SBD/July 16, 2013/Media

A La Carte ESPN Would Cost Consumers $30 Per Month While Industry Could Lose $13B

Research shows 20% of pay-TV subscribers would pay for ESPN if a la carte
ESPN would "cost vastly more for sports fans, about $30 a month, if it was unbundled from the pay-TV package and sold separately only to those who wanted to watch it," according to Bob Fernandez of the PHILADELPHIA INQUIRER. That would be "five times the $6 a month" that ESPN now costs as part of the "big TV bundles offered by cablecasters such as Comcast." Fans that would choose ESPN at the increased cost "would be unlikely to purchase non-sports entertainment channels, leading to billions of dollars in lost revenue." Needham Co. analyst Laura Martin yesterday released her Future of TV report, the "latest contribution to the public debate in Washington and within the TV industry on skyrocketing TV sports costs and what to do about them." Martin said that 20 million pay-TV subscribers, or "one in five, would choose to purchase ESPN if they had the option." This "falls below the 25 million subscribers that many national advertisers seek on pay-TV systems, so ESPN would lose substantial ad revenue." She estimated that "unbundling ESPN could result" in $13B in lost revenue of the pay-TV industry's total $150B revenue per year "because of a cascading effect of lost advertising revenue and ESPN fans not selecting to purchase non-sports channels." Martin said, "This has to be solved, and these negotiators have to figure out how to keep (sports cable channels) in the bundle" (PHILADELPHIA INQUIRER, 7/16). CABLEFAX DAILY reports sports "accounts for about 50% of sub fees and accounts for less than 25% of total viewing." Martin in her report wrote, "We can find no math where unbundling is the best economic answer" (CABLEFAX DAILY, 7/16).
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