Jump to content


Welcome to DBSTalk


Sign In 

Create Account
Welcome to DBSTalk. Our community covers all aspects of video delivery solutions including: Direct Broadcast Satellite (DBS), Cable Television, and Internet Protocol Television (IPTV). We also have forums to discuss popular television programs, home theater equipment, and internet streaming service providers. Members of our community include experts who can help you solve technical problems, industry professionals, company representatives, and novices who are here to learn.

Like most online communities you must register to view or post in our community. Sign-up is a free and simple process that requires minimal information. Be a part of our community by signing in or creating an account. The Digital Bit Stream starts here!
  • Reply to existing topics or start a discussion of your own
  • Subscribe to topics and forums and get email updates
  • Send private personal messages (PM) to other forum members
  • Customize your profile page and make new friends
 
Guest Message by DevFuse

Photo
- - - - -

Sharing article on sports costs


  • Please log in to reply
43 replies to this topic

#26 OFFLINE   tonyd79

tonyd79

    Hall Of Fame

  • Registered
  • 12,860 posts
  • LocationColumbia, MD
Joined: Jul 24, 2006

Posted 28 January 2013 - 05:00 PM

Yep, going some form of a la carte does have big risks. Imagine a niche channel that is currently getting 25 cents from all of Directv's subscribers because it's in the basic bundle. But separate it out and only 10% of the customers want it. To stay at the same revenue level they'd have to charge $2.50, which would cause even more people to drop it, further driving up the cost.

Now do the math on a sports channel that's getting $3 or $4 a sub. Would 25-30% drop it? What if it's now $5-6 a month? What if 50-60% drop it?

Don't get me wrong, I'm a proponent of some form of segmenting programming into smaller clusters or packages or limited a la carte, but any moves along this road would be highly disruptive.


It is worse than that. If that channel is commercial driven, the money from advertising drops and they need to make that up.
LR: HR34-700, H24-200, Fios DVR, BD350 Blu Ray, Roku Netflix Player, Chromecast, Sony 65w850 TV
BR: HR21-200, Viso 32LX, DB350 Blu Ray
Dish: Slimline, SWM8
Other: genieGo

...Ads Help To Support This Site...

#27 OFFLINE   JoeTheDragon

JoeTheDragon

    Hall Of Fame

  • Registered
  • 4,288 posts
Joined: Jul 21, 2008

Posted 28 January 2013 - 05:50 PM

It is worse than that. If that channel is commercial driven, the money from advertising drops and they need to make that up.


what about stuff like Disney where they are dropping some ad's.

D* and other should push back and say yet use sell disney as it's own channel or we will insert ad's with no hold backs other then adult ad's.
I want CLTV / CLTV HD on direct tv.

#28 OFFLINE   lokar

lokar

    Icon

  • Registered
  • 707 posts
Joined: Oct 07, 2006

Posted 28 January 2013 - 05:54 PM

Sports programming is a little like group insurance -- the more people in the risk pool, the cheaper the premiums for everyone. But when you start to cull out segments, the cost rises astronomically.

To have sports programming only for those who want it, you'd be looking at triple-figure subscriber prices, easily.


That is just to maintain the current system, which is ridiculous and nearing a breaking point. Take TWC's $280 million a year channel for the Dodgers. If this channel and all RSNs were a la carte, there's no way they would spend that much money on the Dodgers because as you say they would have to charge triple digit subscriber fees and nobody would pay it. TWC would then have to charge whatever the market would bear for their Dodgers channel and their bid would be substantially lower, as would their competitors.

End result: the Dodgers would have to get by on a lot less money and all LA non-sports subscribers would have more money. Sounds like a win-win.

#29 OFFLINE   HGuardian

HGuardian

    Godfather

  • Registered
  • 429 posts
Joined: Aug 09, 2010

Posted 28 January 2013 - 06:26 PM

That is just to maintain the current system, which is ridiculous and nearing a breaking point. Take TWC's $280 million a year channel for the Dodgers. If this channel and all RSNs were a la carte, there's no way they would spend that much money on the Dodgers because as you say they would have to charge triple digit subscriber fees and nobody would pay it. TWC would then have to charge whatever the market would bear for their Dodgers channel and their bid would be substantially lower, as would their competitors.

End result: the Dodgers would have to get by on a lot less money and all LA non-sports subscribers would have more money. Sounds like a win-win.


Bingo. This current system is broke and we will see it in the next few years. This model can not and will not sustain itself.

#30 OFFLINE   jmpfaff

jmpfaff

    AllStar

  • Registered
  • 56 posts
Joined: Dec 12, 2004

Posted 28 January 2013 - 09:51 PM

That is just to maintain the current system, which is ridiculous and nearing a breaking point. Take TWC's $280 million a year channel for the Dodgers. If this channel and all RSNs were a la carte, there's no way they would spend that much money on the Dodgers because as you say they would have to charge triple digit subscriber fees and nobody would pay it. TWC would then have to charge whatever the market would bear for their Dodgers channel and their bid would be substantially lower, as would their competitors.

End result: the Dodgers would have to get by on a lot less money and all LA non-sports subscribers would have more money. Sounds like a win-win.


Exactly. While I acknowledge the risks of a la carte, reality is that the RSN sports prices can only go up so much before people would dump them. (Also true of non-sports channels)

And one happy story is unfolding here in Houston for those who want this to happen. With CSN-Houston only available on about 40% of TV households in Houston, they are seeing a major drop off in interest. Sports talk radio hears barely a mention of them. Simple fact is that the lack of TV coverage is costing them fan support.

And I would encourage DirecTV to take a hard line with ALL content providers and refuse to let the content provider dictate the package selection. If they want to offer a discount for being in 80% of houses, for example, I have no issue with that. But they shouldn't be able to dictate that they are in the basic package vs the sports package vs premier.

#31 ONLINE   pdxBeav

pdxBeav

    Godfather

  • Registered
  • 445 posts
Joined: Jul 05, 2007

Posted 28 January 2013 - 10:31 PM

Exactly. While I acknowledge the risks of a la carte, reality is that the RSN sports prices can only go up so much before people would dump them. (Also true of non-sports channels)

And one happy story is unfolding here in Houston for those who want this to happen. With CSN-Houston only available on about 40% of TV households in Houston, they are seeing a major drop off in interest. Sports talk radio hears barely a mention of them. Simple fact is that the lack of TV coverage is costing them fan support.

And I would encourage DirecTV to take a hard line with ALL content providers and refuse to let the content provider dictate the package selection. If they want to offer a discount for being in 80% of houses, for example, I have no issue with that. But they shouldn't be able to dictate that they are in the basic package vs the sports package vs premier.


I agree. One of the things that people completely miss here is that they assume if a programmer has only 20% of the viewers they previously had that they will charge 5x the previous cost in order to maintain the same revenue. This isn't how prices are set. The market determines how much the cost will be. Just because a company used to get XYZ in revenue doesn't mean they'll get XYZ in the future.

I always side with cable/sat companies in carriage disputes.

#32 OFFLINE   Cyber36

Cyber36

    Legend

  • Registered
  • 274 posts
  • LocationByron NY
Joined: Mar 20, 2008

Posted 29 January 2013 - 10:47 AM

Being the major sports fan I am, I'm still about to say enough's enough. In the grand scheme of life, it's just not that important anymore. Sure, these guys still need to make a living, but jeezus...........

#33 OFFLINE   Mike Bertelson

Mike Bertelson

    6EQUJ5 WOW!

  • Moderators
  • 13,974 posts
Joined: Jan 24, 2007

Posted 29 January 2013 - 11:30 AM

All these networks want to be ESPN and I don’t think any service provider can afford to let that happen. There’s too many of them.

It almost seems that RSNs are a completely different animal when it comes to programming. There are so many of them that it almost begs for an a la cart system because most people aren’t going to want to pay for channels outside their region. But, with a la cart the RSN may not make enough to keep the network afloat. Now you’re back to spreading the cost across all subs which almost nobody wants.

I can see a situation where the whole dedicated sports network concept will collapse under its own weight.

It’s even possible that Pac-12 or any other sports network may be the make or break negotiation for the future of league/conference/team based sports networks.

