Will Increased TV Sports 'Taxes' Push Viewers Over The Cliff?
Are you thinking about the fiscal cliff and what it might mean to your taxes?
Have you also thought about the growing TV consumer sports "tax"? Liberty Media Chairman John Malone believes that's what TV consumers pay -- or at least viewers who don't watch sports regularly. "[Sports rights are] essentially a high tax on a lot of households that don’t have a lot of interest in sports," said Malone.
But isn't there a free market for consumer purchases of monthly programming packages? Yes -- and no. Ninety percent of U.S. TV homes buy a monthly package from either a cable, satellite or telco company. So is there a tax? Hey, if you think multichannel services are screwing you -- you can always go the Over-The-Top (OTT) route. Or read a book. Maybe an e-book.
Some executives -- like former FCC Commissioner Michael Powell -- believe there could be government intervention. Talking to The Los Angeles Times, Powell said, "I can't control that the NFL has the power to demand a 73% increase for 'Monday Night Football,' which I find astonishingly insane." Maybe, says Powell, distributors might say, "I can't handle it anymore." Or worse. "The only way it is going to change in the short run is for government to intervene," Malone said.
Government intervention usually happens when unfair competitive business practices are at work -- or when consumers seem to be unfairly affected by certain practices.
Some critics of higher TV sports fees believe fees should result from a strict supply-and-demand equation. If the supply for premium sports telecasts isn't growing, and demand (consumers) isn't climbing, then what are we talking about?
While ratings are generally strong -- relative to other TV entertainment -- for the NFL and other leagues, they still continue to drift lower on average except for the Super Bowl.
Increasing numbers of cable, satellite and telco executives claim that they can't continue to pay higher fees for sports programs, especially when only a minority of their customers view them on a regular basis.
Many multichannel TV distributors would like to sell sports separately from the rest of their lineups. But ESPN and other sports networks strongly resist this because their channels would wind up in fewer homes -- resulting in fewer viewers and advertising revenue. It would also mean ever-higher -- but perhaps fairer -- costs for consumers who want the channels.
And then factor in this: ESPN doesn't have to buy NFL rights. Multi-channel TV services don't have to show ESPN. And consumers don't have to buy and participate in a TV ecosystem where increasing costs are pushing some monthly averages to over $120 a month.