(01-31-2024 10:16 PM)BeepBeepJeep Wrote:  

(01-31-2024 04:54 PM)Frank the Tank Wrote:  

(01-31-2024 03:34 PM)BeepBeepJeep Wrote:  I actually disagree about there being less money for sports rights in the future. There's only 3 things that matter on TV - Sports, News, and Content. Fox (smartly, IMO) is just focusing on Sports and News and while that may limit growth it also limits downside risk and is pretty dang stable year over year. Netflix is now $23 a month and ended all the account sharing stuff to boost revenue. Netflix also just signed the WWE to grab the elusive young male demographic they were lacking. All that's left for Netflix to grow revenue is sports, and it's very easy for me to imagine that Netflix can extract another $7 a month from each user if they had ESPN levels of sports to watch.

It’s not so much the value of sports rights as long as there are enough competitors in the marketplace. I agree that sports rights themselves have unique value that give them a good chance to keep rising.

The specific issue with ESPN and other cable networks is their business model was predicated on getting a high amount of revenue from *every* cable subscriber in America whether they watched the channel or not. Plus, they didn’t have to spend money to get people to sign up for it (as it was just included automatically in a cable package) and it was difficult to cancel. ESPN was getting over $10 per month from tens of millions of people that *never* the channel, didn’t have any customer acquisition costs, and low churn because cable was hard to cancel. People can disagree with a lot of things, but we should all acknowledge that making hundreds of millions of dollars per year off of people that actually *don’t* use your product is the greatest feat in the history of the media business.

The streaming business inherently flips all of that on its head: people have to *actively* want to subscribe to a service, it takes a ton of marketing and support costs to get those people to subscribe, and people can instantly cancel those subscriptions on their phone.

ESPN may very well transition to a sustainable streaming business. In fact, if I were a betting person, I think they’ll be able to do so because of what you’ve said about the value of sports. However, can it ever be anywhere near as profitable as it was in the halcyon days of basic cable? It’s effectively impossible in streaming because ESPN will no longer be making hundreds of millions of dollars per year off of people that never watch any sporting events at all - it’s simply a much worse business for ESPN and Disney by comparison. That’s why Wall Street has punished Disney and puts so much of the blame on ESPN - the peak revenue and profit point of ESPN is in the rear view mirror and it can only go down even if they have a sustainable streaming model. Once again, a stock price is generally more about what the market thinks of a company’s future as opposed to its past or present (and that matters because Bob Iger and every other public company CEO is beholden to their company’s stock price).

I'm with you on the ESPN part. I've wrote extensively here on why I think ESPN will find no buyers/strategic investors, and Disney is at best gonna have to just milk it until it's dead.

My point was that Netflix, at least in the US, has the kind of ubiquiti and stickiness that cable did, so if anyone can pass on a "sports tax" to people that never watch it, it's Netflix.

ESPN is not dying, it is just becoming a lot less profitable. There is a big difference in the two. As long as ESPN makes money buying college football content they will have the money to do so. There is zero reason to believe otherwise. It is their business model. If ESPN cannot turn a significant profit with college football no one can.

Now Netflix is intriguing. You are right that they could have the market penetration and delivery platform to bundle an ESPN sports package, but the average non-sports would not agree to pay for it as cable subscribers historically did. Still, there likely could be synergy there.

(02-01-2024 07:04 AM)Gitanole Wrote:  

(02-01-2024 01:29 AM)EdwordL Wrote:  ....
I've been wondering if ESPN could act as mediator with FSU, the ACC, and the SEC to move FSU to the SEC, or would that leave ESPN subject to charges of tortious interference?
....

ESPN personnel are now on course to be called in for depositions as part of the lawsuit's discovery process. The information they share could go a long way toward determining which party has the stronger position.

Question for the lawyers: If asked by the litigants before that point to join them in discussions aimed at reaching a settlement, does anything prevent ESPN from accepting? How about after that point?

There isn’t really anything preventing ESPN from being involved if they’re asked to do so.

The main question is whether they would *want* to be involved. I know a lot of forum posters here want to believe that ESPN somehow wants to be involved, but generally speaking, a party that isn’t named in a lawsuit wants to avoid being in the middle of settlement discussions regarding that lawsuit at all costs. From ESPN’s perspective, there’s nothing to “mediate” for them - they will likely look at it as a GOR agreement matter between FSU and it’s up to them to figure it out.

