Sports programs drive up TV costs

Subscribers who don’t love sports cry foul

Los Angeles TimesDecember 6, 2012 

The new owners of the Los Angeles Dodgers are expected to get $6 billion-plus for the TV rights to their team’s games.

That may be a big win for the home team, but consumers won’t be doing high-fives once they see their pay-TV bills.

The average household already spends about $90 a month for cable or satellite TV, and nearly half of that amount pays for the sports channels packaged into most services. Massive deals for marquee sports franchises are driving those costs even higher. In the next three years, monthly cable and satellite bills are expected to rise an average of nearly 40 percent, to $125, according to market research company NPD Group.

So far, people seem willing to pay. But the escalating costs are triggering worries that, at some point, consumers will begin ditching their cable and satellite subscriptions.

“We’ve got runaway sports rights, runaway sports salaries and what is essentially a high tax on a lot of households that don’t have a lot of interest in sports,” said John Malone, the cable industry pioneer and chairman of Liberty Media. “The consumer is really getting squeezed, as is the cable operator.”

A key concern is that the higher bills driven by sports are being shouldered by subscribers whether they watch sports or not. National and local sports networks typically require cable and satellite companies to make their channels available to all customers.

“I pay $98 a month for cable, and half of that is for sports?” said Vincent Castellanos, 51, a fashion stylist who lives in Los Angeles. “I’ve never once gone to a single sports channel. I wasn’t even aware I was paying for it. I want my money back. Who do I call?”

Cable TV and satellite providers have long paid a premium for national sports channels such as ESPN. Now they are increasingly paying higher fees to the regional sports networks that carry local football, basketball, baseball, hockey and soccer games.

The competition has spawned turf wars for sports rights among big media companies both nationally and locally. NBC and CBS have launched their own national sports networks to compete with ESPN. Fox is expected to follow suit next year.

“There are not new pro and college games being created,” said Dan York, an executive vice president of satellite broadcaster DirecTV. “You are getting the same product being reshuffled into smaller slices at higher prices. That’s not a model consumers can continue to support.”

Cox Cable executive Bob Wilson estimated that sports account for more than 50 percent of the bill for the provider’s Southern California subscribers, even though just 15 percent to 20 percent are regular watchers. “That relationship is getting way out of whack,” he said.

Sports costs are also rising because this programming is considered “DVR proof” – consumed live by viewers, and thus more valuable to advertisers and networks. Increasingly, consumers are opting to record other types of shows to watch later, and then fast-forwarding through the commercials.

“Sports are foolproof when it comes to ratings,” said Charles Bergmann, associate director of Mindshare, a prominent advertising buying firm. “Sports fans can’t wait to watch a game; they want to know the outcome. And that’s not traditionally the case with most prime-time shows.”

As a result, cable and broadcast channels that specialize in sports are able to command higher subscriber fees from pay-TV distributors. Walt Disney Co.’s ESPN gets more than $5 a month per subscriber from the systems that carry it, according to SNL Kagan. Time Warner Cable is getting more than $3 a month per subscriber for SportsNet.

Those prices are higher than those for nonsports channels. The Disney Channel, for example, gets only about $1, while Viacom’s popular MTV gets only 40 cents.

Analyst Craig Moffett said that the Dodgers deal could put the pay-TV business in a precarious position. “For some consumers, this Dodger channel will be the straw that breaks the camel’s back,” the Sanford C. Bernstein & Co. media analyst said.

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service