Primetime Battle Over Sports TV Contracts
The American Cable Association spoke out against the rising cost of sports television rights, as Major League Baseball inked a $12.4 billion deal with ESPN, Fox, and TBS.
No one would dispute that athletes make an absurd amount of money these days. Just look at the average salary per sport:
- National Basketball Association: $5.15 million
- Major League Baseball: $3.31 million
- National Hockey League: $2.4 million
- National Football League: $1.9 million
Just as the cost of signing these players has skyrocketed, so too has the cost of showing the games on television.
Last week, following MLB’s $12.4 billion TV rights deal, the American Cable Association (ACA) decried “insane” sports TV contracts, saying they are “destroying a business model that once balanced the interests of consumers, pay-TV operators, programmers, and advertisers.”
“It’s an unsustainable model,” said Matthew M. Polka, president and CEO of ACA. “The leagues know that the networks will pay for it, and the networks know, if they do pay for it, that they can just turn around like they’ve been doing for a long time and shove it down to cable and satellite companies, and to consumers to pay. … You can’t have these increases year after year without consumers revolting.”
In a tight economy, where every dollar matters for many families, a basic cable television package can be a steep expense, and sports programming is playing a large part. Sports channels account for about 40 percent of cable fees, and consumers are stuck with the bill whether they watch the programming or not.
ESPN, the leading all-sports network, charges roughly $5 per subscriber, per month—the highest single-channel subscriber fee.
“You have a significant amount of money over the course of the year that consumers are paying for sports programming that by and large they don’t watch,” said Polka.
ACA’s members are small cable companies that provide service in rural areas, and they feeling the pinch from rising sports-package costs.
“We have to make those services available to everybody without any choice,” he said. “The networks come to us saying, ‘If you want to receive my popular channel, which we know that you must have in order to compete with other providers in your market, then you’ll take all of these other channels too.’”
The cable group has been advocating for an a la carte approach, where cable companies could offer an optional sports tier to customers who are willing to pay for sports programming.
ACA has been active in Washington, educating policymakers on the effects of the high costs of sports TV contracts on its members, and in the media, seeing an increase in coverage by the analyst community.
Everyone agrees “that there is no way in the long term that the consumer is going to continue to be able to pay for these rising rates on a monthly and annual basis, particularly as leagues ask for more and more, and the sports networks continue to agree to pay more and more,” said Polka. “It’s leading towards the demand for much greater choice for consumers, and we want to help to provide that to them.”
(TMG archive photo)