ESPN is paying $160 Million per year to air the Sugar Bowl and the Rose Bowl ($80 Million each).

http://espn.go.com/college-football/stor...l-air-game

Can they actually sell $80 Million worth of advertising for each game? Will they actually make money on these deals?

If they weren't going to make money on it, it wouldn't be happening.

Can they make that much money back from this game? Probably not. I don't know the particulars such as who gets to keep sponsorship money, do they pay that money directly to those conferences or to the bowl to distrubute, or if they get any back from the bowl itself for putting it together. So there are questions to be asnwered to understand the true economics. But assuming it's just a straight cash transaction, they probably don't directly make their money back. They'd have to charge $1 million per commercial just to break even, before you account for production and promotion costs. For a non championship game, that's a bit hard to see happening. But what it does is add to the overall portfolio that ESPN has, and for the next decade, meaning when it is time to renegotiate their carriage rights with your local cable company, they are going to rake them over the coals. Then they get their investment back, and then some.

Not to worry, ESPN knows what they are doing. They currently demand the highest subscriber fees from cable and satellite companies and are Disney's largest profit center. They currently pay $111M per game for Monday Night Football, a program that gets ok ratings for cable, but certainly isn't the ratings winner it used to be (or that Sunday Night Football currently is). So to pay $80M each for two college games that traditionally do very well in the ratings might even be a bargain for them, especially since four times during the next 12 years, each of those games will be semifinals and get even higher ratings.

(11-16-2012 02:56 PM)CommuterBob Wrote:  They currently pay $111M per game for Monday Night Football, a program that gets ok ratings for cable, but certainly isn't the ratings winner it used to be (or that Sunday Night Football currently is). So to pay $80M each for two college games that traditionally do very well in the ratings might even be a bargain for them,

Not quite a fair comparison. Little side note, it actually breaks down to $105 Million per game (they also get the Pro Bowl). But the addition of prime time football to ESPN's lineup was worth essentially $1.00 per subscriber to ESPN (and probably more going forward). That was why when ESPN lost Sunday Night football, they were forced to move Monday Night football from ABC to ESPN, to keep their carriage rate the same, since their carriage rate agreements basically had a clause in them should espn lose NFL football. so while they may pay $105 million per game to air, in theory they generate $67 million per game in subscriber fees almost directly because of it. It was one reason why so many cable companies were absolutely pissed about the deal. Because they know they will have to pay for it.

NY Post Wrote:In a statement yesterday, it said that “ESPN has struck a bad bargain for consumers. The sports network’s financially wanton deal will push the cost of pay-TV service into the stratosphere, making the product less and less affordable during a time of severe economic stress and high unemployment.”

Matthew Polka, chief executive of the ACA, accused ESPN of refusing to give consumers the ability to opt out of programming they don’t want.

Bernstein Research’s cable and satellite expert, Craig Moffett, also waded into the debate, pointing out that ESPN and ESPN2 alone account for almost 20 percent of the wholesale cost of the average pay-TV subscription -- but account for just under 2.5 percent of total viewership.

The two channels cost pay-TV distributors $4.69 and $0.62 per subscriber per month, or nearly $64 a year.

Note that the last line, does not include ESPNU ($0.20 per scubsciber), ESPNNEWs ($0.17), ESPN Classic ($0.16), ESPN3 ($1.00 per ISP subscibeer) or WatchESPN (unknown)

You the cable subscriber is helping to pay that fee.

MNF, while it doesn't get the ratings SNF does for NBC, is often the highest rated cable program on a weekly basis.

Reading that article I just quoted, if ESPN keeps pushing it, they may fidn themselves banished to a sports tier. All it takes is for one major company to do it (Dish was the one mentioned) and for them to drop their fees and steal a bunch of customers, for others to follow suit. Then ESPN would be scrwed down the line.

(11-16-2012 03:15 PM)adcorbett Wrote:  Reading that article I just quoted, if ESPN keeps pushing it, they may fidn themselves banished to a sports tier. All it takes is for one major company to do it (Dish was the one mentioned) and for them to drop their fees and steal a bunch of customers, for others to follow suit. Then ESPN would be scrwed down the line.

