Friday, February 11, 2011, 7:44 AM ET|Posted by Will RichmondDaisy Whitney and I are pleased to present the 87th edition of the VideoNuze Report podcast, for February 11, 2011.
In this podcast, Daisy and I do a deep dive into the role of sports in pay-TV packaging, based on my post from Monday, "Not A Sports Fan? Then You're Getting Sacked For At Least $2 Billion Per Year." I think this is a fascinating topic and something that has been under-reported even though it has huge implications for pay-TV subscription rates as over-the-top services gain awareness.
The basic premise of my post was that since a relatively small cluster of sports-oriented channels (e.g. ESPN, TNT, Regional Sports Networks and others) collectively cost pay-TV operators $10 per month, then the charges being incurred by non-fans and casual who fans who rarely, if ever watch these channels, could amount to at least $2 billion per year. Since writing the post and gaining feedback from various sources, it's actually quite possible that the annual charges incurred in exchange for little-to-no value could exceed $3 billion. Whatever the number is, it's very large, and effectively represents a massive subsidy that non-fans and casual fans pay each year because of escalating sports TV rights deals and astronomical player compensation.
Click here to listen to the podcast (17 minutes, 8 seconds)
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Monday, February 7, 2011, 10:43 AM ET|Posted by Will RichmondLast night 100 million plus people tuned into the Super Bowl, once again highlighting the game's singular popularity. But aside from this huge once per year spike in sports enthusiasm, a simple fact remains: if you subscribe to pay-TV services and are not a sports fan (or are just a casual one), you are paying a lot of money each month for very expensive sports-oriented cable TV channels which you mostly don't watch. This degree of wasteful overspending, which could amount to at least $2 billion every year (as I'll detail below), creates a mile-wide opportunity for entertainment-oriented over-the-top entrants to prosper.
The value of sports programming was a topic we tackled last week at the MIT Enterprise Forum (panelists included Mark Cuban, Avner Ronen, Paul Sagan and me). Moderator Woody Benson challenged us at the start with how he could reduce his current $260/mo cable bill. As part of the discussion, Mark volunteered that pay-TV operators probably spend around $10 per month in licensing fees just for sports-oriented cable channels (these include channels like ESPN and its sister networks, TNT, and Regional Sports Networks, "RSNs" like NESN and Comcast SportsNet here in the Boston area and others). Mark estimated that this adds up to about 25% of the total monthly amount pay-TV operators spend on programming. My sense is that Mark's $10 per month amount might be a little high, but since he owns the NBA's Mavericks and sees the TV deals, he's in a good position to know.
(The video starts with about 40 minutes of one-on-one discussion between Mark and Woody and then shifts to the full panel)