ESPN and Monday Night Football: The $2 Billion Cost (DIS, NWS, CBS, GE, DTV, SIRI)

The cost of carrying Monday Night Football is about to go from being expensive to off the charts.  We Americans probably never think of the costs behind carrying the game.  The costs are enormous today and if reports are accurate then those costs are about to go from high to egregious.  SportsBusiness Daily reported that the NFL and ESPN, a unit of The Walt Disney Company (NYSE: DIS), are close to an extension of their media deal.

If the report is accurate, those rights would have Disney’s media network pay the NFL close to $2 billion a year to extend the game coverage into the next decade.  The 65% to 70% increase is put between $1.8 to $1.9 billion.  ESPN currently pays about $1.1 billion currently, well above what the other networks are charge.  SportsBusiness Daily gave the costs paid by the other networks as follows:

News Corp. (NASDAQ: NWS) pays about $720 million for Fox to carry games;

CBS Corporation (NYSE: CBS) pays about $620 million;

General Elctric Co. (NYSE: GE) pays just over $600 million for NBC;

DirecTV (NASDAQ: DTV) pays close to $1 billion for exclusive access to Sunday Ticket.

SIRIUS XM Radio Inc. (NASDAQ: SIRI) also just renewed its NFL coverage pact in December, extending the NFL and SIRIUS partnership that has been in place since 2004 for pre-season to Super Bowl out to 2016.

The ramifications of his are many.  Suddenly, the players’ agents will ask for even more money. It can drive up the costs of cable stations in packages.  If the gouging by this amount is true, then we might as well expect game tickets to become even more exclusionary for Joe Public.  Food and drinks at the game will probably go up again too.  The way price hikes tend to work is in unison, even if it takes a season or two to catch up.

JON C. OGG