Friday, May 10, 2013

Economics of Sports A-La-Carte: Would You Pay and Does It Tilt The Playing Field?

Consider this post a discussion point.  Something to make you think.

John McCain introduced a bill on Thursday in the Senate and part of the goal of the bill is to allow consumer choice when selecting the programming they desire to pay.  Many other countries, like Canada and the UK, have various versions of a-la-carte offerings with the pay TV providers that serve households.

ESPN is an obvious target of the bill.  Per a Variety article on the bill citing SNL Kagan research, ESPN costs a cable provider $4.69 per subscriber, per month (here's a chart with several sports channels as of 2011).  As you can see from the chart, that's just the main ESPN as ESPN2, ESPNU and other networks have a much lower price.  In the case of ESPN2, it costs a cable provider just 13% of what ESPN costs.

If a-la-carte ever becomes a possibility for consumers, the question then becomes "What am I getting for my money?" on a channel-by-channel basis.  And let's not assume that we'll continue to pay $4.69 for ESPN.  Assume you'll pay more.  Even if 20% of cable subs opt-out of ESPN,the person that wants ESPN is likely paying at least 20% more to cover the loss of customers who don't want ESPN, assuming that Disney wants to maintain a consistent budget level and profit margin.  Let's be honest too.  If you elect not to pay for ESPN, you probably aren't paying for ESPN2, ESPNU, etc. either.  Maybe you are.  Maybe some of the niche items on those channels interest you like some of the action sports coverage, the NHRA or something else.

For all of us, we'd have to make decisions.  College sports is fairly unique because a large majority of the major conferences have their games delivered to us via national means.  Most of us aren't fans of just college sports though.

We luck out with the NFL, because its available on the broadcast networks.  There are out-of-market packages.  If you're in-market for the team playing on Monday or Thursday night, you're in luck because the game is on a local channel because the NFL mandates a local channel carrying those games as long as they aren't under a blackout.  So if you're out of market, you ask yourself  "Can I do without those games".   

MLB you can luck out with because of the alternate distribution means of RSNs for many ESPN games.  The out-of-market fan suffers very little and has multiple choices with MLB.TV and Extra Innings, with the exception of Sunday nights on ESPN...and most of the playoffs.
The main ESPN channel gets the prime content.  We can still point to UNC-Duke airing on ESPN2 over 15 years ago as a driving force behind more homes picking up ESPN2, but with the exception of the NHL's tenure on ESPN and concurrent events which necessitates moving an event to ESPN2, pro sports tends to stick on the main channel.   Even the college events that end up on ESPN2 are seen as lesser events when airing there, compared to whatever is on ESPN.  I really can't think of many concurrent college games lately, now that both ESPN and ESPN2 are in roughly the same number of homes, when looking over the games "on paper" (since we know once a game is played it can be a dog or not) and say "Wow, ESPN2 got the better game than ESPN."

The flipside of ESPN getting those prime events: the need for other channels.  Not a fan of any of NBCSN's or CBSSN's properties?  You probably aren't paying for them, and they probably are less willing spending the money to become more widely viewed and gain more television rights.  Even if NBCSN is willing to pay a premium compared to ESPN for a property, someone like MLB or the Big Ten might be less inclined to move because they know that a fan will have to move their TV subscription with them.  Diehards will move, diehards will pay.  Will the alum who isn't versed in the nuances of TV rights but discovers on Saturday morning that they now need to pay for a sports channel for one big property, and at a higher rate than they would today in a bundle, be willing to do so?  

Another way to look at it:  if I'm paying $8-$10 for 1-2 sports channels, and to get one more channel it will push my price to $13-$15 AND I don't intend to drop either of the original two channels because there is still plenty of other content that I find worthy, is it truly worth it?  And how would that compare to today's system if I'm paying $11-$12 for all of the content even if I'm only watching 3-4 of the 10-12 sports channels offered to me?

I can't say that bundling or a-la-carte is the right way to go.  I can find positives and negatives to each based on my personal situation, and so can you.  I can see where the variety of a channel will appeal to more consumers compared to a niche channel.  The goal is to be an educated consumer regardless of the system in use.

Wednesday, May 8, 2013

Recent TV scheduling updates (B1G/SEC/C-USA)

Some of this may be redundant to things posted on my Twitter timeline.  Consider this a recap of sorts.

SEC Network
Going back to this list of questions in a previous blog post, we have a few answers.
  • AT&T U-Verse was announced as the first provider to carry the network
  • There will be a specific online component, where content not shown live on the network will air through a dedicated SEC Network online package
  • Per the Wall Street Journal, ESPN owns the network 100%.
  • Per Sports Business Journal, profits will be split 50-50 between ESPN and the SEC
  • A content board will exist of pIeople from both the SEC office and ESPN.  They will determine which games will air on a particular network.  We can probably infer that a game was selected by the SEC Network ahead of ESPN/ESPN2/ESPNU, but we probably will never know those games.
  • It appears that the national cable properties (ESPN/ESPN2/ESPNU) will continue to see the same number of football and men's basketball games
  • Alterations were made to the CBS contract.  Their game window is no longer exclusive.  The SEC Network can air a game at the same time as as a game on CBS.  Does not appear that right was afforded to ESPN/ESPN2/ESPNU.  In addition, the ESPN contract with the conference now extends out to the 2033-34 athletic year.
  • At least the CSS regional cable package is moving to the SEC Network in 2014.  The FOX Sports RSN package will move over in 2015 
What isn't known yet