In theory, yes, but the reason why the cable companies don't do it is because they are much more terrified of the opposite. ESPN has the highest loyalty rate of any cable channel, which means that ESPN is the channel that consumers name as the #1 channel that they would cancel their cable entirely over if their carrier didn't have that channel:

http://www.hollywoodreporter.com/news/an...age-355796

That data shows that over 1/3rd of cable subscribers would say that they would cancel their cable if they didn't have ESPN, which is the highest out of any cable network. Only cable carriers dropping over-the-air channels (ironically the very channels that you don't need cable at all for) would p*ss people off more. That's why ESPN has so much leverage along with other sports networks: the "average" TV watcher (most likely a woman over 50) may want nothing to do with paying for sports channels (so they're the ones that are getting screwed without a la carte cable, NOT any of us here who are getting our sports viewing habits subsidized many times over whether you like ESPN, NBCSN, Fox Sports Net or your regional sports network), but the most important demo (males under 49) consider sports to be so important that it's the one thing that they'll switch cable companies over. Most non-sports networks might be cheap compared to sports networks, but the people that care about sports REALLY REALLY REALLY care about having those networks and will base their subscription decisions accordingly. In contrast, non-sports fans generally don't think that way about any particular networks. The Big Ten Network was able to leverage that type of loyalty on a regional scale in the Midwest when it initially had a carriage dispute with Comcast. It would be many multitudes worse with any carrier that tried to drop ESPN - they would get crushed because there are a LOT more people that would drop a carrier that didn't have ESPN than would be happy with a lower cable bill (no matter how much people here might want to believe otherwise).

(11-16-2012 03:15 PM)adcorbett Wrote:  Reading that article I just quoted, if ESPN keeps pushing it, they may fidn themselves banished to a sports tier. All it takes is for one major company to do it (Dish was the one mentioned) and for them to drop their fees and steal a bunch of customers, for others to follow suit. Then ESPN would be scrwed down the line.

The article said that ESPN makes up 20% of the cost of cable, but only 2.5% of the viewship. That's such a ridiculous screw job that it can't last forever. Especially not with the new national networks from NBC and Fox who are gearing up to compete directly with ESPN.

(11-16-2012 04:14 PM)Frank the Tank Wrote:  

(11-16-2012 03:15 PM)adcorbett Wrote:  Reading that article I just quoted, if ESPN keeps pushing it, they may fidn themselves banished to a sports tier. All it takes is for one major company to do it (Dish was the one mentioned) and for them to drop their fees and steal a bunch of customers, for others to follow suit. Then ESPN would be scrwed down the line.

In theory, yes, but the reason why the cable companies don't do it is because they are much more terrified of the opposite. ESPN has the highest loyalty rate of any cable channel, which means that ESPN is the channel that consumers name as the #1 channel that they would cancel their cable entirely over if their carrier didn't have that channel:

http://www.hollywoodreporter.com/news/an...age-355796

That data shows that over 1/3rd of cable subscribers would say that they would cancel their cable if they didn't have ESPN, which is the highest out of any cable network. Only cable carriers dropping over-the-air channels (ironically the very channels that you don't need cable at all for) would p*ss people off more. That's why ESPN has so much leverage along with other sports networks: the "average" TV watcher (most likely a woman over 50) may want nothing to do with paying for sports channels (so they're the ones that are getting screwed without a la carte cable, NOT any of us here who are getting our sports viewing habits subsidized many times over whether you like ESPN, NBCSN, Fox Sports Net or your regional sports network), but the most important demo (males under 49) consider sports to be so important that it's the one thing that they'll switch cable companies over. Most non-sports networks might be cheap compared to sports networks, but the people that care about sports REALLY REALLY REALLY care about having those networks and will base their subscription decisions accordingly. In contrast, non-sports fans generally don't think that way about any particular networks. The Big Ten Network was able to leverage that type of loyalty on a regional scale in the Midwest when it initially had a carriage dispute with Comcast. It would be many multitudes worse with any carrier that tried to drop ESPN - they would get crushed because there are a LOT more people that would drop a carrier that didn't have ESPN than would be happy with a lower cable bill (no matter how much people here might want to believe otherwise).

Frank your article gives the same data as mine. You just have to look at it the opposite way. if 1/3 of the people absolutely care, then 2/3 of the people DON'T care at all, and could save a lot of money if given the option to not pay for espn. That's a hell of an incentive to switch. And that was what dish Networks president was talking about in the article, that there is probably a big market for those who don't want to pay for it, and was something they would consider if necessary.

As I said, all it takes is one to do it. Ben others see it will work. Could result in a flock of people going to directtv who absolutely would not consider it, but may in turn lead others to move to the lower ones. Remember, I am not the one who introduced this idea: the freaking cable companies did.

(11-16-2012 04:20 PM)MechaKnight Wrote:  

(11-16-2012 03:15 PM)adcorbett Wrote:  Reading that article I just quoted, if ESPN keeps pushing it, they may fidn themselves banished to a sports tier. All it takes is for one major company to do it (Dish was the one mentioned) and for them to drop their fees and steal a bunch of customers, for others to follow suit. Then ESPN would be scrwed down the line.

The article said that ESPN makes up 20% of the cost of cable, but only 2.5% of the viewship. That's such a ridiculous screw job that it can't last forever. Especially not with the new national networks from NBC and Fox who are gearing up to compete directly with ESPN.

