Is This the Beginning of the End of Overpaying for Sports on TV?
Some sports programming—emphasis on some—is finally getting too expensive for cable companies to justify jacking up your cable bill prices even more.
Some sports programming—emphasis on some—is finally getting too expensive for cable companies to justify jacking up your cable bill prices even more. At least two pay-television providers have opted not to pay for at least one local sports network because it's not worth hiking prices for all the viewers who won't ever watch a Houston Astros or Rockets game, reports The Wall Street Journal's Matthew Futterman. Both DirectTV and AT&T have refused to carry CSN Houston—the exclusive network of the Astros and Rockets—because they say $3.40 a month per subscriber doesn't match the demand of its subscriber base. "We'd like to make the channel available to our customers, but the proposed cost is not fair to pass to all of our customers across Texas, Oklahoma, Louisiana and Arkansas, especially based upon our subscribers' historical lack of viewership of Rockets and Astros games," AT&T said in a statement.
Already, that's a huge step toward a more affordable future in cableland. Demand for live sports has kept cable bills high and bundled because sports is the most reliable source of viewers. At least that's the theory the likes of ESPN have peddled while charging the egregious prices that cable networks force on their customers. "ESPN is consistently ranked by cable operators as the most compelling and comprehensive driver of their businesses," an ESPN spokesperson told WSJ back in 2011.
Viewer data, however, shows not all sports events are created equal. The Astros and Rockets—two teams that haven't had the best records, of late—aren't bringing in enough eyeballs to warrant raising the cable bill another $3.40 per person. AT&T and DirectTV refused to release the actual numbers, but Nielsen data says the TV audience for sports makes up 4 percent or less of households. And, local sports do even worse, with less than 3 percent of TV owning households tuning in to watch their home teams play. All of this despite making up around 20 percent of the entire cable bill. It's no wonder neither of these pay TV providers wants it.
While an encouraging blow to the conventional wisdom that sports programming deserves to cost more, this is just the story of two sports teams and one local sports network, unfortunately. The NFL drives sports prices far more than other events, as this chart below shows:
Also, ESPN is in a whole different league. It charges a whopping $4.69 per household, but has the loyal fan base—who tune in not just for sports but for endless sports commentary—to do it. Despite turning down $3.40 per subscriber for Astros and Rockets games, you don't see DirectTV, AT&T or any cable or satellite provider doing anything about ESPN's ever-rising costs. The progress, for now, seems limited to one tiny Houston network.
As small as the step is, the situation has one other incredible, encouraging element. As a counter-offer, AT&T suggested providing CSN Houston to its subscribers a la carte. CSN declined—for now, as it still has a lucrative deal with Comcast and 60 percent of the market. But, not making these deals could prove a financial blow to the franchise, notes Futterman. "Failing to get picked up by more TV providers could affect how much money Mr. [James] Crane, the owner, has to spend on his team and could depress the value of the franchise." That a la carte deal might not look so bad in the future. And with that, we'd have the beginning of the end of bundled sports programming on TV, which would do a whole lot to lower those high cable bills.