To the extent that ESPN would ever want to intervene, there’s a good chance that it would be the *opposite* of what a lot of posters here want to believe: it wouldn’t be that they want to shift FSU to the SEC, but rather ESPN and the entire Walt Disney Company has a high interest in ensuring that GOR agreements are enforceable. Remember that the GOR agreements *protect* ESPN just as much as they protect the conferences: ESPN outright wouldn’t have started the ACC Network without it specifically because the value of that network tanks if a school like FSU gets replaced by a school like USF. Other parts of the entertainment business rely on GOR or GOR-like agreements, too, and Disney is the world’s number one holder of entertainment IP. The copyright laws of this country have been adjusted multiple times specifically because of Disney’s fierce lobbying to extend the original copyright of Mickey Mouse from Steamboat Willie longer. (They finally relented and that version of Mickey Mouse just entered the public domain this past month on January 1st. The copyright would have originally expired in 1984, but Disney got the law changed. It would have then expired in 1999, but Disney got the law changed *again*. They’re now going to primarily rely on trademark protection for Mickey’s image, which never expires. Recall the Houston Oilers trademark discussion that we had here when the University of Houston had Oiler-like alternate jerseys. The Titans still own the Oilers trademarks and they never expire provided that they have some regular use of them, so they were well within their rights to stop UH from having similar uniforms.)

So, to the extent that Disney and ESPN care about this case, I believe that THIS is what matters to them: to keep GORs enforceable. Anyone that thinks that Disney *wants* FSU to get the GOR thrown out in court and/or pay anything less than a huge punitive amount to get out of it isn’t looking at Disney’s entire business. Having as many super strong ways to lock down IP rights is waaaaaaay more important to them than fearing that Fox is going to get some more Florida sports fan viewers.

(01-29-2024 11:18 AM)JRsec Wrote:  ESPN has a Florida State issue. They don't want to deal with a bigger problem.

The Big 10 is at 18 and ESPN needs to protect its rights. What is the simplest way to address this?

Unofficially negotiate a price with the ACC for which FSU can be released. Relay that price to FSU. FSU gives official notice. The SEC takes them in. The SEC adds Kansas and Kansas pays what Texas and Oklahoma paid to leave.

The ACC backfills with USF. The Big 12 backfills with Oregon State.

ESPN pas 35 million more for FSU in the SEC but with the viewer multiplication for FSU's games vs an SEC schedule they break even.

To Kansas they pay 55 million to move. They make a portion of this back up with scheduled games against Kentucky, North Carolina, Duke, Syracuse, etc. But the issue is this is an expenditure. The cost here is offset by closing the LHN or converting it to a Big 12 Network where it will earn more.

USF moves to the ACC. This costs ESPN about 20 million, still an amount covered by the closure of the LHN.

Oregon State moves to the Big 12. This costs Big 12 pro rata.

Occam's Razor can be effectively used in a time of crisis. The simplest solution is still the best. Here ESPN preserves its control over the state of Florida, addresses an SEC need, picks up full rights to a product it has wanted in the past, still controls USF though promotes them, has more West Coast late night options for 50%, allows Oregon State to reinvest some of their PAC money into being competitive in the Big 12.

The moves are slight. None of the moves truly take away Big 10 targets, both networks are freer to make competitive bids on the CFP, and further realignment is put off until 2026 giving FOX and ESPN more time to think through their moves and the schools more time to decide what they can and can't afford.

Will this exactly happen this way? Who knows. But with the CFP looming as primary objective for both networks' large outlays and an all-out parsing of the ACC isn't in the cards, and if this works well, may never be.

The SEC stands at 18 as does the Big 10. The Big 12 stands at 16, the ACC stands at 14 plus one and may seek to add 2 more full members. How can ESPN satisfy FOX moving forward and monetize itself without breaking up the ACC? ESPN can sell FOX 50% of the rights to the ACC. Then the two networks own the two super conferences or share them with CBS and NBC in the case of FOX, and they split the rest of the rights negating a need to raid to have access.

At this point I find more perks and financial savings in a solution along these lines than in an all-out bidding war on a handful of schools which would be on the lower end of the earnings range in either super conference.

And unless the networks are hellbent on only having 2 conferences, which would alienate the fans of the former P5, Occam's Razor economically says why pay SEC and Big 10 money for 48 schools combined when you can get the same impact by paying 36 top price and keeping the lesser paid still in the same tier thereby still having access to their markets for advertising, especially if the two networks share the lesser priced tier's rights. And the number in the tier still grows to about 69 total schools so there's no issue with demotion or exclusion.

I am still scratching my head, of all the possible SEC adds why would they want Kansas. NC, VT, VA,NC state would all be better adds for SEC.

(02-01-2024 08:01 AM)Lurker Above Wrote:  ESPN is not dying, it is just becoming a lot less profitable. There is a big difference in the two. As long as ESPN makes money buying college football content they will have the money to do so. There is zero reason to believe otherwise. It is their business model. If ESPN cannot turn a significant profit with college football no one can.

"Turning a profit on college football" isn't a yes / no binary.

IT's dependent mostly on *how much you're paying*.

The CW just bought a package of middliing-at-best ACC college football games. Presumably they project that as a money-makinng operation, but who knows maybe they lose their shirts like Fox did with Thursday Night NFL Football.

CBS and NBC just bought into the Big Ten college football business for OTA games. Will that turn a profit, or is it a sort of panicky decision driven by FOMO and reluctance to admit that their entire business model is probably a bad bet?

And a related question is, marginal profit for marginal product.
How much more would ESPN Disnney make if the SEC replaced 16 body bag games with 8 conference games?

How much more would ESPN make with FSU and Clemson in the SEC vs the ACC, compared to what money would they lose with a half-dozen ACC games on ABC showing, say, Pitt vs NC State instead of FSU vs Wake Forest?

(02-01-2024 08:01 AM)Lurker Above Wrote:  

(01-31-2024 10:16 PM)BeepBeepJeep Wrote:  

(01-31-2024 04:54 PM)Frank the Tank Wrote:  

(01-31-2024 03:34 PM)BeepBeepJeep Wrote:  I actually disagree about there being less money for sports rights in the future. There's only 3 things that matter on TV - Sports, News, and Content. Fox (smartly, IMO) is just focusing on Sports and News and while that may limit growth it also limits downside risk and is pretty dang stable year over year. Netflix is now $23 a month and ended all the account sharing stuff to boost revenue. Netflix also just signed the WWE to grab the elusive young male demographic they were lacking. All that's left for Netflix to grow revenue is sports, and it's very easy for me to imagine that Netflix can extract another $7 a month from each user if they had ESPN levels of sports to watch.

It’s not so much the value of sports rights as long as there are enough competitors in the marketplace. I agree that sports rights themselves have unique value that give them a good chance to keep rising.

The specific issue with ESPN and other cable networks is their business model was predicated on getting a high amount of revenue from *every* cable subscriber in America whether they watched the channel or not. Plus, they didn’t have to spend money to get people to sign up for it (as it was just included automatically in a cable package) and it was difficult to cancel. ESPN was getting over $10 per month from tens of millions of people that *never* the channel, didn’t have any customer acquisition costs, and low churn because cable was hard to cancel. People can disagree with a lot of things, but we should all acknowledge that making hundreds of millions of dollars per year off of people that actually *don’t* use your product is the greatest feat in the history of the media business.

The streaming business inherently flips all of that on its head: people have to *actively* want to subscribe to a service, it takes a ton of marketing and support costs to get those people to subscribe, and people can instantly cancel those subscriptions on their phone.

ESPN may very well transition to a sustainable streaming business. In fact, if I were a betting person, I think they’ll be able to do so because of what you’ve said about the value of sports. However, can it ever be anywhere near as profitable as it was in the halcyon days of basic cable? It’s effectively impossible in streaming because ESPN will no longer be making hundreds of millions of dollars per year off of people that never watch any sporting events at all - it’s simply a much worse business for ESPN and Disney by comparison. That’s why Wall Street has punished Disney and puts so much of the blame on ESPN - the peak revenue and profit point of ESPN is in the rear view mirror and it can only go down even if they have a sustainable streaming model. Once again, a stock price is generally more about what the market thinks of a company’s future as opposed to its past or present (and that matters because Bob Iger and every other public company CEO is beholden to their company’s stock price).

I'm with you on the ESPN part. I've wrote extensively here on why I think ESPN will find no buyers/strategic investors, and Disney is at best gonna have to just milk it until it's dead.

My point was that Netflix, at least in the US, has the kind of ubiquiti and stickiness that cable did, so if anyone can pass on a "sports tax" to people that never watch it, it's Netflix.

ESPN is not dying, it is just becoming a lot less profitable. There is a big difference in the two. As long as ESPN makes money buying college football content they will have the money to do so. There is zero reason to believe otherwise. It is their business model. If ESPN cannot turn a significant profit with college football no one can.

Now Netflix is intriguing. You are right that they could have the market penetration and delivery platform to bundle an ESPN sports package, but the average non-sports would not agree to pay for it as cable subscribers historically did. Still, there likely could be synergy there.

Your first paragraph points to the existential issue in the whole media business: how can sports (not just college football) provide overall profits in a world without basic cable? It’s important to note that if you just look at sports rights fees and only look at advertising revenue generated them, it’s a straight up money loser and that has been the case for decades. In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue. Even today with the over-the-air networks of ABC, CBS, NBC and Fox (much less more cable networks like ESPN), the largest part of their revenue comes from cable retransmission fees paid by cable companies to carry those networks on their cable packages, which are the same as cable subscriber fees only with a different name. Sports fans have long been the most likely cable subscribers along with being the most pronounced in moving to a different cable carrier if they didn’t carry the sports programs that they wanted, so any network with lots of premium sports had leverage to get higher cable fees and that benefited ESPN more than anyone else.

Like any highly leveraged asset, though (with this case being leverage with cable carriers as opposed to leverage with debt), outsized positive returns in a rising market also mean outsized negative losses in a declining market. (Think of the real estate crash of the late-2000s.) We don’t need hypotheticals of the danger that sports networks are in. 5 years ago, the most profitable channels in all of cable besides ESPN were the regional sports networks. They all had (and still have) the highest subscriber fee on your cable/satellite/streamer of cable channels bill besides ESPN. Within 5 years, those RSNs went from massive profits to half of them now being in bankruptcy and the rest of them trying to scramble to build a streaming business that may or may not work.

Those RSNs are the canary in the coal mine for ESPN and why Wall Street is punishing Disney’s stock so much for the “ESPN problem” - the RSN profits evaporated in less than 5 years. To be clear, I don’t think ESPN will die, but I also think a lot of people don’t understand just how much *less* ESPN will make in a direct-to-consumer streaming environment and the Street (and therefore Disney) doesn’t want to hear any story about how much *less* a business is making. A lot of people also don’t understand and completely underestimate how much ESPN would need to charge to just break even with a direct-to-consumer model - the industry estimates are in the $40-50 per month range, which is a tough amount to sell to wide audience of customers. Plus, this is compounded that if you have fewer subscribers, you also have to charge less for advertising because there are inherently fewer viewers. I’m not a big existential crisis guy that cries wolf very often, but all of the economics here aren’t good and Disney still hasn’t figured it out despite knowing that this problem would be on the horizon even when they signed the ACC Network deal in 2016… which is why ESPN mandated that the ACC sign their GOR!

Believe me - if I had the answer, I wouldn’t be sharing it here and instead would go get paid a bazillion dollars by the Hollywood studios to implement that solution. There may simply not be a viable solution akin to Kodak going from an industrial power for over a century to having its primary business wiped out in a matter of 5 years with smartphones. I don’t know if it’s that extreme, but technology can absolutely kill entire industries and quite quickly. Heck, to the point about Netflix, look at how quickly Blockbuster evaporated due to Netflix.

The future of sports programming may very well be reverting back to the pre-cable days of being a loss leader, except it’s for the interests of the streaming services as opposed to linear TV channels. That is essentially Amazon’s business model with the NFL - the Thursday Night Football package is a pure unambiguous money loser when looked at in terms of the rights fees versus advertising and even in terms of the number of new Prime subscribers. The whole reason why Amazon won those TNF rights in the first place was that the over-the-air networks all took a financial bath on those games despite the high ratings. (Once again, advertising revenue simply isn’t enough.)

However, Amazon is using the NFL as a conduit to get people to spend more on buying things on Prime, which in turn generates *other* revenue for Amazon, and in turn makes people more likely to *keep* Prime, and it becomes a virtuous circle. That’s at least the theory behind it - we’ll see if it works in practice for the long-term. On paper, it makes some sense because Amazon is the one provider where the advertisers will pay for an ad on Prime and then conceivably the customer would order that item on Prime itself, so it’s a multi-tier revenue stream (Prime subscription revenue plus advertising plus people ordering off of Prime) that conceivably replicates the multi-tier revenue stream that basic cable has had for so long.

Netflix doesn’t have the customer order facet of Amazon, but does have (a) an ad-tier subscription that it wants to push to more customers because it makes more revenue per subscriber even with a lower subscription cost and (b) an interest in reducing churn and increasing existing subscriber retention. Sports programming is very effective on those fronts and that’s why Netflix signed with the WWE (which isn’t exactly “sports” but it’s sports-like live programming that is on every week with loyal fans). Still, it’s being powered by the size of Netflix’s subscription base that is essentially the size of the old cable household universe. Without that in place, none of it works.

(02-01-2024 09:47 AM)Frank the Tank Wrote:  

(02-01-2024 08:01 AM)Lurker Above Wrote:  

(01-31-2024 10:16 PM)BeepBeepJeep Wrote:  

(01-31-2024 04:54 PM)Frank the Tank Wrote:  

(01-31-2024 03:34 PM)BeepBeepJeep Wrote:  I actually disagree about there being less money for sports rights in the future. There's only 3 things that matter on TV - Sports, News, and Content. Fox (smartly, IMO) is just focusing on Sports and News and while that may limit growth it also limits downside risk and is pretty dang stable year over year. Netflix is now $23 a month and ended all the account sharing stuff to boost revenue. Netflix also just signed the WWE to grab the elusive young male demographic they were lacking. All that's left for Netflix to grow revenue is sports, and it's very easy for me to imagine that Netflix can extract another $7 a month from each user if they had ESPN levels of sports to watch.

It’s not so much the value of sports rights as long as there are enough competitors in the marketplace. I agree that sports rights themselves have unique value that give them a good chance to keep rising.

The specific issue with ESPN and other cable networks is their business model was predicated on getting a high amount of revenue from *every* cable subscriber in America whether they watched the channel or not. Plus, they didn’t have to spend money to get people to sign up for it (as it was just included automatically in a cable package) and it was difficult to cancel. ESPN was getting over $10 per month from tens of millions of people that *never* the channel, didn’t have any customer acquisition costs, and low churn because cable was hard to cancel. People can disagree with a lot of things, but we should all acknowledge that making hundreds of millions of dollars per year off of people that actually *don’t* use your product is the greatest feat in the history of the media business.

The streaming business inherently flips all of that on its head: people have to *actively* want to subscribe to a service, it takes a ton of marketing and support costs to get those people to subscribe, and people can instantly cancel those subscriptions on their phone.

ESPN may very well transition to a sustainable streaming business. In fact, if I were a betting person, I think they’ll be able to do so because of what you’ve said about the value of sports. However, can it ever be anywhere near as profitable as it was in the halcyon days of basic cable? It’s effectively impossible in streaming because ESPN will no longer be making hundreds of millions of dollars per year off of people that never watch any sporting events at all - it’s simply a much worse business for ESPN and Disney by comparison. That’s why Wall Street has punished Disney and puts so much of the blame on ESPN - the peak revenue and profit point of ESPN is in the rear view mirror and it can only go down even if they have a sustainable streaming model. Once again, a stock price is generally more about what the market thinks of a company’s future as opposed to its past or present (and that matters because Bob Iger and every other public company CEO is beholden to their company’s stock price).

I'm with you on the ESPN part. I've wrote extensively here on why I think ESPN will find no buyers/strategic investors, and Disney is at best gonna have to just milk it until it's dead.

My point was that Netflix, at least in the US, has the kind of ubiquiti and stickiness that cable did, so if anyone can pass on a "sports tax" to people that never watch it, it's Netflix.

ESPN is not dying, it is just becoming a lot less profitable. There is a big difference in the two. As long as ESPN makes money buying college football content they will have the money to do so. There is zero reason to believe otherwise. It is their business model. If ESPN cannot turn a significant profit with college football no one can.

Now Netflix is intriguing. You are right that they could have the market penetration and delivery platform to bundle an ESPN sports package, but the average non-sports would not agree to pay for it as cable subscribers historically did. Still, there likely could be synergy there.

Your first paragraph points to the existential issue in the whole media business: how can sports (not just college football) provide overall profits in a world without basic cable? It’s important to note that if you just look at sports rights fees and only look at advertising revenue generated them, it’s a straight up money loser and that has been the case for decades. In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue. Even today with the over-the-air networks of ABC, CBS, NBC and Fox (much less more cable networks like ESPN), the largest part of their revenue comes from cable retransmission fees paid by cable companies to carry those networks on their cable packages, which are the same as cable subscriber fees only with a different name. Sports fans have long been the most likely cable subscribers along with being the most pronounced in moving to a different cable carrier if they didn’t carry the sports programs that they wanted, so any network with lots of premium sports had leverage to get higher cable fees and that benefited ESPN more than anyone else.

Like any highly leveraged asset, though (with this case being leverage with cable carriers as opposed to leverage with debt), outsized positive returns in a rising market also mean outsized negative losses in a declining market. (Think of the real estate crash of the late-2000s.) We don’t need hypotheticals of the danger that sports networks are in. 5 years ago, the most profitable channels in all of cable besides ESPN were the regional sports networks. They all had (and still have) the highest subscriber fee on your cable/satellite/streamer of cable channels bill besides ESPN. Within 5 years, those RSNs went from massive profits to half of them now being in bankruptcy and the rest of them trying to scramble to build a streaming business that may or may not work.

Those RSNs are the canary in the coal mine for ESPN and why Wall Street is punishing Disney’s stock so much for the “ESPN problem” - the RSN profits evaporated in less than 5 years. To be clear, I don’t think ESPN will die, but I also think a lot of people don’t understand just how much *less* ESPN will make in a direct-to-consumer streaming environment and the Street (and therefore Disney) doesn’t want to hear any story about how much *less* a business is making. A lot of people also don’t understand and completely underestimate how much ESPN would need to charge to just break even with a direct-to-consumer model - the industry estimates are in the $40-50 per month range, which is a tough amount to sell to wide audience of customers. Plus, this is compounded that if you have fewer subscribers, you also have to charge less for advertising because there are inherently fewer viewers. I’m not a big existential crisis guy that cries wolf very often, but all of the economics here aren’t good and Disney still hasn’t figured it out despite knowing that this problem would be on the horizon even when they signed the ACC Network deal in 2016… which is why ESPN mandated that the ACC sign their GOR!

Believe me - if I had the answer, I wouldn’t be sharing it here and instead would go get paid a bazillion dollars by the Hollywood studios to implement that solution. There may simply not be a viable solution akin to Kodak going from an industrial power for over a century to having its primary business wiped out in a matter of 5 years with smartphones. I don’t know if it’s that extreme, but technology can absolutely kill entire industries and quite quickly. Heck, to the point about Netflix, look at how quickly Blockbuster evaporated due to Netflix.

The future of sports programming may very well be reverting back to the pre-cable days of being a loss leader, except it’s for the interests of the streaming services as opposed to linear TV channels. That is essentially Amazon’s business model with the NFL - the Thursday Night Football package is a pure unambiguous money loser when looked at in terms of the rights fees versus advertising and even in terms of the number of new Prime subscribers. The whole reason why Amazon won those TNF rights in the first place was that the over-the-air networks all took a financial bath on those games despite the high ratings. (Once again, advertising revenue simply isn’t enough.)

However, Amazon is using the NFL as a conduit to get people to spend more on buying things on Prime, which in turn generates *other* revenue for Amazon, and in turn makes people more likely to *keep* Prime, and it becomes a virtuous circle. That’s at least the theory behind it - we’ll see if it works in practice for the long-term. On paper, it makes some sense because Amazon is the one provider where the advertisers will pay for an ad on Prime and then conceivably the customer would order that item on Prime itself, so it’s a multi-tier revenue stream (Prime subscription revenue plus advertising plus people ordering off of Prime) that conceivably replicates the multi-tier revenue stream that basic cable has had for so long.

Netflix doesn’t have the customer order facet of Amazon, but does have (a) an ad-tier subscription that it wants to push to more customers because it makes more revenue per subscriber even with a lower subscription cost and (b) an interest in reducing churn and increasing existing subscriber retention. Sports programming is very effective on those fronts and that’s why Netflix signed with the WWE (which isn’t exactly “sports” but it’s sports-like live programming that is on every week with loyal fans). Still, it’s being powered by the size of Netflix’s subscription base that is essentially the size of the old cable household universe. Without that in place, none of it works.

" In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

Look back - when has the superbowl or the world series not been a great ad-seller for newspapers, radio, tv, etc.

Cable has had many "lives". going from the place to watch uncut/uncensored movies, and watching ppv boxing, to the re-run capitol, to reality tv, to political news (with obvious overlaps)

but cable was nowhere near the first to be able to monetize sports.

I know that the internet makes its bones on negativity and "the end is nigh", but when do we stop listening to the clickbait?

(02-01-2024 11:48 AM)Skyhawk Wrote:  " In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

What happened in 1993 was that the old-line networks were coming under increasing pressure. All three were run by cost-cutters: ABC by Capital Cities, NBC by General Electric, and CBS by theater mogul Larry Tisch. After the 1990–91 recession, the cost-cutters complained, almost in union, that their NFL deals were leaving them in the red. “No way I am going to lose money on the NFL,” Tisch thundered.

Under its previous deal, CBS had paid $265 million a year for the NFC. The network calculated that it could break even if it paid the NFL $250 million a year. So Tisch did something audacious: He told his executives to offer the NFL no more than that figure, which amounted to a $15 million pay cut. Neal Pilson, the president of CBS Sports, was in a bind: How could he appease his boss and keep the rights to the NFC?

https://www.theringer.com/nfl/2018/12/13...on-cbs-nbc

Quote:That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

EVerybody's gotta eat. That doesn't mean that Kenny Rogers Chicken and Quiznos don't go out of business.

People like watching movies. That doesn't mean that Blockbuster Video doesn't go out of business.

