Commentary

Sports Leagues Say Aereo Could Lead To More Cable Deals

Big sports gain a lot from TV networks -- mostly from broadcast networks.

In 2011, the NFL signed deals with NBC, CBS, Fox and  ESPN amounting to $42 billion in revenue.

But Aereo -- the company that delivers over-the-air signals to consumers without paying the broadcast networks -- could throw a massive wrench into the works.

Aereo has been perceived as a threat to broadcast networks and stations. Now sports franchises recognize that Aereo could jeopardize their financial business model as well.

Thus both the NFL and Major League Baseball have recently filed friend of the court briefs in support of the broadcast networks' legal efforts to stop Aereo.

Should the Aereo threat become real and pervasive, stations could lose millions of dollars in retransmission revenues as Aereo and similar programming services siphon away viewers and presumably ad revenues.

Broadcast networks wouldn’t be able pay for high-valued sports programming anymore. Instead that programming would wind up on cable networks, where, in theory, leagues would get less money -- especially for the likes of the Super Bowl and World Series.

On the flip side, cable networks like ESPN and TNT would benefit. More quality sports programming would come their way at big discounts from what broadcasters pay.

All this leads to another disturbing wrinkle: How would cable, satellite and telco operators feel about paying even higher sports programming subscriber fees to networks? Not too good, I’m sure. In that framework, some severe financial changes would occur – and, for sure, more blackouts.

Live sports programming has been a savior for marketers who flock to the likes of the NFL and MLB. The live programming nature of sports is viewed as more valuable, generally speaking, than scripted or reality programming which can be time-shifted.

For all high-end programming, broadcast networks still get a hefty cost-per-thousand price premium from marketers over cable networks.  That would change.

If Internet-delivered TV platforms running broadcast networks for free prevail, it would be no surprise for the whole TV ecosystem to shift dramatically. Already CBS has mulled the idea of turning into a cable network. Time Warner Cable and DirecTV have individually considered setting up their own Aereo-like services where they wouldn’t have to pay retransmission fees to networks.

With sports programming maintaining its value during the last few years of TV and digital media turmoil, you can understand leagues looking to protect what seems to be their home field media advantage.

5 comments about "Sports Leagues Say Aereo Could Lead To More Cable Deals ".
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  1. Peter Benjamin from MyOffices, November 19, 2013 at 7:01 p.m.

    Correct me if I am wrong but wouldn't more of an audience mean more revenue. Free Tv is free already. Thats the difference. I think companies like Aereo offer a convenience not offered by the networks.

  2. Walter Graff from Bluesky Media, November 19, 2013 at 10:49 p.m.

    Yes it's stupid. Broadcasters say that's an unfair dodge, and that Aereo should have to pay them to retransmit their programming just like cable and satellite companies do. No, they are just mad because they are missing potential revenue, not losing any. The ads are already paid for and all the money in the bank. People are still watching the ads, still getting the same thing they'd get with a OTA antenna. It's all selfish and stupid on the part of the leagues.

  3. Edmund Singleton from Winstion Communications, November 20, 2013 at 5:38 a.m.

    I wonder what would happen to the NFL and others, if they no longer were able to millions from broadcasting rights? Would they just go away or find another way to make more bucks?

  4. Walter Graff from Bluesky Media, November 20, 2013 at 9:16 a.m.

    Millions? You mean Billions. NFL makes an amazing amount of money from TV and in no uncertain terms do they want to loose that. So their bluff of going to pay services could never equal the amount they get contractually for broadcast. Unfortunately as models of broadcasting are altered and bled everyone is going to have to deal with it, find ways of continuing to make revenue, and expect changes that might not always be in the best interest of their bank accounts. The only winners in all of this are lawyers but aren't they always?

  5. Edmund Singleton from Winstion Communications, November 20, 2013 at 11:22 a.m.

    Walter, yes, you took the words right out of my mouth...

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