ESPN And The Bursting Of The Sports Bubble…(Yes!!)

Friday, May 26, 2017
By Paul Martin

by William Anderson via The Mises Institute,
ZeroHedge.com
May 25, 2017

When the cable TV sports giant ESPN announced 100 layoffs recently, including letting go a number of high-profile broadcasters, a lot of people took notice, and well they should: things no longer are business as usual in sports broadcasting, and we are not even at the beginning of the end, and maybe not even the end of the beginning.

Like the slow crashing of the retail sector as online purchase firms like Amazon begin their domination, we are seeing a sea change in sports broadcasting and that is going to mean big changes are down the road not only for ESPN, but for all of the sports entities that depend upon the huge payouts that ESPN provides. To put it mildly, a lot of people are about to see their lives change drastically as consumer choices drive sports broadcasting in a new direction.

Enough with the superlatives. What is happening with ESPN, and why is it important? As Clay Travis of the sports website Outkick the Coverage has been writing for more than a year, the main ESPN business plan, the one that brings in the most revenues to the firm, is doomed to near-extinction, and there is nothing ESPN can do about it. Writes Travis:

In the past five years ESPN has lost 11,346,000 subscribers according to Nielsen data.

If you combine that with ESPN2 and ESPNU subscriber losses this means that ESPN has lost over a billion dollars in cable and satellite revenue just in the past five years, an average of $200 million each year. That total of a billion dollars hits ESPN in the pocketbook not just on a yearly basis, but for every year going forward.

It’s gone forever.

Since it began to grow in popularity in the late 1970s, cable (and later, satellite) television has offered its customers coverage with “bundles,” that is different payments allow cable subscribers to expand their viewership as payments increase. For example, a “basic” cable subscription would allow the customers to view, say, 15 channels including the ABC-CBS-NBC-PBS lineup plus other channels such as CNN or Fox. A higher-tier subscription would add other channels, including ESPN and its associated channels and others such as The Food Channel or assorted movie channels.

One problem with bundling, of course, is that subscribers will pay for channels that they rarely or do not watch. For example, I have a basic subscription with Direct TV, but maybe watch 10 channels at most, even though dozens are available. (I don’t include ESPN or any of the other sports channels in my monthly package.)

As technology has improved in telecommunications, the ability of providers to further segment packages has meant that cable and satellite subscribers are able to eliminate the channels they don’t want to watch, and that means that many are unhooking from ESPN. Continues Travis:

ESPN is losing 10,000 subscribers every day so far in 2017. In the past six years they have lost 13 million subscribers and that subscriber loss is escalating each year. That’s billions of dollars in lost revenue.

Every year for the next five years ESPN is spending more and bringing in less. You don’t have to be Warren Buffett to see that’s a business problem.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter