The firestorm of criticism of ESPN’s pricey $15 billion rights deal with the NFL continued yesterday as the pay-TV industry voiced its discontent about rising sports rights fees they claim penalize non-sports fans.
The heated debate, over the eight-year, $1.9 billion a year deal inked by Disney’s ESPN and the football league, will keep “Monday Night Football” on the country’s No. 1 sports network — but, according to the pay-TV industry, push cable bills higher.
The American Cable Association, which represents 900 smaller cable operators, lashed out against the deal.
In a statement yesterday, it said that “ESPN has struck a bad bargain for consumers. The sports network’s financially wanton deal will push the cost of pay-TV service into the stratosphere, making the product less and less affordable during a time of severe economic stress and high unemployment.”
Matthew Polka, chief executive of the ACA, accused ESPN of refusing to give consumers the ability to opt out of programming they don’t want.
Bernstein Research’s cable and satellite expert, Craig Moffett, also waded into the debate, pointing out that ESPN and ESPN2 alone account for almost 20 percent of the wholesale cost of the average pay-TV subscription — but account for just under 2.5 percent of total viewership.
The two channels cost pay-TV distributors $4.69 and $0.62 per subscriber per month, or nearly $64 a year.
ESPN has not said it will raise rates as a result of the new deal, but normally raises rates while adding services each time it has to renew carriage talks.
The Post reported yesterday that Dish Network boss, Charlie Ergen, has been exploring whether to banish basic cable’s ESPN to a separate sports tier.
Moffett pointed investors yesterday toward a comment made by Ergen on Dish Network’s first quarter call, “There’s probably a really good path for somebody, for one of the four [big distributors] not to carry the sports programming. [It] would have a great strategic advantage for certain customers.”
Meanwhile, Needham & Co. analyst Laura Martin added, “The new NFL deal raises the likelihood that sports must be sold on a separate tier, because non-sports viewers are subsidizing sports fans. Sports is so expensive, and everybody is paying even if they don’t watch.”
Martin said her research shows that only one-third of consumers say they can’t live without sports, “That means two-thirds of households are paying roughly $5 a month for sports. Charge the sports fan $15, that way people who shouldn’t be paying for it, aren’t.”
ESPN is Disney’s cash cow and the powerful sports division would likely argue against being part of a separate sports tier because ESPN gets paid by both pay-TV companies and by advertisers who want to be available to the widest audience.
The ESPN-NFL extension begins in 2014.
In 2003, Cox Communications dropped ESPN over a carriage fee dispute that was quickly resolved in 2004.