Rethink MVPD a la carte in wake of ESPN NFL pact


RBR-TVBR Analysis:

ESPN has just decided to throw long, as if it’s down by six points and facing a 4th-and-25 situation with ten seconds left on the clock, and the receiver is the National Football League. However, the NFL won’t be catching a football, it’ll be catching a pot of gold. All things being equal, broadcasters are usually in favor of less regulation – but this event may provide the tipping point for broadcasters to sign on with those calling for a mandate requiring an a la carte channel selection option for MVPD subscribers.

One of the keys to maintaining a healthy local broadcasting system, and through it necessary consumer access to local news and information, especially critical local disaster information – is access to the quality programming broadcasters need to stay in business.

A service like ESPN, which charges penthouse rates for carriage, and/or gets other co-owned channels onto MVPD channel lineups by bundling them with ESPN, has a steady revenue stream that that hedges its vulnerability to the ups and downs of the advertising business.

The move of Monday Night Football from ABC Television Network to ESPN – from free TV to pay TV – is a shot over the wall for broadcasters, and the latest ESPN deal with the NFL is cause to man the ramparts.

The direction this sort of event is headed will have the effect of pricing broadcast networks out of prime programming events. Big stable income cable will simply be able to outbid broadcasters at all turns.
And that’s not all — this is a double-dip threat. On another level, if the NFL price tag causes ESPN to raise its carriage fees higher, it will make it that much harder for broadcasters to get fair value for retransmission consent.

What’s amazing is that MVPD subscribers don’t seem to be aware that they are already paying for ESPN, whether they watch it or not. The Sacramento Bee did a non-scientific poll of its readers, asking them how much they’d pay for the station. As of the afternoon of 9/16/11, 364 readers had weighed in. Here are the results:

$5 – 39 voters (11%)
$10 – 10 votes (3%)
$15 – 7 voters (2%)
$0 – 308 voters (85%)

We suspect that the 85% have no idea they are already paying $5 a month – or $60 a year – to get ESPN.
Although this writer is a sports fan, we rarely have ESPN tuned in here. In fact, we haven’t watched ESPN at our residence since the 2010 NFL season, and the only games we watch in general are those involving the two household favorite teams (Steelers and Redskins for those keeping score at home) and the occasional game featuring a rival. We’re paying $60 a year, or somewhere around there, for maybe four-six football games a year.

We used to not mind the subscription model – where we could flip through a wide selection of channels and settle where we wanted for one monthly fee.

But as that fee rises, and as channels we don’t ever watch go ballistic with their fee demands, and as those fees threaten the programming we can get on our local television stations that we do rely on, we are coming to the opinion that we’d like to opt out of channels like ESPN.

Maybe it’s time to find out exactly how much ESPN is really worth. If this household is given a chance to vote with its checkbook, we can pretty much guarantee we will deduct our $60 from the ESPN bottom line. We’ll bet a lot of other households will follow suit, and ESPN and its parent Walt Disney will think twice before bidding up rights fees into the stratosphere.

As a matter of survival – both in terms of access to prime programming and access to fair carriage compensation – we think broadcasters should start thinking along the same lines.