For years the single most expensive piece of a pay-TV subscription has been the sports programming offered by cable and satellite providers. These companies pay ever-higher fees to sports leagues like the NFL, MLB and the NBA because, for years, sports programming could easily be characterized as the most valuable content in the world. No one (or, at least, not millions of people) wants to watch the seventh game of the World Series the day after it’s played.
But sports is event-driven and if there is no big event (the NBA finals, for example), most people don’t tune in to the sports channels. A new survey by a cord-cutting website CutCableToday.com indicates that 56% of U.S. pay-TV subscribers rarely or never watch sports programming on Walt Disney Co.’s (NYSE: DIS) ESPN channels. Of the total surveyed, 30% never watch ESPN and 26% watch less than once a month. Just 8% said they watch ESPN daily.
In fact, nearly a third of those surveyed said that having access to a live sports channel was “very unimportant” to them and another 20% said it was either “somewhat unimportant” or they were “neutral/not sure.”
Sports programming now makes up about 40% of a cable/satellite provider’s costs, according to a report last December in the Los Angeles Times. ESPN costs an average of $7.20 a month. Adding in regional sports programming is expected to drive the cost of an average consumer’s pay-TV bill to $18.37 a month this year.
On Wednesday, TiVo Corp. (NASDAQ: TIVO) released its first-quarter video trends report including a breakdown of the top channels that respondents to its survey want to have in an á la carte pay TV package. The top five were ABC, CBS, Discovery, NBC and the History channel. ESPN ranked 16th, barely within the average of 19 channels that respondents said they would like to have in their ideal packages. More than 75% of respondents would like the ability to create their own bundle of channels, something that the pay-TV providers have shown little interest in doing.
U.S. consumers say they are willing to pay an average of $28.31 a month for their top 20 channels. If sports programming is costing nearly a third of that and more than half of subscribers don’t want it, the pay-TV providers are in a serious bind.
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