Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

(01-26-2016 07:44 PM)johnbragg Wrote:  Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

If you are thinking that ESPN is going to be able to monetize ESPN 3, they won't be able to since the content they have rights to won't be profitable or as profitable. The larger conferences don't need them to run the streaming platform since they area able to do that themselves. The smaller and poorer conferences need outside help.

SEC SEC SEC

(01-26-2016 08:20 PM)Attackcoog Wrote:  

(01-26-2016 07:44 PM)johnbragg Wrote:  Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

(01-26-2016 08:46 PM)MWC Tex Wrote:  If you are thinking that ESPN is going to be able to monetize ESPN 3, they won't be able to since the content they have rights to won't be profitable or as profitable. The larger conferences don't need them to run the streaming platform since they area able to do that themselves. The smaller and poorer conferences need outside help.

Except the conferences don't own their rights to stream. That's my point. ESPN is smart to buy up as many rights as they can. The content is where the value is. People don't stream static---they stream content---and frankly---ESPN doesn't make content. They just warehouse content they buy from existing leagues and conferences.

Yes, we are going to see a change in the delivery method and the billing model currently in use. Changes are coming. Some may stream more. Some may cut the cord. Some will never cut the cord. Others will do both. Carriage income will certainly drop. Some will stay with cable and embrace a la carte pricing. In the new environment some networks will cost much more than they do now---others will vanish because they have no real audience willing to pay for them. Other new transmission technologies will emerge. Content providers will eventually offer different bundles and packages. Sports may only be available by subscription in the future. But regardless---any model that emerges will have at its center the promise of some sort of content.

The point is---content costs money. As streaming becomes the most common delivery method, the content providers will be looking to recover their production costs and profits from streaming providers. The cheap streaming free lunch will be over. Content is where the value is---that's why you see other content aggregators like HBO and Netflix (who are also just middle men like ESPN) moving into content production. The delivery model is going to change. Whats not going to change is that the content rights holder will get paid.

This assumes that Disney isn't very smart. I don't assume that.

(01-26-2016 08:55 PM)Nebraskafan Wrote:  

(01-26-2016 08:20 PM)Attackcoog Wrote:  

(01-26-2016 07:44 PM)johnbragg Wrote:  Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

The funny thing is I think the decisions they have made are their only real life preserver. Their huge catalogue of sports rights is the most valuable thing ESPN has (its what gives ESPN its appeal). The current group of contracts will keep ESPN alive for some time---but if they lose their carriage deals and cant offer a huge block audience to conferences and pro leagues---why would those leagues re-sign with ESPN in the future when those conferences/leagues can just cut out the middle man and stream directly to customers?

The real danger to ESPN's future isn't their huge current contracts. The real danger is losing those big contracts.

As long as the four-letter network owns the content, they dictate how the content will be delivered. Not adjusting the delivery method quick enough could be costly, but in the end they have the content.

The ultimate backup plan for the four-letter network is to become a subchannel on all ABC affiliates - it may take a few years for the entire affiliate portfolio to come on board, but aside from Sinclair-owned stations, no affiliate would turn down the opportunity. Hearst still owns 20% of the four-letter network, so it would be in their best interest to work with ABC stations. For example, in the Birmingham market, WVTM is owned by Hearst and is affiliated with NBC, while WBMA (ABC 33/40) is owned by Sinclair and affiliated with ABC; if Disney and Hearst want the four-letter network OTA, those stations would swap affiliates in a heartbeat.

I wouldn't be shocked if Netflix or Amazon start streaming live sports in the future. The cable/satellite industry as we know it is in its last days. Companies like Comcast and AT&T will be in the business of selling internet packages

(01-26-2016 10:18 PM)UTEPDallas Wrote:  I wouldn't be shocked if Netflix or Amazon start streaming live sports in the future. The cable/satellite industry as we know it is in its last days. Companies like Comcast and AT&T will be in the business of selling internet packages

It wouldn't surprise me. In a lot of ways, they're way better positioned than ESPN to show G5 and fcs games.

