Sports-TV Execs Defend the Cable Bundle, Embrace OTT Technologies
With most major media-rights deals locked up for the foreseeable future, it’s an interesting time for sports-television executives. With negotiations quieting down, network powers are turning their attention to the impact of technology on traditional business models. Most notably, defending the cable subscription bundle is their biggest battle.
The buzz behind breaking up the bundle has grown louder lately, with both CBS and HBO launching online video services that some in the industry think could push would-be cord-cutters to make the move. At $5.99 per month, CBS All-Access offers a catalog of approximately 6,500 episodes from current CBS primetime series and older shows. It also tosses in live feeds from 14 CBS affiliates.
Some of sports television’s high-profile names don’t see this to be the case, opining that à la carte cable purchasing is still not in the best interest of the industry or the consumer.
“If anything, I think CBS’s announcement only reaffirms the value of bundling,” NBC Sports Group Chairman Mark Lazarus said during a panel discussion at the NeuLion Sports Media & Technology Conference presented by Sports Business Journal/Sports Business Daily. “$6 goes a long way across all of [cable].”
Randy Freer, president and COO of Fox Networks Group, concurred: “The future is still rosy. The deeper you get into this, the more you realize the opportunity provided by bundling has given more opportunity than in the last decade or so. Give them more of what they want, and what they want is of more value. The closer we can get to consumers as an industry, the better long-term things will happen.”
The numbers bear out Lazarus’s opinion. While a network like ESPN currently goes for just over $6 per month in the average cable bundle today, the median cost per channel in the current system is just 14¢. Unbundling cable would lead to higher prices for individual networks: by the time customers finished building their catalog of networks under an à la carte system, their cable bills could end up being markedly higher.
Sports networks may sell at a premium, but most would argue that it’s the revenue generated by those sports networks that help keep the entire system afloat.
“There will be sports networks for the next 100 years,” said CBS Sports Chairman Sean McManus. “So, when you talk about unbundling the cable model, that will affect us some, but what will happen is that those networks that are a lower price — cooking, DIY, travel, etc. — are going to go out of business. A percentage of the cable channels with a small, loyal audience are just not going to survive.”
The feeling is also that over-the-top distribution is not an enemy of traditional cable but, in fact, an ally in growing brand exposure and serving viewers.
“You’ve got to be involved in OTT,” said Turner Broadcasting System President David Levy, whose company teams with CBS and the NCAA on, arguably, the biggest and most successful OTT project in the industry, March Madness Live. “It’s great exposure for your brand, and it’s a great way for us to monetize our content and bring in new viewers. We don’t see it as a threat to a business but as an add-on.”
In terms of the impact of OTT on ratings, Levy also echoed the idea that sports is, in many ways, immune to the trials and tribulations that scripted television is facing with sagging ratings and more viewers choosing to either use DVR or streaming services such as Hulu or Netflix to watch programs on their own time.
“With audience fragmentation, live viewing is declining,” he said. “But sports is washed out of that. It’s about winning nights of television. We might continue to have metrics that are far different from entertainment viewing, but, from a sports perspective, we win nights of television, and that’s important to our brand and our viewers.”