View Full Version : The cost of ESPN & Fox Sports
Many posts have been written here about the rising cost of cable. However, some also realize that the same market forces that cause cable companies to raise prices also affect DBS. One of those market forces is the cost of content. Cable companies, as well as DBS, are facing large (huge) increases from ESPN & Fox Sports. The following are excerpts from the full article.
ATLANTA (AP) - Some cable TV viewers may have to decide whether they are willing to pay extra for ESPN and Fox Sports.
One of the nation's largest cable operators says the channels have become too expensive for its basic packages and should become premium content.
Jim Robbins, chief executive of Cox Communications, says the change is forced by the fact the ESPN and Fox Sports channels combine for 8 percent of Cox's cable viewers and 32 percent of its costs.
Robbins said Fox is requesting a 35 percent increase in its current rates and that ESPN wants a 20 percent increase.
A complicating factor in the negotiations is the cable industry's battle to protect its market share against satellite TV.
News Corp., the parent company for Fox, is in negotiations to purchase satellite content provider DirecTV. If that deal is completed and Cox makes Fox Sports premium content, Robbins said he could risk pushing customers to buy satellites.
http://www.omaha.com/index.php?u_pg=1458&u_sid=878547
This article with statements by local Cox Omaha appeared the same day.
Cox Communications officials in Omaha said it's too soon to know if possible rate hikes by ESPN and Fox Sports will affect Omaha cable television subscribers.
Local officials were responding to a statement by Jim Robbins, Cox chief executive, that the sports channels have become too expensive for its basic programming packages and should become premium content.
"We don't know if it's going to happen here, or when," said Marcia Cady, community relations manager for the Omaha market.
"What Mr. Robbins is doing is setting forth our strategy that our (basic) customers shouldn't have to pay (extra) for this programming. Costs are so escalated."
Even basic cable channels cost money, Cady said. When it comes to ESPN and Fox Sports, the channels combine nationally for 8 percent of Cox's cable viewers and 32 percent of its costs.
Cady said Cox is trying to educate customers.
"When it comes to ESPN and Fox, they're asking for a lot more money than some of the top viewed channels on the cable system," she said.
"Is that fair that they should be asking for those amounts of money when they have a very small audience?"
Cady said she doesn't know how customers will respond if Cox begins charging extra for the sports channels.
"But I think they will appreciate the fact that we're trying to do everything we possibly can to keep expenses down," she said.
Cox subscriber Dan Carney of Ralston said he wouldn't like to pay extra for ESPN.
"But I would begrudgingly do it because I can't live without my sports channels," he said.
http://www.omaha.com/index.php?u_pg=1458&u_sid=879077
In the first article, it states that a complicating issue for cable companies is the purchase of DirecTV by News Corp., and protecting market share. But the complicating factor is also there for Dish. Dish has already been facing these cost increases. What will Dish be facing if the sale goes through, and will this be enough of a complicating factor that the sale will not be approved?
Are ESPN and Fox Sports shooting themselves in the long run. My other question is, are they so expensive because they just want to make a lot of money, or are they forced to charge what they do because of the demands of sports teams and leagues who once again are gouging, in the end, the fans who want to watch?
PS to the admins. I thought a lot about where to post this, and if you want to move it to the Sports forum I have no problem with it, but it seemed to deal with larger issues than just sports.
Lyle_JP
10-08-03, 12:46 PM
I will drop my existing service immediately for the first DBS or cable company which has the balls to put all of their sports channels in an optional sports channel package and offers substantial savings on the rest of the basic channel line up!
I'm sick of heavily subsidizing sports fanatics.
George_T
10-08-03, 01:03 PM
You've got two different situations here. ESPN is in great demand by many, and they are on many basic plans. Fox Sports, on the other hand, isn't on as many basic plans, and usually you have to pay extra for them (or purchase more than a basic plan). On D*, for instance, you get ESPN in your basic plan, but if you want more than your local Fox Sports affiliate, you have to purchase the Sports' package for 10-12 dollars more a month.
