Friday, April 20, 2012

Sports Cable Wars

A year ago, ESPN was the unequivocal, unchallenged king of cable sports television.  Now, with NBC Sports Network up and running and Fox Sports considering its own 24-hour national sports network, could ESPN’s reign be in jeopardy?  Hardly.  It’ll take several years and billions of dollars for any media company to be even a small competitor to the World Wide Leader in Sports.

The only way to draw loyal viewers to a sports cable network is with live sports rights, and ESPN has a stranglehold on the market.  ESPN has rights to almost every major sports property with the exceptions of the NHL and the Olympics, which belong to the newly rebranded NBC Sports Network.  After going live on January 1, NBCSN averaged just 62,000 viewers at any given moment.  By comparison, ESPNews, ESPN’s 3rd cable network, averaged 74,000.  I wouldn't exactly call that "coming out with a bang."

The reality is ESPN has an insurmountable advantage in its revenue streams.  The Disney-owned network makes $4.69 per month per subscriber from its flagship network alone, compared to just $0.31 for NBC Sports Network.  If the goal is to compete with ESPN, industry experts say NBCU-Comcast or Fox Sports might have to spend $20 billion on rights alone.  It's not that it can't be done, but it is a strategy that should scare some stockholders.