As I've said, not all viewership is equal. ESPN delivers the most valuable ad demographic (males 18-49) better than anyone and it's the most likely channel that people will drop their cable carrier entirely over if that carrier doesn't have it. There is a large and valuable segment of people (once again, males 18-49) that will absolutely cancel a cable carrier if they can't receive the sporting events that they want, whereas that same intensity doesn't apply to other types of programming. So, even if ESPN is "only" 2.5% of viewership, they can easily be considered to be "worth" 20% of the average cable bill because there's such a large segment of the population that will only sign up for cable specifically because they need ESPN and other sporting events. I know that's definitely the driving factor for me - being able to watch sports is really the only reason why I pay for DirecTV. While I love Mad Men and Breaking Bad and appreciate the ability to watch them as soon as they're aired, there are alternative ways for me to watch those shows if I didn't have cable. Sports, on the other hand, is something that 99.9% of us need to experience in real time.

(11-16-2012 04:14 PM)Frank the Tank Wrote:  there are a LOT more people that would drop a carrier that didn't have ESPN than would be happy with a lower cable bill

The guy from DISH that was quoted in the article wasn't talking about cancelling ESPN all together, but moving it to a separate sports package. That way the people who really want it can still get it, while DISH can lower rates for everyone else.

If they worked the math right they might even be able do it without charging much more for the sports package than they currently are for basic. Just charge the basic subscriber a little more than is necessary based on the costs for basic cable, and use that to subsidize the sports package so it's still affordable even with the higher rates from ESPN.

Frank, espn actually does not deliver the demographic better than others. They consistently deliver it for sure, but even in that demo, they don't even top out as the highest rated cable station. That would be USA followed by TNT and Tbs, with espn 4th, three out of four quarters every year (MNF).

Again the MNF deal may be the tipping point. Essentially espn spends all of this money, then makes the cable companies pay for it. And now with MNF, and thee new bowl contracts, they are looking for ways to push back.

(11-16-2012 04:26 PM)adcorbett Wrote:  Frank your article gives the same data as mine. You just have to look at it the opposite way. if 1/3 of the people absolutely care, then 2/3 of the people DON'T care at all, and could save a lot of money if given the option to not pay for espn. That's a hell of an incentive to switch. And that was what dish Networks president was talking about in the article, that there is probably a big market for those who don't want to pay for it, and was something they would consider if necessary.

As I said, all it takes is one to do it. Ben others see it will work. Could result in a flock of people going to directtv who absolutely would not consider it, but may in turn lead others to move to the lower ones. Remember, I am not the one who introduced this idea: the freaking cable companies did.

Check out how Dish Network is doing in the New York market by refusing to carry the YES Network because of the costs. Their presence is non-existent there.

Guess which major market has been the worst market for satellite companies to break into? Philadelphia. Why? Because Comcast was able to exploit an obscure FCC rule for many years that allowed it to not offer Comcast SportsNet Philadelphia to satellite companies since it distributed CSN Philly as a "microwave and fiber optic" channel that required hardwire cable services. The FCC finally closed the loophole a couple of years ago, but now Comcast has then only offered CSN Philly to the satellite operators at a massive price, so there still isn't any satellite carriage.

Those are two regional examples of how important sports are in terms of whether people will buy cable/satellite from you. Dish Network can talk tough, but they know from the YES and CSN Philadelphia experiences that it would be national suicide to drop ESPN.

(11-16-2012 04:29 PM)MechaKnight Wrote:  

(11-16-2012 04:14 PM)Frank the Tank Wrote:  there are a LOT more people that would drop a carrier that didn't have ESPN than would be happy with a lower cable bill

The guy from DISH that was quoted in the article wasn't talking about cancelling ESPN all together, but moving it to a separate sports package. That way the people who really want it can still get it, while DISH can lower rates for everyone else.

If they worked the math right they might even be able do it without charging much more for the sports package than they currently are for basic. Just charge the basic subscriber a little more than is necessary based on the costs for basic cable, and use that to subsidize the sports package so it's still affordable even with the higher rates from ESPN.

I agree... they are not talking about dropping espn, just that it may go to another tier.

People can do the math and decide whether to order the tier or switch to another carrier.

(11-16-2012 04:44 PM)Topkat Wrote:  

(11-16-2012 04:29 PM)MechaKnight Wrote:  

(11-16-2012 04:14 PM)Frank the Tank Wrote:  there are a LOT more people that would drop a carrier that didn't have ESPN than would be happy with a lower cable bill

The guy from DISH that was quoted in the article wasn't talking about cancelling ESPN all together, but moving it to a separate sports package. That way the people who really want it can still get it, while DISH can lower rates for everyone else.

