Powered by TMCnet
| More

Cable Technology Feature Article

December 06, 2011

ESPN: The Worldwide Leader in Jacking up Your Cable Bill

By Beecher Tuttle, TMCnet Contributor

ESPN (News - Alert) – the self-proclaimed worldwide leader in sports – has been branded by cable execs with an alternative slogan: the primary reason your cable bill is so darn expensive.

Walt Disney (News - Alert)-owned ESPN charges cable and satellite providers a higher subscription fee than any other cable channel, according to the Wall Street Journal, citing an SNL Kagan study. Since 2006, ESPN's fees have increased around 42 percent to $4.69. In contrast, the average cable channel fee has only increased 24 percent in the same period, and currently sits at just over 25 cents a month.

While speaking at an investor conference in New York, Liberty Media CEO Greg Maffei referred to ESPN as a “tax on every American household,” adding that the increasing costs of sports programming could eventually lead customers to walk away from cable altogether.  

The Journal also quotes Viacom (News - Alert) CEO Philippe Dauman as an ESPN detractor, noting that the sports network “in many systems is double the cost of all our networks combined.”

Before mounting an “Occupy ESPN” campaign, know that the network charges more, in part, because it has some fairly large bills to pay. Sports Business Daily reported earlier today that the NFL and cable networks are nearing a new $6 billion a year deal, one that would represent a 60 percent increase over current fees.

ESPN, which owns the rights to Monday Night Football, would be obliged to fork over around $1.9 billion per year.

The biggest problem for cable and satellite providers is that ESPN has all the leverage. A 2010 Needham & Company study found ESPN to be the most indispensible basic-cable channel available today, making it nearly impossible for a Comcast or a Time Warner (News - Alert) to balk at the network's heavy demands.

Eventually, pay TV providers may have to include sports channels in higher-priced bundles, giving non-sports fans reasons to stick with cable.

Although pay TV churn rates have remained fairly steady over the last few years, respected Credit Suisse analyst Stefan Anninger recently projected that the pay TV market will lose 200,000 subscribers in 2012.

His report emphasizes that future losses won't necessarily stem from cord-cutting – which previous reports have speculated – but rather because new households won't be signing up for cable in the first place.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell