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RE: "Sports networks squeezed by rising costs and fewer subscribers"
(05-10-2022 12:25 PM)Frank the Tank Wrote: (05-10-2022 11:16 AM)nodak651 Wrote: (05-10-2022 09:55 AM)Frank the Tank Wrote: (05-10-2022 09:18 AM)Yosef181 Wrote: The only reason to have cable/satellite anymore is for live sports. If it weren't a requirement where I rent, I wouldn't have it.
That's sort of the Catch-22 that these networks are all in right now.
The biggest reason why people are dropping cable/satellite is due to cost, which is disproportionately driven by networks with live sports.
Yet, simultaneously, the biggest reason why people *keep* cable/satellite is for live sports.
It's similar to the "TINA" ("There is no alternative") concept in investing. That is, people may continue to invest in and drive up the prices of superficially suboptimal assets because all of the other alternatives are seen to be even worse. The stock market over the past year is a classic example. It was pretty widely known that stocks by the middle of 2021 were generally historically overvalued by many metrics like P/E ratio. Yet, the problem was that bond prices and other investments (whether super-conservative like money market accounts or super-risky like Bitcoin) were performing so poorly combined with inflation that it drove people to keep piling into the stock market. When you're essentially losing money with "safe" investments due to various factors (e.g. inflation, rising interest rates, etc.), it means that you have a TINA situation where you need to invest in assets that you may know well are overpriced in the current environment (e.g. stocks and real estate). Even now with how the stock market has performed poorly in 2022 (especially this past week), it's still tough for investors to switch because bonds and other alternative investments simply don't look better by comparison.
That's essentially where TV networks are with respect to sports rights. Sports rights are going up and up and up to levels where they're eating into the profits of those TV networks. However, the problem is that very little else outside of sports is drawing live audiences on TV anymore, which means they're in a TINA situation. In essence, for a TV network today, the only thing worse than having to pay for live sports is not having live sports.
Is there a point where leagues like CUSA, Sun Belt, MAC, or potentially even CAA/MVFC/BigSky start to finally get some decent money or air time, simply due to budgeting reasons? Asking because the payouts some of the p5 conferences are getting just seem unsustainable. Is there any point where networks decide to cut costs a little bit? For instance, bottom rung p5 games don't really mean anything, and a sold out Washington Grizzly Stadium in Montana vs a rival in a meaningful game could probably be more exciting and visually appealing to a casual fan. FCS games can occasionally get ok tv ratings, but look at the amount of advertising other games get in comparison as well (none). With a bit of advertising, I could see something like a weekly FCS game of the week do ok, especially if sandwiched between a couple bigger games, and the networks could get the rights for essentially free, which would help with bottom line. Just as an example. I'm not saying this is something that should be done or that it would be worthwhile currently, but with the rising rights costs, you would think that non P5 programs would start to benefit more than they currently are, no?
Unfortunately for the G5, FCS and non-name brand schools, I believe that it's the opposite.
Unfortunately, non-brand name football (which is essentially the G5 and FCS) likely falls into that middle category. While the rights fees might be low, they also still have fixed level production costs and don't draw in large ratings compared to, say, a network-owned reality show that could also conceivably be shown multiple times and/or sent to a streaming service (optimally also owned by that same network).
Now, you could have some exceptions, particularly if there's a 12-team playoff and there ends up being value for, say, a G5 game that has a material impact on the playoff race. We've seen that to some extent in the CFP and BCS era with some AAC and Boise State games. However, the Big 12 backfilling really put a dent into the volume of non-P5 games that will likely have national interest based on brand names themselves.
From an entertainment company perspective, the highest and best use of non-P5 football games would be to fill out streaming services like ESPN+. These are serving niche (as opposed to mass market) audiences that make a lot more sense as streaming properties.
When we say "sports rights fees" are rising, what we really mean is that "sports rights fees for marquee properties" are rising, which would definitely include the P5. It doesn't mean that ALL sports rights fees are going up.
Well, Fox did just invest in owning the USLF to create more inventory. Are USFL teams less non-name brands than G5? $150-$250 million over three years for just 8 teams, plus getting additional investors. It would be more cost effective with less downside risk to lure the top of the G5 away and get them to play in the spring. Although FCS's one time spring was hit or miss with a lot of miss, for a first year the numbers even for that level were on par with second week of USFL and playoff hockey, better than sunday night baseball and much more cost effective than NBA playoff games.
We're in a time of disruption, with live sports being the last stand. In times of disruption it is a frequent mistake to carry forward previous world view constraints. I suspect the thirst for live sports will result in it being closing time at a bar.
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"Sports networks squeezed by rising costs and fewer subscribers"
