Needham: 20M 'super fan' homes would pay $30 monthly for ESPN
Only 20 million ESPN "super fan" homes would be willing to pay $30 monthly for the sports network if distributors create sports tiers and the network is forced to hike subscription fees to recoup lost ad revenue, according to Needham analyst Laura Martin.
In a report last week titled the "Future of TV," the veteran cable analyst said entertainment networks would suffer if cable operators and satellite TV providers unbundle traditional subscription packages and create sports tiers. "If sports leave the bundle, we estimate that many of the 20 million households that are heavy sports viewers today would disconnect the remaining entertainment bundle, thereby further pressuring ecosystem profits," Martin said. She estimated that the pay TV industry would lose $13 billion in annual revenue from unbundling, including a $10 billion drop in subscription revenue.
Some distributors are paying more than $35 monthly--or half of their programming expenses--on sports networks, according to Needham. The firm noted that ESPN's networks cost $6 monthly. Some of the top regional sports networks cited in the report included YES Network ($3.20 monthly); Comcast SportsNet Washington ($4.35); Fox Sports North ($4.25); Fox Sports Southwest ($4); and MSG (3.50).
Martin noted that increased sports programming costs are being driven by the rights deals networks strike with leagues like the NFL and Major League Baseball. She said unbundling would hurt the industry and that distributors and content owners should work to find common ground. "We think the best solution to this hard problem is to find a negotiated compromise that allows both content and distribution to win and the bundle to stay intact, or grow. We can find no math where unbundling is the best economic answer," Martin added.
- see the report
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