.

I think if providers were able to offer better tier packages, the whole Ala Carte thing wouldn't have nearly the amount of steam it does.

You make an excellent point here. The stations that I would favor being on basic tier would be the multiple Discovery, History, and News channels, which I actually consider to be great values to the public.

You make an excellent point here. The stations that I would favor being on basic tier would be the multiple Discovery, History, and News channels, which I actually consider to be great values to the public.

And thus shows the issue, as your views on great values to the public are certainly not shared by all.

fios gives you even less choice. you can have lifeline (locals only) for like $15. the next package is $48, which includes NO HD channels besides local. $10 gets you all HD except premiums. it's really feast or famine. an HD box costs $10, HDDVR $15.

if a la cart comes to pass, I'm pretty sure somehow or other they'll make sure I pay the same if not more than I do now.

if everybody and their grandma have cable, and there's more competition than ever, how come my bill keeps going up? can I get my wage to be pegged to my cable bill?

if a la cart comes to pass, I'm pretty sure somehow or other they'll make sure I pay the same if not more than I do now.This is the point most seem to miss.

The die is cast for revenue.

well, if you want to be absolutely correct it its really à la carte, but variations abound.
I know, but I didn't/don't know how to type the accent mark.;)

But ESPN cannot be tiered.

Disney insists it be on "Basic" to get everyone to pay.
Actually, it is on the Expd. Basic here, and I think everywhere else. As such, not everyone pays. Basic customers and Basic + Digital and/or Premium customers don't pay.

But ESPN cannot be tiered.

Disney insists it be on "Basic" to get everyone to pay.
The question is, why?

The cable companies have all the power - especially if so few actually watch the channel. They just have to refuse to pay up or allow it to be on the basic tier.

Why does no one look at it the other way around? Given the choice, all I would subscribe to is ESPN(all of them), TNT, my RSN, and maybe USA. Now what happens to the other 200 cables channels subsidized by my subscription for essentially 5 - 7 sports channels plus locals. Without the sports fan the niche cable channels would be out of business. ESPN and most RSN's would survive a la carte, the smaller channels would not. Just because your favorite channel only charges .25$ per subscriber with 50 million subscriptions doesn't mean they won't be charging $50/month as well when all they get is 25,000 subscriptions.

ESPN and most RSN's would survive a la carte, the smaller channels would not.

ESPN would not have near the rights to the same type games it has now - you'd see a lot more lacrose and water polo, certainly no BCS nor MNF.

Why does no one look at it the other way around? Given the choice, all I would subscribe to is ESPN(all of them), TNT, my RSN, and maybe USA. Now what happens to the other 200 cables channels subsidized by my subscription for essentially 5 - 7 sports channels plus locals. Without the sports fan the niche cable channels would be out of business. ESPN and most RSN's would survive a la carte, the smaller channels would not. Just because your favorite channel only charges .25$ per subscriber with 50 million subscriptions doesn't mean they won't be charging $50/month as well when all they get is 25,000 subscriptions.

And the strong shall survive, that's the way nearly all business works, but TV stations seemed to have formed a cartel with the distributors. There are so many channels that I might watch one program, but I think the good shows would find a home and the weak ones will not.

ESPN would not have near the rights to the same type games it has now - you'd see a lot more lacrose and water polo, certainly no BCS nor MNF.

How do you figure? In an a la carte world, who's going to out bid them? Is broadcast suddenly going to get re-interested in all these sports they sent off to cable because the ratings were mediocre and the packages were overpriced?

Maybe the BCS would come back to broadcast, but if you ask me, most sports that ESPN couldn't afford would just shift from ESPN to either the NFL Network, the MLB Network, Speed, or NBA TV. MNF certainly isn't going back to broadcast, and the NFL Network would love to gobble up more NFL games to improve its carriage position.

Everyone seems to be thinking that in an a la carte world ESPN is sunk but suddenly the other networks are swimming in money. In an a la carte world, everybody's pocketbook gets lighter except, in theory, the consumer's.

The broadcast nets are bleeding money with or without a la carte. They don't suddenly become wealthier, especially since they're backed by major media companies that all stand to lose big time in an a la carte world. What more than likely will happen in an a la carte world is that the production values for sports broadcasts would plummet quickly. Fox's presentation is already garbage. Imagine how bad it'll be when the Fox cable empire crumbles into dust.

How do you figure? In an a la carte world, who's going to out bid them? Is broadcast suddenly going to get re-interested in all these sports they sent off to cable because the ratings were mediocre and the packages were overpriced?

Maybe the BCS would come back to broadcast, but if you ask me, most sports that ESPN couldn't afford would just shift from ESPN to either the NFL Network, the MLB Network, Speed, or NBA TV. MNF certainly isn't going back to broadcast, and the NFL Network would love to gobble up more NFL games to improve its carriage position.

Everyone seems to be thinking that in an a la carte world ESPN is sunk but suddenly the other networks are swimming in money. In an a la carte world, everybody's pocketbook gets lighter except, in theory, the consumer's.

The broadcast nets are bleeding money with or without a la carte. They don't suddenly become wealthier, especially since they're backed by major media companies that all stand to lose big time in an a la carte world. What more than likely will happen in an a la carte world is that the production values for sports broadcasts would plummet quickly. Fox's presentation is already garbage. Imagine how bad it'll be when the Fox cable empire crumbles into dust.

They will end up either going PPV (which will still have the commercials) or the price will come back down to earth to where they will revert back to OTA TV. Either way, the price will come back down to reality.

If they go that way, expect Congress to look at their anti-trust exemptions, so its a slippery slope, especially as public money is put into stadiums and venues.

They will end up either going PPV (which will still have the commercials) or the price will come back down to earth to where they will revert back to OTA TV. Either way, the price will come back down to reality.

You nailed it. The ability of ESPN (and other so-called "basic" cable networks) to force non-viewers to subsidize their program acquisition costs has resulted in sports rights fees getting bid way past what would otherwise happen. Those fees are sustainable only as long as non-sports fans who subscribe to cable/satellite are forced to subsidize networks like ESPN.

A la carte would throw a major wrench in the present business models that are propping up those fees -- and driving up cable/satellite subscription fees for the end customer. It would be interesting to see what the result would be -- but my bet would be that major sports would migrate back to broadcast television, with other events ending up on pay per view or a la carte specialty channels.