Mike

µß
Since it costs 1.66¢ to produce a penny, my 2¢ worth is really 3.32¢ worth.  That 3.32¢ is my own and not the 3.32¢ of DIRECTV, Dish, or anyone else for that matter.


#34 OFFLINE   Satelliteracer

Satelliteracer

    Hall Of Fame

  • Topic Starter
  • Registered
  • 3,042 posts
Joined: Dec 06, 2006

Posted 29 January 2013 - 12:49 PM

I agree. One of the things that people completely miss here is that they assume if a programmer has only 20% of the viewers they previously had that they will charge 5x the previous cost in order to maintain the same revenue. This isn't how prices are set. The market determines how much the cost will be. Just because a company used to get XYZ in revenue doesn't mean they'll get XYZ in the future.

I always side with cable/sat companies in carriage disputes.


The problem is, however, they have to back into their pricing so it's not a traditional model on what the market will bear.

TWC goes out and agrees to pay the Doyers $7 billion for 25 years. They need to charge a price to the distributors that is going to (at the very least) cover that cost along with their own overhead costs associated with that deal (staff, production, etc, etc). So before a negotiation even starts, they know absolutely the price is going to be at least $5 (just using a number for illustrative purposes) even if that $5 is above what the market will bear...but they are tying that $5 to a minimum penetration which will yield the multiplier (like 3 million customers as an example).

If they can't get that distribution, the math is pretty simple...the $5 becomes $10 if they get only 1.5 million distribution. It becomes $20 if the distribution is only 750K. So on and so forth. The problem is that these deals are done up front with teams, leagues, etc for really high numbers and they then go out and sell that back to the distributors and ultimately to you. They are reverse engineering what they need to get to based on what they promised up front and what the market will bear is seemingly an after thought. In my opinion.
DIRECTV employee

All comments are my own. Unless specifically stated, my views do NOT represent the views of DIRECTV

#35 ONLINE   pdxBeav

pdxBeav

    Godfather

  • Registered
  • 445 posts
Joined: Jul 05, 2007

Posted 29 January 2013 - 01:52 PM

The problem is, however, they have to back into their pricing so it's not a traditional model on what the market will bear.

TWC goes out and agrees to pay the Doyers $7 billion for 25 years. They need to charge a price to the distributors that is going to (at the very least) cover that cost along with their own overhead costs associated with that deal (staff, production, etc, etc). So before a negotiation even starts, they know absolutely the price is going to be at least $5 (just using a number for illustrative purposes) even if that $5 is above what the market will bear...but they are tying that $5 to a minimum penetration which will yield the multiplier (like 3 million customers as an example).

If they can't get that distribution, the math is pretty simple...the $5 becomes $10 if they get only 1.5 million distribution. It becomes $20 if the distribution is only 750K. So on and so forth. The problem is that these deals are done up front with teams, leagues, etc for really high numbers and they then go out and sell that back to the distributors and ultimately to you. They are reverse engineering what they need to get to based on what they promised up front and what the market will bear is seemingly an after thought. In my opinion.


I understand that, but at some point it won't work anymore. The price must be agreed on by the buyer and seller. At some point not enough people will pay for the channel and no matter how much they charge they won't break even.

As an extreme example, let's say TWC payed the Dodgers 500 trillion dollars. How much would they need to charge the distributors to break even? I don't think there is any number that would work in this unrealistic scenario, but it shows that there is a limit to what works.

And again, I'm not implying we are at that point yet, but there is a limit to how much they can charge.

#36 OFFLINE   tonyd79

tonyd79

    Hall Of Fame

  • Registered
  • 12,860 posts
  • LocationColumbia, MD
Joined: Jul 24, 2006

Posted 29 January 2013 - 04:43 PM

And again, I'm not implying we are at that point yet, but there is a limit to how much they can charge.


Deals like the Lakers and Dodgers deals are pushing us awfully close to the breaking point.

What is odd is that Time Warner, as a cable company, should know better. There is no way they recoup their costs if they cannot sell the channels to systems outside their own. They saw how hard it was to sell the Lakers and, being on the other side, should know the economics better than, say, Fox Sports.