(01-26-2016 10:18 PM)UTEPDallas Wrote:  Companies like Comcast and AT&T will be in the business of selling internet packages

In Britain, the telecom companies are also the Premier League and Champions League rightsholders. They televise the games on their own systems and you have to either buy one of their TV/phone/broadband packages bundled with the games, or buy the games separately -- current BT rate for an unbundled sports subscription is 20 pounds/month, about $29/month. Sky costs more, looks like it's about 25 pounds/month if not bundled with phone or broadband.

Here, that would take something like AT&T buying ESPN. Don't know if our government would permit that, even if Disney wanted to sell.

(01-26-2016 10:18 PM)UTEPDallas Wrote:  I wouldn't be shocked if Netflix or Amazon start streaming live sports in the future. The cable/satellite industry as we know it is in its last days. Companies like Comcast and AT&T will be in the business of selling internet packages

Agreed. They've been teasing it but not sure if they'll pull the trigger.

Signing up a few of the G5s seems like a no brainer to me. These services live off of content and a conference can give them lots of content, it wouldn't be all premium content but I'm sure it would be worth while.

I could then see a company like Amazon partnering with ASN, after they've built out their network more, and licensing someof these football and basketball games on TV. Amazon could use it as a 2-3 hour commercial.

(01-26-2016 08:46 PM)MWC Tex Wrote:  If you are thinking that ESPN is going to be able to monetize ESPN 3, they won't be able to since the content they have rights to won't be profitable or as profitable. The larger conferences don't need them to run the streaming platform since they area able to do that themselves. The smaller and poorer conferences need outside help.

If you did an ESPN2 weeknight FUNBELT/MACTION quality telecast based on appropriate ad rates you would need about 10,000 viewers to break even. Scale it back to an ASN/Fox Regional/CBS Sports Net/ESPNU midweek quality telecast and the break even point moves to around 4000 viewers. Take some of it in-house without leasing so much in gear and people and you can move breakeven to 2000 viewers with little trouble.

According to reports first year of heavy MAC on ESPN3 averaged 3500 viewers.

Except ESPN isn't bothering to sell ads and there have been a few message board claims that part of ESPN's payment to the MAC is designated to cover production costs. I know AState has shifted from producing some basketball for our NeuLion deal to ESPN3 because the cost isn't much higher and it was a cost we were already paying.

Currently about 86 million homes do not have a streaming device vs just under 29 million with a device.

There is obviously some serious growth potential left out there.

This assumes that no one cracks the targeted ad nut. Where the ad received in a particular household is based on demographic data so that one viewer receives an ad for Audi and across town someone else gets an ad about the sale on Hyundai's or hypertargeted so that one person may receive a national ad for Rolex and across town the ad is for locally owned Joe's Pawn Shop.

Crack the targeted and hypertargeted nut and ad revenue explodes.

ESPN isn't even trying to monetize ESPN3 today outside the carriage fee from ISP's.

(01-26-2016 09:34 PM)Attackcoog Wrote:  

(01-26-2016 08:55 PM)Nebraskafan Wrote:  

(01-26-2016 08:20 PM)Attackcoog Wrote:  

(01-26-2016 07:44 PM)johnbragg Wrote:  Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

The funny thing is I think the decisions they have made are their only real life preserver. Their huge catalogue of sports rights is the most valuable thing ESPN has (its what gives ESPN its appeal). The current group of contracts will keep ESPN alive for some time---but if they lose their carriage deals and cant offer a huge block audience to conferences and pro leagues---why would those leagues re-sign with ESPN in the future when those conferences/leagues can just cut out the middle man and stream directly to customers?

The real danger to ESPN's future isn't their huge current contracts. The real danger is losing those big contracts.

BINGO

If you are a Florida State fan cordcutting be damned you are going to pay to watch Florida State play. Sure you'll take a streaming package if you can save money or it fits your lifestyle but you want to see the Seminoles play and 10 to 12 of the 12 regular season telecasts are going to be owned by ESPN.

Watching UCF or FIU is not an acceptable substitute if you are an FSU fan.