(02-01-2024 12:07 PM)johnbragg Wrote:  

(02-01-2024 11:48 AM)Skyhawk Wrote:  " In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

What happened in 1993 was that the old-line networks were coming under increasing pressure. All three were run by cost-cutters: ABC by Capital Cities, NBC by General Electric, and CBS by theater mogul Larry Tisch. After the 1990–91 recession, the cost-cutters complained, almost in union, that their NFL deals were leaving them in the red. “No way I am going to lose money on the NFL,” Tisch thundered.

Under its previous deal, CBS had paid $265 million a year for the NFC. The network calculated that it could break even if it paid the NFL $250 million a year. So Tisch did something audacious: He told his executives to offer the NFL no more than that figure, which amounted to a $15 million pay cut. Neal Pilson, the president of CBS Sports, was in a bind: How could he appease his boss and keep the rights to the NFC?

https://www.theringer.com/nfl/2018/12/13...on-cbs-nbc

Quote:That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

EVerybody's gotta eat. That doesn't mean that Kenny Rogers Chicken and Quiznos don't go out of business.

People like watching movies. That doesn't mean that Blockbuster Video doesn't go out of business.

Thank you as that Ringer article outlines exactly what I was talking about. It’s not “clickbait” to actually look at the history of the sports media industry and study it in detail. I’m not the one throwing things against the wall here.

(02-01-2024 12:07 PM)johnbragg Wrote:  

(02-01-2024 11:48 AM)Skyhawk Wrote:  " In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

What happened in 1993 was that the old-line networks were coming under increasing pressure. All three were run by cost-cutters: ABC by Capital Cities, NBC by General Electric, and CBS by theater mogul Larry Tisch. After the 1990–91 recession, the cost-cutters complained, almost in union, that their NFL deals were leaving them in the red. “No way I am going to lose money on the NFL,” Tisch thundered.

Under its previous deal, CBS had paid $265 million a year for the NFC. The network calculated that it could break even if it paid the NFL $250 million a year. So Tisch did something audacious: He told his executives to offer the NFL no more than that figure, which amounted to a $15 million pay cut. Neal Pilson, the president of CBS Sports, was in a bind: How could he appease his boss and keep the rights to the NFC?

https://www.theringer.com/nfl/2018/12/13...on-cbs-nbc

Quote:That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

EVerybody's gotta eat. That doesn't mean that Kenny Rogers Chicken and Quiznos don't go out of business.

People like watching movies. That doesn't mean that Blockbuster Video doesn't go out of business.

There's a huge difference between saying that quiznos goes out of business, and saying that all restaurants are dying, the end is nigh.

Which was part of my point. I'm seeing all these broad statements as if the world's ending. And it's not.

To continue the restaurants example. there are restaurants which are closing locations. society has changed since Covid. So fast food and delivery is on the rise and some non-take out places are consolidating.

But that's like any business, you adapt or, well, then you don't.

Cable is adapting. ota is adapting

like anything, it's bumpy, messy, and for some, rather costly.

But we're watching the transitions.

(02-01-2024 01:24 PM)Skyhawk Wrote:  

(02-01-2024 12:07 PM)johnbragg Wrote:  

(02-01-2024 11:48 AM)Skyhawk Wrote:  " In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

What happened in 1993 was that the old-line networks were coming under increasing pressure. All three were run by cost-cutters: ABC by Capital Cities, NBC by General Electric, and CBS by theater mogul Larry Tisch. After the 1990–91 recession, the cost-cutters complained, almost in union, that their NFL deals were leaving them in the red. “No way I am going to lose money on the NFL,” Tisch thundered.

Under its previous deal, CBS had paid $265 million a year for the NFC. The network calculated that it could break even if it paid the NFL $250 million a year. So Tisch did something audacious: He told his executives to offer the NFL no more than that figure, which amounted to a $15 million pay cut. Neal Pilson, the president of CBS Sports, was in a bind: How could he appease his boss and keep the rights to the NFC?

https://www.theringer.com/nfl/2018/12/13...on-cbs-nbc

Quote:That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

EVerybody's gotta eat. That doesn't mean that Kenny Rogers Chicken and Quiznos don't go out of business.

People like watching movies. That doesn't mean that Blockbuster Video doesn't go out of business.

There's a huge difference between saying that quiznos goes out of business, and saying that all restaurants are dying, the end is nigh.

Which was part of my point. I'm seeing all these broad statements as if the world's ending. And it's not.

To continue the restaurants example. there are restaurants which are closing locations. society has changed since Covid. So fast food and delivery is on the rise and some non-take out places are consolidating.

But that's like any business, you adapt or, well, then you don't.

Cable is adapting.

But they're not "adapting." They're just shrinking.

The RSN's didn't "adapt". They're just going under. They just have a lot less money than they used to.

Quote:ota is adapting

like anything, it's bumpy, messy, and for some, rather costly.

