This is a pretty amazing data point.
On the flip side, ESPN’s costs for content have skyrocketed to well over $7 billion a year, more than any competitor, according to projections from Boston Consulting Group and SNL Kagan. That compares to $5 billion by Netflix and $4.3 billion by NBC. Rights to “Monday Night Football” alone cost ESPN $1.9 billion a year, not to mention hefty deals with the NCAA and NBA.
That gets back to what I posted yesterday. Even if you credit ESPN with focusing on the core value of its business plan, which is monopolizing live sports (or at least coming as close as possible), the expense is coming up on the edge of what is currently sustainable. Firing 100 talking heads and reporters won’t make a dent in that.
There are two things to take away from Mickey’s current bottom line bleeding. One is finding other ways to control delivery of live sports, which is why you see the WWL scrambling to make its way into the digital domain. The other is re-calibrating what sort of value the content has. The latter is obviously dependent on the former and will take some time to develop, especially when you consider that Mickey is contractually locked into a lot of costs now.
The former is not without its perils, either. Consider the story that led of the linked article.
A friend in Little Rock decided to cut the cord when he moved. He planned to do without cable TV altogether, at least until college football season began.
His thinking reflected one of cable’s last hopes as viewers increasingly rely on streaming, social media and even that ancient throwback, the free airwaves.
For years, sports was a deal-saver. For live events, you had to have cable, and ESPN was the giant holding the strings keeping millions of fans tethered.
But when college football season rolled around in September, my friend surprised himself. “I never went back to cable,” he said. “I was able to go to friends’ houses, or to bars, to see games. I could watch clips on my phone. I also could learn not to give a care.” OK, he used an earthier word than “care.”
Sure, it’s just one unnamed friend. The story struck a chord with me, nonetheless. You see, I’m dipping my toes into cord-cutting waters. I’m dumping my satellite provider and going to a package of high-speed Internet and local stations to get my sporting fix. I’ll pick up access to ESPN and the SEC Network through Sling TV for football season and dump what I don’t need during the rest of the year.
I’ll be curious to see if going with little sports broadcast access for half a year has a similar impact on my viewing habits. It sort of gives a whole new meaning to cord-cutting, doesn’t it?
If I were Greg Sankey, I’d be a little concerned.