If the carriage fee model dies then instead of $6 per month tacked on to the cable bill where you don't see it, ESPN will just give you the choice of paying $20 per game and the helpful sales rep will point out that for $20 per month (9 month contract) you can get every ACC game and when you bite, the rep will add that for $25 per month you can get the total college football package and when you bite on that it will be hey for $35 per month (12 month agreement) you can get all ESPN college football, NFL Monday Night Football and select NBA and MLB games along with some soccer, tennis, and golf.

(01-26-2016 11:55 PM)arkstfan Wrote:  

(01-26-2016 09:34 PM)Attackcoog Wrote:  

(01-26-2016 08:55 PM)Nebraskafan Wrote:  

(01-26-2016 08:20 PM)Attackcoog Wrote:  

(01-26-2016 07:44 PM)johnbragg Wrote:  Tweet from CNBC's Carl Quintanilla with screenshot

I've never heard of Atlantic Equities, but I wouldn't have expected to.

So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

The funny thing is I think the decisions they have made are their only real life preserver. Their huge catalogue of sports rights is the most valuable thing ESPN has (its what gives ESPN its appeal). The current group of contracts will keep ESPN alive for some time---but if they lose their carriage deals and cant offer a huge block audience to conferences and pro leagues---why would those leagues re-sign with ESPN in the future when those conferences/leagues can just cut out the middle man and stream directly to customers?

The real danger to ESPN's future isn't their huge current contracts. The real danger is losing those big contracts.

BINGO

If you are a Florida State fan cordcutting be damned you are going to pay to watch Florida State play. Sure you'll take a streaming package if you can save money or it fits your lifestyle but you want to see the Seminoles play and 10 to 12 of the 12 regular season telecasts are going to be owned by ESPN.

Watching UCF or FIU is not an acceptable substitute if you are an FSU fan.

If the carriage fee model dies then instead of $6 per month tacked on to the cable bill where you don't see it, ESPN will just give you the choice of paying $20 per game and the helpful sales rep will point out that for $20 per month (9 month contract) you can get every ACC game and when you bite, the rep will add that for $25 per month you can get the total college football package and when you bite on that it will be hey for $35 per month (12 month agreement) you can get all ESPN college football, NFL Monday Night Football and select NBA and MLB games along with some soccer, tennis, and golf.

The problem for ESPN is what their subscription price point needs to be because of the NBA and NFL contracts, as well as the mix of content.

1. ESPN needs to get 20% of households to pay a monthly subscription of $35 for all 12 months of the year to match current revenue.
2. HBO's model has already shown us that a lot of the public will go to the effort of adding/dropping a channel based on content at a price point of only $20 a month.

I can see ESPN having a chance of hitting their target during the months they have football. They will be crushed during the 2/3 of the year they don't have live football games.

(01-26-2016 09:00 PM)Attackcoog Wrote:  

(01-26-2016 08:46 PM)MWC Tex Wrote:  If you are thinking that ESPN is going to be able to monetize ESPN 3, they won't be able to since the content they have rights to won't be profitable or as profitable. The larger conferences don't need them to run the streaming platform since they area able to do that themselves. The smaller and poorer conferences need outside help.

Except the conferences don't own their rights to stream. That's my point. ESPN is smart to buy up as many rights as they can. The content is where the value is. People don't stream static---they stream content---and frankly---ESPN doesn't make content. They just warehouse content they buy from existing leagues and conferences.

That depends on the conference. ESPN is buying up content like they did with the MAC and Sunbelt. They may only broadcast a game or two over their family of networks, but those conferences gave up their digital rights to ESPN as part of the TV package so that their other games can be streamed. Unlike the MW, the MAC and Sunbelt decided to let ESPN3 handle the digital side of things.

Now the P5 conferences who have their own network, can still stream those games if they want or are setup to do so. Those games not shown over TV are owned by the conference for digital rights, not by ESPN, Fox or CBS. The PAC-12 for example streams their content on their network. (now you have to go through a TV service provider to do so to access it on the TV Everywhere app but that is beside the point.)