If they worked the math right they might even be able do it without charging much more for the sports package than they currently are for basic. Just charge the basic subscriber a little more than is necessary based on the costs for basic cable, and use that to subsidize the sports package so it's still affordable even with the higher rates from ESPN.

I agree... they are not talking about dropping espn, just that it may go to another tier.

People can do the math and decide whether to order the tier or switch to another carrier.

That's not a small matter, though. In cable terms, "just moving to the sports tier" is the equivalent of climbing Mt. Everest immediately after running the Iron Man Triathlon. Comcast is already locked in for a long-term deal with Disney. With Comcast having ESPN (among other Disney channels) guaranteed to be on basic for the foreseeable future, who is the biggest national player next to DirecTV, there's NFW that Disney would ever come within one inch of allowing another cable carrier to move ESPN to a sports tier -they either sign up for the full boat for ESPN or they don't get ESPN at all. So, it's a fallacy to believe that the sports tier option is even there in practicality because Disney has complete leverage in not even considering it (as much as a carrier like Dish might wish for the opposite to be the case). Dish itself has tried the "we're cheaper" argument in the NYC market by not carrying the YES Network and that has been a bust.

By the way, lest you think that I'm just an ESPN shill, what I'm talking about is the entire basis for the dramatic increase in value for ALL sports rights and ALL sports networks, including whatever gains that the Big East might receive from Comcast, Fox, ESPN or anyone else. If you don't think a critical mass of people want to pay basic cable rates for ESPN, then they certainly aren't going to be paying basic cable rates for NBCSN or Fox Sports One. In the event that it ever *did* come to the point where ESPN had to move to a different tier, they would at least have an HBO-like presence and the wherewithal to survive. They're one of maybe 10 or 15 basic cable channels that could actually live on in an HBO-type subscription model or get people to pay higher amounts for higher tiers. It would be the competing sports networks that would get killed if they got shifted down tiers. Believe me - everyone here should want ESPN and all sports networks to continue to be on the basic tier from a selfish perspective (both in terms of our personal viewing and the fact that our favorite sports teams and leagues completely depend upon it).

Just to note, you're speaking for he wrong person about the NBC thing, because I couldn't care less about NBC (unless the BE foolishly signs with them.) nor do I dislike espn. I was simply mentioning what dish network and the Cable broadcasting alliance, or whatever they call it, are planning. If enough of them actually fight back, and I'm not even saying they will, it could be an issue. Especially after all that has happened in the last year. That's all.

(11-16-2012 05:08 PM)adcorbett Wrote:  Just to note, you're speaking for he wrong person about the NBC thing, because I could t care less about NBC (unless the BE foolishly signs with them.) nor do I dislike espn. I was simply mentioning what dish network and the Cable broadcasting alliance, or whatever they call it, are planning. If enough of them actually fight back, and I'm not even saying they will, it could be an issue. Especially after all that has happened in the last year. That's all.

Oh, I agree with you adcorbett. I know that you don't have any particular love for Comcast.

I just don't think that Dish and others have much leverage here, particularly since Comcast re-upped with Disney and ESPN in a long-term deal. Content is ultimately king and that's the greatest advantage that all sports networks have: it's something that you watch live and it's exclusive. You can create a competitor to ESPN's NFL Countdown on your own, but you can't create your own NFL games. That's why ESPN and the top regional sports networks have always had cable carriers by the cajones and I actually think it will get worse. The chord cutters are generally customers that weren't that valuable to cable carriers in the first place, whereas the sports watching customer is generally their #1 target and most likely to stick with higher prices to the end. Just like sports programming in general is becoming more valuable *relative* to other types of programming (even if those other types of programming might draw more total viewers), sports networks are becoming more valuable *relative* to other types of networks, which is why they're able to charge such high subscriber rates in the first place.

On a separate note, anyone that thinks Dish Network or any other cable carrier is going to suddenly start passing back savings to consumers by shifting more expensive channels to different tiers is fooling themselves. Their long-range goal is to charge the same $80-plus per month bill to you with fewer channels and expenses as opposed to ramping you down to a $30 per month bill. I don't think it will work because, once again, content is king. There's actually way more competition among distributors than there is among the content providers of the cable channels (where there might be a greater number of channels but they're not all going after the same market, whereas cable providers are basically all competing for the same group of customers).

(11-16-2012 02:39 PM)3601 Wrote:  ESPN is paying $160 Million per year to air the Sugar Bowl and the Rose Bowl ($80 Million each).

http://espn.go.com/college-football/stor...l-air-game

Can they actually sell $80 Million worth of advertising for each game? Will they actually make money on these deals?

For ESPN the commercials are simply an added bonus. They get something like 5 billion per year in carry fees alone.