Proceeds from the ads below will be donated to the Bob Wuesthoff scholarship fund.

Wednesday, April 04, 2012

More On RSN Contract Valuations

The Wall Street Journal did us all a very nice public service by coming up with some numbers I have wanted to see for some time, and that is, revenue per cable subscriber. In the interests of providing this data past whatever expiration date exists on that story, I here reproduce a table therein:

TeamNetwork2011 Subscribers
YankeesYES Network12.0$2.80
RangersFox Sports Southwest8.1$2.66
MetsSportsNet New York7.4$2.38
AngelsFox Sports West7.1$2.66
DodgersPrime Ticket5.8$2.33
Red SoxNew England Sports Network4.1$3.35
PhilliesComcast SportsNet Philadelpha3.1$3.03

The surprises, of course, are that the Dodgers have less market penetration than the Angels. (The lower per-capita price is a direct function of their current TV deal.) Regarding the Dodgers' next contract, the article makes this unbelievable bit of speculation (as usual, emboldening is all mine):

Analysts say a Dodgers network could command a monthly fee of about $3.50 per home beginning in 2014 and reach a market that could stretch as far east as Las Vegas and north to San Luis Obispo.

That could translate into nearly $300 million in revenue annually before the network sells a single ad spot. Another bonus: Proceeds from regional sports networks aren't subject to baseball's revenue-sharing rules, which seek to maintain competitive balance among the MLB's 30 teams.

I say that's unbelievable because of the news from BGR (nee Boy Genius Report) that one million US adults discontinued cable TV service in 2011, representing more than a third of the estimated 2.65 million who have done so since 2008. The trend of cable-cutting is accelerating, but these ridiculous deals presume that the costs of RSN contracts will continue to be amortized over a larger customer base. That seems implausible if satellite and cable TV viewers continue to conclude those services aren't worth the money.

Update: Deadspin, whom I find myself with increasing respect for these days (they have been on the side of the angels in both the Michael Vick and Penn State stories), has a fantastic piece about this very subject that echoes my feelings about the situation, and provides additional clarification:

We're now learning that that cable providers are tired of RSNs' bullshit and perfectly willing to yank telecasts. Non-fans—against their will—subsidize telecasts for fans. Consider the MSG-Time Warner standoff in winter (and what's going on in San Diego now). According to reports (because none of this is transparent), Madison Square Garden wanted Time Warner customers to pay a 53 percent increase on its $4.65-a-month fee. That's $7.11 a month—or $85.32 a year, from every Time Warner subscriber in New York—for the Knicks, Rangers, Islanders, and Devils. Time Warner naturally balked, and might have held out longer if not for Jeremy Lin. In San Diego, Fox Sports San Diego is reportedly seeking a 400 percent fee increase from Time Warner Cable. Time Warner wisely has said no.

MLB could also face competition from First Row Sports or some other outlaw streaming enterprise. The pirate feeds don't cut out nearly as much as they used to, and, so far, the feds haven't been able to sue them out of existence.

As for a customer revolt: One gets progressively likelier, as cable prices climb while the economy lags and the market develops viable alternatives. One doesn't need cable anymore to fall under a screen's spell. There's Netflix and Hulu, video games are better than ever, and there's all kinds of other stuff to watch on the internet. Why should someone who buys cable just for the occasional movie write the Knicks such a big check? As the bills get bigger and bigger, people will check out. As for FCC intervention—forcing à la carte cable, or some such thing—it's not likely, but it's not impossible.

Read the whole thing.

Labels: , , ,

Maybe I'm missing something here, but does it really matter if people are giving up cable? They're not giving up TV altogether; they're just switching to another service provider. Does it really make a difference if they're getting the $3.50/month from a cable subscriber, DirecTV subscriber, Dish subscriber, FiOS subscriber, etc?
They're ditching cable and satellite in favor of Internet-based options such as Hulu or YouTube. They can't get their favorite MLB team that way — not in-market, anyway, not yet — but that may not matter if subscriber growth collapses faster than the RSNs can raise rates to meet their committed and fixed dollar amounts owed the teams. And even if they do, that might accelerate the losses as people who don't care about sports will leave cable and satellite even faster.

Above and beyond all of that, as I pointed out in an earlier post, overall television ownership is in decline. That's just mind-boggling.

Post a Comment

Note: Only a member of this blog may post a comment.

Newer›  ‹Older
This page is powered by Blogger. Isn't yours?

WWW 6-4-2