The Mountain West has digital rights to all the games not shown on CBS Sports or ESPN or Root. The exception with Root is that the MW has the right to stream that game that is outside the Root area. All other content is owned by the MW.
In my opinion, if the MW Digital Network makes a lot more progress in the next 4 years to where they are making a bit of money, the next TV deal may be just tier 1 only games and the rest will be on the MWDN.

ESPN may be able to monetize ESPN3 content and they do play a bit of ads on the games I did watch, so I do think they are getting some money out of it, but they are not going to be able to monetize to the point to make-up any loss on the cables subscription side.
We'll just have to see how this is all going to play out in the next 5 years.

(01-27-2016 06:18 AM)krup Wrote:  

(01-26-2016 11:55 PM)arkstfan Wrote:  

(01-26-2016 09:34 PM)Attackcoog Wrote:  

(01-26-2016 08:55 PM)Nebraskafan Wrote:  

(01-26-2016 08:20 PM)Attackcoog Wrote:  So i guess the assumption is that ESPN will be stuck with the bill for all these sports rights, but will only have a declining stream of carriage fees to cover those costs. I think any 20 year projection is kind of a joke. Twenty years ago the internet was a novelty that moved at snails pace over phone modems. Twenty years ago Amazon was a 2 year old start up company and "on demand" in-home entertainment meant renting a movie from Blockbuster. My guess is ESPN will figure out new and different ways to monetize the very popular content they own via multiple platforms using different subscription price points (including one game at a time PPV). With the pace of change, predicting 20 years out is a fools errand.

In short---the value is in the content----not the billing or delivery system. People are consuming more and more content---not less. The assumption that there will be no other way than carriage fees to monetize the massive catalogue of sports rights that ESPN currently owns is premature at best and at worst, is totally devoid of any real insight into the future marketplace.

ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

The funny thing is I think the decisions they have made are their only real life preserver. Their huge catalogue of sports rights is the most valuable thing ESPN has (its what gives ESPN its appeal). The current group of contracts will keep ESPN alive for some time---but if they lose their carriage deals and cant offer a huge block audience to conferences and pro leagues---why would those leagues re-sign with ESPN in the future when those conferences/leagues can just cut out the middle man and stream directly to customers?

The real danger to ESPN's future isn't their huge current contracts. The real danger is losing those big contracts.

BINGO

If you are a Florida State fan cordcutting be damned you are going to pay to watch Florida State play. Sure you'll take a streaming package if you can save money or it fits your lifestyle but you want to see the Seminoles play and 10 to 12 of the 12 regular season telecasts are going to be owned by ESPN.

Watching UCF or FIU is not an acceptable substitute if you are an FSU fan.

If the carriage fee model dies then instead of $6 per month tacked on to the cable bill where you don't see it, ESPN will just give you the choice of paying $20 per game and the helpful sales rep will point out that for $20 per month (9 month contract) you can get every ACC game and when you bite, the rep will add that for $25 per month you can get the total college football package and when you bite on that it will be hey for $35 per month (12 month agreement) you can get all ESPN college football, NFL Monday Night Football and select NBA and MLB games along with some soccer, tennis, and golf.

The problem for ESPN is what their subscription price point needs to be because of the NBA and NFL contracts, as well as the mix of content.

1. ESPN needs to get 20% of households to pay a monthly subscription of $35 for all 12 months of the year to match current revenue.
2. HBO's model has already shown us that a lot of the public will go to the effort of adding/dropping a channel based on content at a price point of only $20 a month.

I can see ESPN having a chance of hitting their target during the months they have football. They will be crushed during the 2/3 of the year they don't have live football games.

Article indicates Sky Sports charges roughly $67 a month for its sports package http://www.cityam.com/212007/sky-subscri...eague-deal

Considering the higher interest in sports since we have greater diversity in offerings I bet they can hit that target.

(01-27-2016 10:43 AM)arkstfan Wrote:  

(01-27-2016 06:18 AM)krup Wrote:  

(01-26-2016 11:55 PM)arkstfan Wrote:  

(01-26-2016 09:34 PM)Attackcoog Wrote:  

(01-26-2016 08:55 PM)Nebraskafan Wrote:  ESPN has made some horrible business choices the last several years and it is coming back to bight them. It will be a slow, painful slide down for that corporation.

