• by Wayne Friedman , Staff Writer, August 29, 2023

Traditional bundling of linear TV networks will see a dramatic change in two years, projects John Hodulik, media analyst of UBS Research. And sports will be the big reason why.

That's when he expects ESPN will become a full live streaming platform abandoning the legacy/virtual pay TV bundles. “This will accelerate change in the linear TV bundle,” says John Hodulik on CNBC on Monday.

Currently, there has been a lot of gradual shifting of sports TV deals -- especially exclusive sports franchise deal-making: Amazon now has “Thursday Night Football,” while Apple TV+ has Major League Soccer. 

Although some analysts are concerned that ESPN may have missed the boat in shifting to a full streaming platform, Hodulik says the platform still commands a lot of sway. He estimates a dominating piece  -- 30% of all live sports viewing --- is on ESPN.

Some critics say it has been late in making the big leap, but ESPN still gains in benefit when it comes to ever rising advertising pricing -- especially recently.

Even as linear TV cost-per=thousand viewer (CPM) pricing has weakened during the just completed upfront advertising market for all entertainment programming -- down by 1% to 3% on average --  live sports was still able to tack on as much as 5% gains, showing the durability of advertisers for sports on linear TV. 

ESPN has been said among analysts to be the glue that holds the traditional pay TV bundle together. So with its departure, imagine that cord-cutting will dramatically accelerate. 

This comes even as the bigger picture still shows that in 2023, total industry-wide spending on U.S. non-sports entertainment content is estimated to be $103 billion, with spending on sports on TV/streaming and elsewhere at $28 billion, according to UBS. 

So what remains then of sports? Many believe linear, live TV bundling could shrink by half -- to around 30 million from around 70 million today in just a few years.

One major positive for sports on linear TV is that even with ESPN's departure, traditional TV networks -- especially broadcast networks -- still have a long-term stake in sports on those networks. One major example here is that decade-long NFL deals with Fox, NBC, CBS, ABC-ESPN, and Amazon will be around.

Those networks will collectively pay over $110 billion for the rights lasting from 2023 through 2033.

At the same time, those linear TV networks will still need to find ways to find other TV and movie content to run in other dayparts and seasonal time periods when the NFL is not on the air.

So one major question for the upcoming NBA TV/streaming negotiations: How does it weigh these ongoing TV/video businesses, in terms of how many exclusive streaming deals might popular TV basketball look to secure for its long-term future?