Welcome back to our continuing coverage of our analysis of the “analysis” of one Laura Martin, champion of the basic cable bundle, and enemy of choice, a.k.a. a-la-carte.
In the article “‘Placing ESPN On Sports Tier Would Harm Pay-TV Ecosystem’ says Analyst”, Martin declares that “there would have to be a five-fold jump from current monthly fees of $6 to some $30 in order for the programmer to … offset the drop in ad revenue, which would result from having a much smaller potential audience to draw from.” In Part 2 of this series, you learned that there would actually be no drop in ad revenue, because advertisers don’t pay for potential audiences, they pay what they pay based on ratings. And ESPN’s ratings wouldn’t change because the actual audience, those who watch ESPN, would stay the same.
But I thought it would be valuable to play with the numbers to see if Martin’s hypothesis, that I’d have to pay a lot more than I am now to get what want and be rid of what I don’t, is valid. So let’s do that.
Here in the Bay Area, Comcast’s basic cable package, called Digital Starter, costs $70 a month after the new subscriber discounts expire. For that amount, subscribers get about 60 national networks, plus local stations, shopping networks, and local government and educational channels. ESPN, ESPN2, Both CSNs, NBC Sports Network, the Golf Channel, and the Pac-12 Network are included in this package. Other sports networks are not.
In this example, let’s assume all local channels are automatically included since, thanks to Must-Carry rules, cable companies have to offer them, which is a good thing since, despite a lot of sports moving from broadcast to cable, there’s still a decent amount of stuff on the big four networks.
Per-subscriber costs for cable networks were found here, here, and here.
Martin says ESPN’s current monthly fees of $6 per subscriber would increase by five times to $30. That includes ESPNU, News, and Classic. I could do without News and Classic, but I want the U, so I’ll take the whole ESPN family, and I still have $40 to spend. And I’ll continue to multiply per-sub costs by five.
Now as for networks in the NBC Sports Group, since we’re talking Comcast, I’d probably get them for free, but let’s be fair. CSN Bay Area runs around $2 and California is about $1. Multiplying by five equals $15. NBC Sports Network would cost me another $1.50 (30¢ x 5). I don’t need the Golf Channel. But throw in another $4 for Pac-12 (80¢). If I can assume I want the new Fox Sports 1, it’ll cost me though it’s unclear how much. Fox is reportedly trying to get 80¢ a sub so let’s go with that. That’s another $4.
Uh oh, I only have $15.50 left.
In case you thought I was only interested in sports, truth is, the network I watch the most is Comedy Central. Gots ta have my nightly Stew-Beef and Colbert. Now, I can watch day-old complete episodes online for free, but Martin would probably argue that if the basic bundle went away, Viacom would put full episodes behind a paywall. Luckily, even at five times the current rate, Comedy Central is only 75¢.
Now throw in AMC for $2 (40¢) and FX for $2.50 (50¢), plus IFC and the Sundance Channel for another $2.50, and TCM for $1.50. Oh, and BBC America for 60¢. And I’m down to $5.65.
And here’s where it gets tricky. TNT and TBS have some sports but are expensive, and I’m not interested in any of their non-sports programming. Sorry, not a fan of Conan. I only want them both in March for March Madness, and then TNT through June. Then I’ll take TBS in October for MLB playoffs. TNT would cost me $6 for the year, but if I amortize it for only the four months I want it, it’s $1.50. By the same token, TBS would run me 50¢ per month for the year if I subscribe for two months. And I still have $3.65 to play with.
NFL Network? It’s about $1.40 per month per year if I get it for four months during the regular season, which is all I want. MLB Network? That’s $1.25 for October, the only month I want it. Fox College Sports? $2. CBS Sports Network? $1.
OK, I’ve gone over a little, but you get the idea. For around the same amount, I gain ESPNU, FS1, TCM, IFC, Sundance, and maybe a few other sports-related nets I currently don’t get. And I unload the Fox News Channel (80¢), Disney Channel ($1), USA Network (70¢), and a whole bunch of others I’m not interested in.
Meanwhile non-sports fans can dump the ESPN Networks and save up to $6 a month, and use that to get something they want.
This was fun, but the truth is, we’d most likely never have to pay these fivefold rates because cable and satellite companies will still bundle, but they’ll create bundles that make sense, like kids’ channels, opinions-masquerading-as-news networks, and yes, sports.
If A-La-Carte happens, despite Martin’s protests, will ESPN survive? Will Fox News, USA, Disney, and all the rest? You bet they will. For every customer who wants to disconnect them, there are plenty who want to keep them.
So what’s the risk? Find out next time.
Follow Dave on Twitter and like him on Facebook, or click “+Subscribe” above and get Bay Area Media Examiner posts sent to your email inbox.