The funny thing is I think the decisions they have made are their only real life preserver. Their huge catalogue of sports rights is the most valuable thing ESPN has (its what gives ESPN its appeal). The current group of contracts will keep ESPN alive for some time---but if they lose their carriage deals and cant offer a huge block audience to conferences and pro leagues---why would those leagues re-sign with ESPN in the future when those conferences/leagues can just cut out the middle man and stream directly to customers?

The real danger to ESPN's future isn't their huge current contracts. The real danger is losing those big contracts.

BINGO

If you are a Florida State fan cordcutting be damned you are going to pay to watch Florida State play. Sure you'll take a streaming package if you can save money or it fits your lifestyle but you want to see the Seminoles play and 10 to 12 of the 12 regular season telecasts are going to be owned by ESPN.

Watching UCF or FIU is not an acceptable substitute if you are an FSU fan.

If the carriage fee model dies then instead of $6 per month tacked on to the cable bill where you don't see it, ESPN will just give you the choice of paying $20 per game and the helpful sales rep will point out that for $20 per month (9 month contract) you can get every ACC game and when you bite, the rep will add that for $25 per month you can get the total college football package and when you bite on that it will be hey for $35 per month (12 month agreement) you can get all ESPN college football, NFL Monday Night Football and select NBA and MLB games along with some soccer, tennis, and golf.

The problem for ESPN is what their subscription price point needs to be because of the NBA and NFL contracts, as well as the mix of content.

1. ESPN needs to get 20% of households to pay a monthly subscription of $35 for all 12 months of the year to match current revenue.
2. HBO's model has already shown us that a lot of the public will go to the effort of adding/dropping a channel based on content at a price point of only $20 a month.

I can see ESPN having a chance of hitting their target during the months they have football. They will be crushed during the 2/3 of the year they don't have live football games.

Article indicates Sky Sports charges roughly $67 a month for its sports package http://www.cityam.com/212007/sky-subscri...eague-deal

Considering the higher interest in sports since we have greater diversity in offerings I bet they can hit that target.

I doubt it will need to be that high since my guess is that more than 20% of households would opt to keep ESPN and will drop other networks in order to do so (if price is an issue). In fact, I'd bet that 20% is a virtual floor for ESPN as so many are used to having the channel as a "basic" network. So, say 40% opt to keep the network---the price would drop to well under $20. If 50% of the people keep the network, its price would be about the same as HBO---but with much more original content----thats much more current. That wouldn't even count other subscribers that choose much more limited packages that ESPN might offer in the future (for instance, an all SEC game subscription or a football only subscription).

Here's one angle that I don't think many people are considering: it would still take a MASSIVE amount of lost basic cable subscribers for ESPN to really consider an over-the-top solution. Let's say that basic cable subscribers in the United States eventually drop to 50 million households, which would represent a monster 60% decline from its peak. This would constitute a decline on par with the decline of revenue at newspapers since the turn of the century. Even at that level, it's still better for ESPN to receive a straight monthly fee at $7-plus per month where they don't have any marketing costs that would be necessary for an OTT solution along with being able to charge higher ad rates (since there are larger audiences with basic cable) compared to having to go directly to consumers and incurring marketing costs and needing to charge lower ad rates with smaller audiences.

So, don't expect ESPN to throw the proverbial baby out with the bath water. ESPN would still be a huge profit maker (and probably still much more so than anything else at Disney, which is saying something) even at 50 million basic cable households compared to an OTT model. If you're assuming that cable subscriptions would go under 50 million subscribers, you're literally assuming that the cable industry is somehow going to do even WORSE than the newspaper industry has fared (and it really can't get much worse than the newspaper industry in the Internet era). I guess anything is possible, but there are a lot of entrenched advantages that cable has (i.e. the fact that most of the major Internet providers are also the major cable providers and how much video content on cable, especially sports, is exclusive whereas news articles have become a commodity) that newspapers never had.