Cable Costs Will Keep Rising, ESPN To Double By 2009

Not surprisingly, top cable networks have dramatically increased programming costs over the last five years--and they are projected to go up higher still, according to new estimates released last week by Kagan Research.

For instance, ESPN--which spends the most on programming of any cable network--is expected to double costs by 2009, growing almost 14 percent per year for the next three years. Through 2009, Kagan expects the top ten networks to increase spending on programming at a rate of 5.5 percent annually.

The greatest gainers since 2000 have been ESPN, Fox Sports Network, TNT, and USA Network. ESPN grew 68 percent from 2000 to 2004 to $25.90 per subscriber per year--the most of any cable network. In 2000, ESPN's number was $15.38. License program rights from sports leagues such as the NBA, Major League Baseball, and the NBA have been the major reason for the rise in ESPN's programming costs.

Next on the list is another sports cable network, Fox Sports Network, whose numbers were $14.42 per sub/per year in 2004.



In third place is TNT, at $9.27. While it is primarily a network that programs dramas and movies, it also airs high-priced NBA games--which contribute to its high number. The Kagan study says the average for the top ten networks is $7.78 per sub. But for all cable networks, the average is a lot lower--averaging $2.29 per subscriber per year.

MTV Network has been on the low-end of programming budgets. It programs lots of reality shows, which are cheaper to produce than other cable networks' scripted programming and off-network programs. But Kagan feels all this is about to change. After ESPN, it expects MTV will have the greatest rise in programming per sub costs for the next three years at just over 10 percent per year. Other big spenders will include USA, TNT, and Fox Sports.

Overall programming costs per sub for all cable networks have stayed essentially flat over the last five years. But Kagan says that will start rising--inching up over 3 percent annually--to reach an industry average of $2.69 per sub per year by 2009.

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