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Friday, March 16, 2012

Regional Sports Network Pricing Climbs Through The Roof

In case you were wondering how the Angels were able to afford Albert Pujols' insane $250M/10-year deal, or why the Dodgers bidding is currently said to be in excess of $1.6 billion, this multichannel.com article about regional sports network fees is something to behold:
According to SNL Kagan, affiliate-fee revenue for all regional sports networks rose 44% in the past five years, from $3.2 billion in 2007 to $4.6 billion in 2011. At the same time, affiliate revenue for non-sports cable networks has climbed nearly 41% in the same period, from $12.3 billion in 2007 to $17.3 billion in 2011.
Cable TV networks are starting to fight back, but Time Warner Cable is conflicted now by their ownership of the Lakers' TV network:
Some reports have said based on the estimated $3 billion TWC paid the Lakers for rights to air their games for 20 years, the MSO will need to charge as much as a combined $3.50 per subscriber per month for the two networks to turn a profit.

“Based on the pretty substantial rights fee they were charged, they, in turn, will probably charge a pretty substantial [carriage] fee,” Berke said.

It seems to me that a lot of the carriage fees are based on some very rosy assumptions, in particular that people won't just start dropping cable. It's very easy to see that it might eventually be the case that carriage fees for RSNs could approach $20, which would set an absolute floor on cable TV monthly charges. $100/month for basic cable? It's not an impossibility.

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On the other hand, The sports networks may well end up being the last, best hold the cable nets have on subscribers. I know that's true for this household.
I agree, but this comes at the expense of my friends in scripted TV.

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