In a COVID-19 world, should sports TV platforms be worried about cord-cutting -- even when live sports eventually comes back to traditional pay TV platforms?
In recent weeks, louder complaints have come from pay TV sports consumers, given the lack of live, local sports — specifically Major League Baseball and NBA basketball. And when it comes to regional sports networks, that can run an extra $15 or so a month.
Many are complaining they should be charged less.
While car insurance companies have been offering rebates to consumers, due to the lack of driving, the same can’t be said of pay TV providers when it comes the lack of live sports program viewing
In its recent earnings call, Sinclair Broadcast Group -- now the owner/operator of 22 regional sports networks -- noted it has some protection: “Sports rights agreements entered between our RSNs and the professional sports teams typically include a minimum game delivery obligation.”
So if Sinclair doesn’t get any games to air, it doesn’t have to pay anything. At the same time, there is a downside: “If we cannot deliver the minimum number of games under the agreements, there is a mechanism for [pay TV] distributors to recoup a portion of their carrier fees.”
Right now, Sinclair is maintaining its end of the bargain -- paying local sports teams rights fees. “We continue to make payments to the teams and our distribution partners continue to pay us.”
But think longer-term.
Much has been made about what happens if pay TV “cord-cutting” continues -- and especially if regional sports networks are caught in the cross-fire.
Perhaps they just get moved to individual OTT platforms, where consumers can just pay for what they want. But until then, if they continue to lose subscribers, what happens to those advertising/economical models?
It wasn’t that long ago, many Wall Street investors were worried about ESPN and cord-cutting, and what it meant for Walt Disney’s bottom line.
Then investors seem less concerned -- especially after Disney’s high-profile deal to buy half of 21st Century Fox, which was followed up with the successful launch of Disney+. It’s good to be diversified.
In the long term, what happens to ESPN? Long before Disney+, the company launched ESPN+, which has been doing moderately well: 7.6 million subscribers. But perhaps it doesn’t completely replace what has been lost on the traditional mothership.
And consider this: Another round of negotiations is going to get started soon with new NFL contracts.
The last one had ESPN paying an incredible premium for “Monday Night Football” -- $1.9 billion a year -- much more than other TV networks for their NFL programming..
Will Disney continue to pay ever-higher rights fees when the big business model for sports on TV may mean more disruption? Punt, play or perhaps get out of the way: The cutters are coming.