At a Bay Area retirement community this past Monday, a group of elderly baseball fans gathered in a room to watch their San Francisco Giants take on the Washington Nationals in the National League playoffs. One problem: the game was nowhere to be found on the TV. The MLB Network, a league-owned cable outlet that requires a special subscription in many areas, was airing the game. The old folks were out of luck, until a worker called the cable company for a quick fix. “An associate and I were able to negotiate a deal (probably not such a good one) to get the game and the channel instantly,” a worker at the retirement community told the San Francisco Chronicle, “for an additional $18/month.”
These retirees weren’t alone: the Chronicle reported that its sports desk fielded over 150 calls from fans trying to find a playoff game on TV. The migration of sports programming away from free TV is nothing new. But now even the crown jewels are on cable. For the first time ever, the bulk of baseball’s two league championship series will air on cable channels. TBS will carry the American League Championship Series between the Baltimore Orioles and Kansas City Royals, which starts Friday; Fox Sports 1, the network Rupert Murdoch launched in August 2013 to compete with ESPN, will handle Games 2-5, and Game 7, of the National Championship Series between the San Francisco Giants and St. Louis Cardinals, which starts on Saturday. The Fox network will broadcast Game 1 and Game 6.
The baseball playoffs have moved way down the dial. I, for one, never thought I’d be watching a league championship series on Channel 99, home of Fox Sports 1 in my New York City neighborhood.
TBS broadcast the Final Four national semifinal games last season, will do so again this coming season, and will add the title game in 2016. The Super Bowl still rotates between CBS, NBC, and Fox: the Super Bowl of college football, the championship game of the new College Football Playoff, will be on ESPN. The sports cable boom isn’t going anywhere: on Monday, the NBA announced that it extended its rights deal with ESPN and TNT through the 2024-2025 season. These networks will pay the NBA a combined $2.66 billion a year, almost triple what they pay in the current contract.
Such lucrative agreements fatten the wallets of players and owners. But they do consumers no favors; they’re driving up the cost of cable. An FCC study shows that the average monthly cable bill for expanded basic service grew 30%, to $64.41 between 2008 and 2013. According to SNL Kagan, a media research firm, sports networks account for 40% of the fees that operators pay cable network to carry their programming.
Operators pass those costs along to consumers, while building in some margin for themselves. So if ESPN and TNT are tripling their investment in the NBA until 2025, they’re going to charge operators more to finance this investment, further spiking your bill. According to SNL Kagan data, ESPN and TNT are already the two most expensive national basic cable networks: operators pay an average of $6.04 per month per subscriber to carry ESPN, and $1.44 per month for TNT. That’s right: ESPN can command a price that’s three-times as high as the second most-expensive national basic cable channel. Four of the top-10 most expensive basic cable networks are sports channels (ESPN, NFL Network, ESPN2, Fox Sports 1). Two others — TNT and TBS — feature high-profile sports content like the NBA regular season and playoffs, the baseball playoffs, and March Madness. (Disney Channel, Fox News, USA, and Nickelodeon round out the Top 10, according to SNL Kagan).
In some areas, the regional sports networks are among the most expensive for operators to carry. For example Fox Sports North, which serves Minnesota, Wisconsin, and other states, costs $4.67 per subscriber per month. Comcast SportsNet Washington (DC) costs $4.60 per month. NESN, in New England, costs $4.22. The rates dwarf the top-tier, non-ESPN basic cable nets like TNT ($1.44), CNN ($0.61), MTV ($0.47) and AMC ($0.39). The network that shows Minnesota Twins games is nearly 12 times more expensive than the one that airs “Mad Men” and “Breaking Bad.”
Over the past five years, ESPN’s carriage fees have jumped 48%. NFL Network fees are up 100%. CNN’s have spiked 22%; fees for Lifetime Television are up 18%. Two forces have driven — and will continue to drive — the accelerated growth in sports cable prices.
First, sports remain DVR-proof. You can record a great TV show, and catch up to it later while fast-forwarding the commercials. (Just stay away from spoilers.) A great sporting event is perishable: going back three days later to watch a Super Bowl just doesn’t make much sense. “Sports is an anomaly,” says Derek Baine, research director at SNL Kagan. “People watch it live.” So ESPN and other sports networks can still attract advertisers, and this ad revenue allows these networks to keep upping the ante for sports rights.
Second, blame Murdoch. If the Fox chairman is going to mount a serious run at ESPN, Fox Sports 1 needs big events. This year’s NLCS, in many respects, is a dress rehearsal. Murdoch’s presence alone made ESPN and TNT pay a premium for the NBA; the networks knew that if they didn’t ante up, Fox would likely swoop in. Fox Sports 1 and other new outlets like NBCSN (NBC Sports Network) increase competition for rights, which create bidding wars that drive up cable bills.
The more expensive monthly bills may not be a bad deal for avid sports fans. For less than $10.00 per month, ESPN comes out to pennies on the hour. But if you don’t want sports, you’re getting rooked. Since cable companies bundle channel packages, you have to pay premiums for ESPN and other sports networks in order to get the stuff you want. Sen. John McCain has pushed for “a la carte” cable — just pay for the channels you know you’ll watch. He won’t get his way any time soon though. The cable industry is fine with their bundled revenues, thank you. The sports boom is just too good. No matter how it costs you.
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