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For years, cable television has been sold in bundles – in order to watch the channels you want, you also have to pay for a host of others. But that model is being challenged in the Supreme Court, by Netflix and by online streaming companies.
What does this have to do with sports?
It starts, as Sports on Earth’s Will Leitch explained to Bill Littlefield, with the unique position sports programming currently occupies in cable packages.
“Everything outside of sports, people are watching the way I watch ‘Parks and Recreation,’ which is whenever I have time to do it,” Leitch said. “Networks are looking for things that people want to watch live like it’s 1984, and the one reliable thing that remains like that is sports.”
This has meant that sports networks are cashing in – especially ESPN.
All cable subscribers – even those who have never flipped to the station — pay about $5 a month to ESPN alone, far and away the highest of any basic cable channel (and which probably helps explain why the company was recently valued at $50 billion).
But if cable becomes unbundled, as many industry experts expect to happen in the not-so-distant future, ESPN should take a hit.
“People talk about the cable bubble bursting,” Leitch said. “If that happens, even though sports is in this unusually powerful position in the world of cable now, it’s still going to be affected.”
“Certainly the way they’re doing business now—it’s hard to see how that’s going to be able to continue in 10 years,” Leitch continued.
The impact will be felt beyond ESPN’s headquarters in Bristol, Conn. Decreased revenue for ESPN and other sports networks equals less money for sports leagues and teams which sell broadcasting rights.
That, Leitch says, could impact competitive balance across sports leagues.
“When those [television contracts] run out, this competitive balance I think we’ve had in, frankly, all of our major sports, you’re going to see that maybe erode a little bit,” Leitch said, “and see the New York and Los Angeles teams maybe even having a bigger advantage than they did up to this point.”
But for the casual sports fan who’s watching from home, the bursting cable bubble could lead to greater choice.
“If the unbundling does happen, you’re going to have a lot more personal choice,” Leitch explained. “It’s funny how all of this change that we talk about, it tends to be the type of change that is bad for teams and bad for networks but potentially good for fans.”
But that extra choice will come with a price.
“As you get more and more options, some of these unbundlings maybe shrink the industry moneywise a little bit, and that money’s going to have to come from somewhere,” Leitch said. “I suspect while you may have more options, if you’re a hard-core fan, you may find those options getting a little bit more expensive year by year.”
This segment aired on May 3, 2014.
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