  • If every SEC school has to appear on the network a specific number of times
  • If the 12:21pm syndication package is truly going away.  Have heard from multiple people that the SEC schools haven't been explicitly told that, but to maintain a consistent level of coverage on ESPN/ESPN2/ESPNU and provide the SEC Network with up to 45 games, you would think they would be going away in 2014.
Big Ten

The conference, ABC/ESPN and BTN selected their night games for 2013.  My list differs slightly from the ESPN & Big Ten releases as they list the Notre Dame at Michigan game as possibly airing on ABC/ESPN/ESPN2.  Their NASCAR schedule conflicts with that, but maybe something is brewing on the NASCAR side of the house.  Hasn't been the first time a race on ESPN Networks has switched to a different channel, but that is usually a Nationwide Series race.

The use of a 6pm window on 9/7 and 9/14, along with the 9pm window on 9/14 is something new.  Don't know if that means that the conference will stack the window before the 6pm games, whether its at 12pm or at a later time, with multiple games if ESPN chooses not to take many games for those two weeks.

As for "regional coverage" for the Indiana games on 9/7 and 9/14, that may be more relevant to non-satellite subscribers.  I've asked around about those and haven't received an answer from the conference or network.  Could be that BTN2Go is required for those outside of Indiana for systems that only have one alternate BTN game-only channel.

Up next, and probably within the next week or so, should be the Big Ten setting the game times for its homecoming games.  ABC or ESPN may elect to choose one of these games for either 12pm or 3:30pm if it desires, but most of these will not have TV set for them.  With the night game selections, only the homecoming games for Northwestern and Michigan were selected.

Conference USA

A preliminary TV schedule was released for the 2013.  At first was a little surprising to see FOX Sports take nearly all of the Thursday and Black Friday games (CBS Sports Network ended up with one game on Black Friday as part of a C-USA & MWC doubleheader).  But when you look into the C-USA press release and see that, at a minimum, at least 10 of the 20 games currently selected have to air on FOX Sports 1, it makes a little more sense.  

C-USA had nine games scheduled for Thursdays or Black Friday specifically for their TV partners (the Jackson St.-Tulane game was moved by Tulane, not TV).  CBSSN took their Black Friday game, and it leaves FOX Sports with eight games.  There were only one or two Thursdays where a C-USA game also had a competing Big 12 or Pac-12 game.  Assuming they were serious about a weekly Thursday night game, those games should be plugged into the FOX Sports 1 count immediately.  That leaves FOX to pick up a 2-4 C-USA Saturday games for FOX Sports 1 to hit their minimum.

Also, the number of games on FOX Sports and CBSSN didn't increase in proportion to the increase in members from 12 to 14 members.  CBSSN actually decreased their number of national games to 13 while FOX stayed at 20, though FOX could increase their number though games exclusively on FOX College Sports if they desire to add some.  Otherwise, regional partners outside of CSS can start working with individual schools to pick up games.  Maybe FSN would look to back fill games lost to FOX Sports One with some regional games.

CBS Sports Network
Looking over the CBSSN schedule of C-USA, Division II, Mountain West and service academy games and they will have a minimum of 49 games on their network for 2013, at least seven more games than last year.  Some of that can be attributed to the extra week of the season, but the network still have to account for a 2x increase in the number of MW games.  How did they do it?
  • There a few more late evening (ie. 10-10:30pm ET) kickoffs specifically to account for the MWC
  • A doubleheader of C-USA and the MWC on Black Friday
  • Using a pair on Friday night windows outside of Black Friday, specifically one for an Army game
  • Filling time on the Sunday of Labor Day weekend with Colorado-Colorado St.
The 9/21 3:30pm window is open, presumably for a Patriot League game.  They have to carry at least one PL game each year.  They could also sublicense an Ivy League game from NBC Sports Network, which they did last year.  

Even if the Air Force-Navy game ends up on CBS instead of CBSSN, the addition of their PL game should put them at 50 games for the year.  Who knows.  Maybe they'll add a couple more CBSSN and MW games too.

Thursday, May 2, 2013

Questions I have for SEC Network

"Project X" gets a real name today.  Here's what I'm curious to find out.
  • Will there be any announced carriers today?
  • Is there an online component to this channel?  I assume so since there is one to Longhorn Network & other ESPN properties.
  • Will the channel be a multi-screen operation with alternate feeds when multiple games are ongoing in football or basketball?  Will it be regional like the Pac-12?
  • What are the terms of ownership, specifically the conference's stake in the network?
  • How many times will the SEC Network jump ESPN, ESPN2 or ESPNU?
  • Will there be less games on the national cable properties?
  • Besides the institutional game that is being committed to the network, are there any requirements around the number of times each school must appear on the network?  
    • If there is a requirement, will it apply specifically to conference games?  In other words, will a school have to appear on the SEC Network in football for at least one conference game like BTN?
  • Have there been any alterations to CBS's contract which allows for games to be spread out throughout the day?  In other words, will CBS's content in football remain non-exclusive with the exception of one window a year, the 12pm window.
  • Will all the syndication packages go away?  I've heard two different responses to that question and it may not yet be resolved.
Let's see if any of these questions get answered.