This is a mad money grab. Get what we can while we still can. Don't worry about the next guy, screw him. Oh, the next guy might be us? Oh well. We got what we could.
LR: HR34-700, H24-200, Fios DVR, BD350 Blu Ray, Roku Netflix Player, Chromecast, Sony 65w850 TV
BR: HR21-200, Viso 32LX, DB350 Blu Ray
Dish: Slimline, SWM8
Other: genieGo

#37 OFFLINE   cforrest

cforrest

    Icon

  • DBSTalk Club
  • 820 posts
Joined: Jan 20, 2007

Posted 29 January 2013 - 11:19 PM

Deals like the Lakers and Dodgers deals are pushing us awfully close to the breaking point.

What is odd is that Time Warner, as a cable company, should know better.


They'll be learning soon enough in NYC area when News Corp, now majority owner of YES Network, plays hardball with Time Warner for renewal. That deal reportedly expires in the 1st qtr of 2014 & you have to wonder if News Corp. uses Time Warner to set a new higher price point for the channel for future renewals with other MSOs.

D* Setup:

Slimline (AU9-S) w/no multiswitch
(1) HR21-100 0x87F (7/8/08 Made in Mexico) via HDMI to Pioneer PDP-6020FD
(1) HR24-100 0x87F (11/9/10 Made in Thailand) via HDMI to Panasonic TC-P58S2

FIOS 150/150


#38 OFFLINE   acostapimps

acostapimps

    Hall Of Famer

  • Registered
  • 1,864 posts
  • LocationIllinois
Joined: Nov 05, 2011

Posted 31 January 2013 - 02:56 AM

It's funny how ESPN pokes fun about their own predictions of the Lakers before the season started, Saying that the Lakers would go to the NBA Finals and face Miami Heat, or going as far to say they'll win the championship, Fast forward to today of what they now think of the Lakers possibly not making the Playoffs, Point of the story if they can make wrong predictions who knows what else mistakes they made, Probably pricing and renegotiating, I just don't trust what's coming out of the horses mouth LOL.

Directv Genie DVR HR44-700
Directv HD DVR HR24-500
Directv HD Receiver H24-200
Directv Wireless Mini Client C41W-100 (Deactivated)
Directv Standard SD Receiver D12-700 

SWM 16  SWM 8-Way Splitter  SWM 2-Way Splitter  Slimline 5LNB  

Directv Subscriber From 2009-?


#39 OFFLINE   tonyd79

tonyd79

    Hall Of Fame

  • Registered
  • 12,860 posts
  • LocationColumbia, MD
Joined: Jul 24, 2006

Posted 31 January 2013 - 06:43 AM

It's funny how ESPN pokes fun about their own predictions of the Lakers before the season started, Saying that the Lakers would go to the NBA Finals and face Miami Heat, or going as far to say they'll win the championship, Fast forward to today of what they now think of the Lakers possibly not making the Playoffs, Point of the story if they can make wrong predictions who knows what else mistakes they made, Probably pricing and renegotiating, I just don't trust what's coming out of the horses mouth LOL.


Very different parts of the company. The business side has made very few missteps.
LR: HR34-700, H24-200, Fios DVR, BD350 Blu Ray, Roku Netflix Player, Chromecast, Sony 65w850 TV
BR: HR21-200, Viso 32LX, DB350 Blu Ray
Dish: Slimline, SWM8
Other: genieGo

#40 OFFLINE   TheRatPatrol

TheRatPatrol

    Hall Of Fame

  • Registered
  • 6,866 posts
  • LocationPhoenix, AZ
Joined: Oct 01, 2003

Posted 04 February 2013 - 02:35 PM

Sports TV Costs Will Continue To Soar As Benefits Still Outweigh Costs: Analyst

#41 OFFLINE   mreposter

mreposter

    Hall Of Fame

  • Registered
  • 1,710 posts
Joined: Jul 29, 2006

Posted 04 February 2013 - 05:01 PM

Sports TV Costs Will Continue To Soar As Benefits Still Outweigh Costs: Analyst


Interesting article. The numbers on the cost of the channel per actual viewer was eye-opening. I'd never thought of it calculating it that way - the total cost of a channel to a provider (ie: Directv) divided by the actual number of people that watch the channel.
..........
.......... There are none so blind as those who can not see it in HD.
.......... Directv customer since January 2000.
..........