Because of the differences, I have less of a problem in paying for an increase in Fox Sports than I do with ESPN. I do think ESPN price gouges; they have historically overpaid for professional sports' broadcasting rights, and then they try to pass it on to customers. Although Fox is trying to get a rate increase, they also have less revenue coming in because if their RSN's show professional events, these are usually only local in nature (thus, they are taking in less revenue). Also, sports fans who want ALL the Fox RSN's do supplement this by paying for the sports' package.
BTW, isn't it ironic that cable's fussing over the proposed increase in Fox Sports' rates right around the time that there's debate over whether or not Rupert's proposal to buy D* draws near. Just a thought.
MrBadGuy
10-08-03, 01:44 PM
Wow. No ABC locals, ESPN, ESPN News, ESPN 2, ABC Family, Disney Channels, Toon Disney, A&E, History Channel, Lifetime, Lifetime Movies, E!, Style, SoapNet, Biography Channel, Fox locals, Fox News, FX, Fox Movies, Fox Sports Nets, Fox Sports World, Speed, National Geographic.
That would be boring to me. But that's just one persons opinion.
If that's what you like, I don't blame you to try and get the NO-Sports cable/satellite company.
Just a heads-up for the future. Viacom owns CBS and they show the NFL & college sports, AOL/Time Warner show the NBA and NASCAR & NBC shows the Olympics which cost them a fortune. You can expect all of them to try and raise their rates and use the other channels they own for leverage as their justification.
Mark Holtz
10-08-03, 01:45 PM
The $ports channels have always been a contentious issue with the DBS community. Many DBS people have been wanting a'la carte programming choices, but the providers say NO!
BTW, isn't it ironic that cable's fussing over the proposed increase in Fox Sports' rates right around the time that there's debate over whether or not Rupert's proposal to buy D* draws near. Just a thought.The last thing I want to see this thread become is a cable/DBS flame war, but there is a sentence in both articles that helps explain the timing that I did not include in my original post.
The company's contract with Fox Sports expires at the end of the year, and its contract with ESPN runs through early 2004. From my perspective as a current Cox sub this is a heads up that some kind of change is very likely in either lineup or cost, or both.
Greg Bimson
10-08-03, 02:10 PM
I will drop my existing service immediately for the first DBS or cable company which has the balls to put all of their sports channels in an optional sports channel package and offers substantial savings on the rest of the basic channel line up!Then you will probably never drop your existing service.
Think about this long and hard. It is called segmentation.
Remember 25 years ago, when you had few choices what to watch on OTA television? Since that time, there have been many more choices, which means there have been less viewers, by percentage and share, of OTA television. However, the ad rates have not dropped; they've gone much higher.
Fast forward to today. Let's put all of the sports channels in a package. Now all of the high-priced sports channels are in one package. What happens when Cox Communications starts to complain about the cost of FX, TNT, Discovery, and Lifetime? Will those channels then be segmented off of basic cable into their own little packages?
The cable company that removes ESPN and an RSN will be the first cable company to lose subscribers en masse to alternatives. And you can bet the cable company will not substantially drop their rates on basic cable.
One fact in this matter: out of the basic pay channels, ESPN and a local RSN are the highest rated of channels in basic packages. When it comes to ESPN and Fox Sports, the channels combine nationally for 8 percent of Cox's cable viewers and 32 percent of its costs.That is because most cable viewers are watching network and local station programming.
FTA Michael
10-08-03, 03:16 PM
From my perspective as a current Cox sub this is a heads up that some kind of change is very likely in either lineup or cost, or both.Bingo! The most likely result of this posturing is a rate increase, blamed on content providers.
And most folks will lose sight of an important business principle: The price a company charges for its product is based on whatever will maximize profit.
Watching the negotiations between Disney et al vs. DBS/cable is like watching negotiations between beef producers and McDonalds. At the end of the day, the beef folks need a market and McDonalds needs burgers to sell. And it's a rare day when any of it actually affects the customer. IMHO :)
Come on only 8 percent of viewers watch ESPN or FOX Sports,that's very hard to believe.I live in a devolpment with 100 homes,and only me and 7 of my neighbors watch cable channel sports.Sounds like alot of spin to me.Then why can ESPN and FOX get the rates they have,for only 8% of viewers.