But we're watching the transitions.

Newspapers didn't "transition". They tried, but there just wasn't any money anymore after Craigslist and other internet sites grabbed their advertising business.

(02-01-2024 02:05 PM)johnbragg Wrote:  

(02-01-2024 01:24 PM)Skyhawk Wrote:  

(02-01-2024 12:07 PM)johnbragg Wrote:  

(02-01-2024 11:48 AM)Skyhawk Wrote:  " In the pre-cable world, sports were generally a loss leader for networks to promote their other much more profitable entertainment and news programs for the rest of the week. Sports themselves only became profitable under the basic cable model where the networks derived massive cable subscriber revenue that dwarfed advertising revenue."

I think you may want to give some context to that statement.

Because, as stated, it's pretty clearly not true.

sports has been a money winner since radio. And really since before that - ask any newspaper publisher from the late 1800s to early 1900s.

What happened in 1993 was that the old-line networks were coming under increasing pressure. All three were run by cost-cutters: ABC by Capital Cities, NBC by General Electric, and CBS by theater mogul Larry Tisch. After the 1990–91 recession, the cost-cutters complained, almost in union, that their NFL deals were leaving them in the red. “No way I am going to lose money on the NFL,” Tisch thundered.

Under its previous deal, CBS had paid $265 million a year for the NFC. The network calculated that it could break even if it paid the NFL $250 million a year. So Tisch did something audacious: He told his executives to offer the NFL no more than that figure, which amounted to a $15 million pay cut. Neal Pilson, the president of CBS Sports, was in a bind: How could he appease his boss and keep the rights to the NFC?

https://www.theringer.com/nfl/2018/12/13...on-cbs-nbc

Quote:That sports/competition, is a winner, was known all the way back in Roman times - "bread and circuses", etc.

EVerybody's gotta eat. That doesn't mean that Kenny Rogers Chicken and Quiznos don't go out of business.

People like watching movies. That doesn't mean that Blockbuster Video doesn't go out of business.

There's a huge difference between saying that quiznos goes out of business, and saying that all restaurants are dying, the end is nigh.

Which was part of my point. I'm seeing all these broad statements as if the world's ending. And it's not.

To continue the restaurants example. there are restaurants which are closing locations. society has changed since Covid. So fast food and delivery is on the rise and some non-take out places are consolidating.

But that's like any business, you adapt or, well, then you don't.

Cable is adapting.

But they're not "adapting." They're just shrinking.

The RSN's didn't "adapt". They're just going under. They just have a lot less money than they used to.

Quote:ota is adapting

like anything, it's bumpy, messy, and for some, rather costly.

But we're watching the transitions.

Newspapers didn't "transition". They tried, but there just wasn't any money anymore after Craigslist and other internet sites grabbed their advertising business.

Cable - they are adapting. You just seem to only look at "counting subscribers" to a certain platform and see that as "shrinking". Comcast (for example) is still making money on providing entertainment content in a channel format. Don't get so hung up on packaging and marketing. The cable companies are still selling their product, they're just getting creative about it.

Newspapers were indeed adapting, until private equity came along and started disemboweling them...

That's a whole other issue.

That's part of that "wall street" that started this tangent in this thread.

As I said, their motives are different.

(02-01-2024 02:05 PM)johnbragg Wrote:  

(02-01-2024 01:24 PM)Skyhawk Wrote:  ... Cable is adapting.

But they're not "adapting." They're just shrinking.

The RSN's didn't "adapt". They're just going under. They just have a lot less money than they used to.

Quote:ota is adapting

like anything, it's bumpy, messy, and for some, rather costly.

But we're watching the transitions.

Newspapers didn't "transition". They tried, but there just wasn't any money anymore after Craigslist and other internet sites grabbed their advertising business.

The three adaptations to a secular decline are go extinct, shrink, or find something else to do.

Cable seems likely to continue shrinking over the coming decade. The big question is whether it keeps on shrinking, or whether it eventually stabilizes at a smaller share, representing some core niche of "big bundle" media households.

One challenge for ESPN is that even if it successfully builds ESPN/ESPN2 on "premium live TV" streaming packages as a tentpole and ESPN+ as the more budget friendly long tail ... those "premium live TV" streaming packages are going to experience more churn than cable is accustomed to, so ESPN is going to have to adapt to a more seasonal revenue picture. Getting people subscribed in Fall to watch NFL and college football is not the same network building success if they then drop that package once the NFL playoffs reach the point that they can catch everything else OTA. Basketball helps cushion the drop, but the drop is still there, and then there is another drop when post-basketball-season churn hits until College Football season kicks off.