#42 OFFLINE   Mike Bertelson

Mike Bertelson

    6EQUJ5 WOW!

  • Moderators
  • 13,974 posts
Joined: Jan 24, 2007

Posted 04 February 2013 - 08:57 PM

Back when cable companies had to report that kind of data to the CT Department of Public Utilities Commission (called something else now), the CT cable co's were paying ≈$1/subscriber for ESPN...1999 time frame. God knows what it is today.

They still have to report the data but it's "confidential" and not to released to the public.

Mike

µß
Since it costs 1.66¢ to produce a penny, my 2¢ worth is really 3.32¢ worth.  That 3.32¢ is my own and not the 3.32¢ of DIRECTV, Dish, or anyone else for that matter.


#43 OFFLINE   Satelliteracer

Satelliteracer

    Hall Of Fame

  • Topic Starter
  • Registered
  • 3,042 posts
Joined: Dec 06, 2006

Posted 07 February 2013 - 11:51 AM

Disney's sports costs up, earnings down. Paying a lot more for sports fees. Ulitimately that means they will try to push those on the distributors. Article below


Disney yesterday posted lower earnings “due in part to the rising costs of acquiring TV sports rights for its ESPN division,” according to Grover & Zeidler of REUTERS. Net income “fell 6 percent" to $1.38B from $1.46B, and net income per share “fell 4 percent to 77 cents a share from 80 cents a share for the company's fiscal first quarter.” Revenues “rose 5 percent to $11.3 billion" from $10.78B a year earlier. Reuters analysis showed that Wall Street was “expecting revenues" of $11.2B. Disney said that operating income at its cable networks decreased $15M to $952M for the quarter "due to a decrease at ESPN, partially offset by growth at its Disney Channel, ABC Family and A&E Television Networks” (REUTERS, 2/5). In N.Y., Brooks Barnes reported ESPN had a “significant impact on Disney’s quarter, with programming expenses increasing for football and basketball.” Those costs “held back results for Disney’s media networks unit, which houses the cable sports behemoth; operating income there increased a tepid 2 percent" to $1.21B (NYTIMES.com, 2/5). CABLEFAX DAILY reports ESPN’s rising programming costs “reflected rate increases for college football and the NFL, as well as an increase in the number of NBA games due to the lockout in the prior year” (CABLEFAX DAILY, 2/6). In L.A., Dawn Chmielewski reported Disney’s results “also included a $219-million gain from the sale of its 50% interest in ESPN Star sports in India to its joint venture partner, News Corp.” (LATIMES.com, 2/5).

HEADING HIGHER: Disney Chair & CEO Bob Iger said the "price increases that we have for ESPN are primarily increases that we believe reflect the continued value proposition for ESPN, for the distributor and for the advertiser … and we’ll be able to continue to raise ESPN’s rates." Iger: "We don’t do so in any cavalier fashion. We’ve been investing in its programming and in the production and believe that value proposition is still there strongly.” He noted programming costs were high this quarter because of the "increase in rights fees" for college football. Iger: “But if you look at the year, the costs for ESPN’s programming will start to flatten out. We also have some distribution deals whose increases don’t kick in until after the first quarter” (“Closing Bell with Maria Bartiromo,” CNBC, 2/5). SNL Kagan data shows that ESPN currently “charges distributors $5 per household per month -- the most of any network.” But Iger “defended higher rates for ESPN, saying customers are getting more for their money through add-ons such as the WatchESPN mobile app” (N.Y. POST, 2/6).

DIRECTV employee

All comments are my own. Unless specifically stated, my views do NOT represent the views of DIRECTV

#44 OFFLINE   TANK

TANK

    Icon

  • DBSTalk Club
  • 885 posts
  • LocationFLORIDA
Joined: Feb 16, 2003

Posted 08 February 2013 - 09:33 AM

SNL Kagan data shows that ESPN currently “charges distributors $5 per household per month -- the most of any network.”


Is that $5 charge for all 4 ESPN channels ( ESPN,ESPN 2, ESPN U and ESPN NEWS ) ?




Protected By... spam firewall...And...