Come on only 8 percent of viewers watch ESPN or FOX Sports,that's very hard to believe.I live in a devolpment with 100 homes,and only me and 7 of my neighbors watch cable channel sports.Sounds like alot of spin to me.Then why can ESPN and FOX get the rates they have,for only 8% of viewers.
I am only guessing, but this is a possibility of how they may reach those figures.
You live in a development with 100 homes, with an average of 4 people living in each home, for a total of 400 viewers. Of the 400 viewers, only 8%, or 32, watch ESPN or Fox Sports at any one time. Even sports fans generally watch other channels besides sports channels at times.
I may very well be wrong on how this figure was reached, and you can disagree with how they want to present the numbers, but when you are negotiations with a provider you probably don't want to be quoted in an article saying that ESPN and Fox Sports are your most important channels, and that virtually everyone watches them. It may even be to your advantage to threaten to make those channels premium channels, available to fewer homes.
Here's a link to an excellent story in USA Today about the cost of sports programming:
http://www.usatoday.com/sports/2003-10-08-cable_x.htm
One stand-out point of the article: ESPN and FSN account for only 8% of Cox's total viewership, he [Cox Cable representative] says, but 32% of its programming costs.
ESPN charges $2.61 per subscriber while most other channels charge less than $1 each. There are some interesting money issues going on here.
Greg Bimson
10-09-03, 11:49 AM
Then again, one needs to look no further than the Nielsen ratings for cable shows. Take a look at multichannel.com (http://www.multichannel.com) at the top rated shows for last week. Seven of the top ten shows on cable were from ESPN. I realize this is an anomoly since ESPN was showing many of the MLB Divisional Playoff games.
When it comes to ESPN and Fox, they're asking for a lot more money than some of the top viewed channels on the cable system.So if the ESPN programming is that highly rated, yet only watched by 8 percent, what are the channels that have better viewership? The networks?
You've got two different situations here. ESPN is in great demand by many, and they are on many basic plans. Fox Sports, on the other hand, isn't on as many basic plans, and usually you have to pay extra for them (or purchase more than a basic plan). On D*, for instance, you get ESPN in your basic plan, but if you want more than your local Fox Sports affiliate, you have to purchase the Sports' package for 10-12 dollars more a month.
Actually with D*, the local Fox sports RSN is included in the basic package Total Choice. To get the remaining out of market RSNs, one must take the sports package.
This is negotiating rhetoric.
The company that seems most vulnerable is Disney.
If cable systems collectively drop ESPN, ESPN's subscription and advertising revenues would take a major hit.
Disney is already stuck with failing retail store division, struggling theme parks, struggling ABC Network, and gradually weaker local stations (in relative market share). Disney is competitively behind other groups (Fox, NBC, Univision and Viacom all have duopolies and own many more TV stations than Disney).
Disney may have do well with sell of content (movies, syndicated content etc.), but besides ESPN, what cable property does Disney have of any value? ABC Family isnt a hot property.
As for A&E, History Channel, Lifetime, Lifetime Movies, Biography they are majority owned by Hearst Argyle. Disney doesnt use these channels in their negotiation tactics. E! and Style are primarily Comcast owned.
I cant imagine Disney tying ABC to ESPN and with the attitude that they'd want ABC pulled if ESPN wasnt carried. ABC is #4th network.
Bogy, My thinking was one home-one bill,no matter how many people in the household.
Actually with D*, the local Fox sports RSN is included in the basic package Total Choice. To get the remaining out of market RSNs, one must take the sports package.
Are you sure about that.. I have total choice + and don't get the
local fox sports net..
Bogy, My thinking was one home-one bill,no matter how many people in the household.
That's what I figured your thinking was, but if you have ever been a "Nielson family" etc. (my family was, many, many years ago), they count each individual viewer. That's what I would figure the numbers would be based upon.
rbonzer
10-09-03, 05:16 PM
I always thought that Nickelodeon was the most watched cable channel. I only base this on the occasional Nielson ratings for cable shows that appear in Entertainment Weekly. It always seems that 25% of the top 25 is SpongeBob SquarePants. Another 25% is the other popular Nick shows like Rugrats, Fairly Oddparents...
IndyMichael
10-09-03, 05:36 PM
Do they really mean 8% of the viewers, or that the ESPN and Fox sports channels account for 8% of the channel lineup and 32% of the costs?
Greg Bimson
10-09-03, 09:35 PM
On weeks there is nothing "special" on television, Nickelodeon tends to receive ratings wins for SpongeBob, Rugrats, and OddParents. However, these are in the 1.2 to 2.2 rating points range. However, the Sunday Night NFL on ESPN generates anywhere from a 7 to a 10 on a regular basis.
Are you sure about that.. I have total choice + and don't get the
local fox sports net..
Some areas dont get an RSN with TC (such as the Phila. market).
Some areas get a RSN in TC, but its not a Fox RSN.
Among the top cable networks are: Lifetime, Nickelodeon, USA, TBS, TNT and ESPN.
What these cable operators want is Disney and Fox out of the picture. If ESPN and Fox Sports are dropped off systems, their business model fails.
Cox and Comcast would rather the cable operators be controlling the sports content television rights. Right now Cox pays for ESPN(Disney) then ESPN pays for MLB... Instead Cox would prefer Cox paying directly for MLB rights, and keeping the rights cable exclusive. Reduction of the middle man and cost savings going towards the cable companies. Cable companies arent working in for the interests of their customers, but have self-serving interests in mind. Rates to customers wouldnt be reduced.
Cable companies arent working in for the interests of their customers, but have self-serving interests in mind. Rates to customers wouldnt be reduced.
Of course DBS companies have no self-serving interests, and don't even care about profits, they work strictly for the good of their customers. :D :rolleyes: :confused: :lol: :sure:
Of course DBS companies have no self-serving interests, and don't even care about profits, they work strictly for the good of their customers. :D :rolleyes: :confused: :lol: :sure:
In comparison, yes. Dish in particular has done many things to keep costs down, and Direct has done a pretty good job too, although at the cost of being in the red. Since I dropped cable, my cost with Dish for the same programming has actually gone down. While AT150 has gone up, the cost of HBO/Cinemax added to it went down. Meanwhile cable here is about $13 more a month than it was then to get the same programming as Dish, and about $19 more a month overall. So yes, in a way DBS is looking out for the consumer more than cable. Thus one of the reasons DBS keeps adding so many new subscribers.
In comparison, yes. Dish in particular has done many things to keep costs down, and Direct has done a pretty good job too, although at the cost of being in the red. Since I dropped cable, my cost with Dish for the same programming has actually gone down. While AT150 has gone up, the cost of HBO/Cinemax added to it went down. Meanwhile cable here is about $13 more a month than it was then to get the same programming as Dish, and about $19 more a month overall. So yes, in a way DBS is looking out for the consumer more than cable. Thus one of the reasons DBS keeps adding so many new subscribers.Since I moved and switched back to cable from DBS my costs have remained pretty much the same, outside of switching packages several times, while Cox as of the 28th of this month will have added about 15 new channels during that time. So lets just leave it that service and attitude vary by provider and discuss the cost of sports channels and not the intrinsic evilness of cable companies, unless you want to identify specific companies you think look out for their customers less than others. As I previously stated, I did not introduce this thread intending it to deteriorate into another cable is evil thread, and if that is what it becomes I will ask the admins to lock it immediately.
Ronmort
10-13-03, 11:27 AM
Well, I don't know what the situation is in your areas, my area is pro-sports big-time. Most men and many women around here watch sports, talk sports, and love sports. There are numerous fans of Penn State, Notre Dame, Yankees, Phillies, Sixers, Flyers, Knicks, etc. There are minor league teams in baseball and hockey that draw pretty well in this area. Even the local high school football games get pretty good crowds. Our local school, Pittston Area is playing undefeated Berwick this Friday, and you'd think it was an upcoming NFL game.
I guess the point is that sports are in great demand in a lot of households, but I agree, even though I number myself among the sports fans, that cable and satellite should be structured in such a way to minimize costs for all customers. The same should be true for non-sports programming. Personally, I like most of the channels and would pay for them anyway because I think variety is what satellite tv is all about.
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