December 11, 2019

News Analysis: For Cable TV Clients, a Steady Diet of Sports

You are paying for it regardless.

Although “sports” never shows up as a line item on a cable or satellite bill, American television subscribers pay, on average, about $100 a year for sports programming — no matter how many games they watch. A sizable portion goes to the National Football League, which dominates sports on television and which struck an extraordinary deal this week with the major networks — $27 billion over nine years — that most likely means the average cable bill will rise again soon.

Those spiraling costs are fraying the formerly tight bonds between the creators and distributors of television. Cable channels like ESPN that carry games are charging cable and satellite operators more money, and broadcast networks are now doing the same, demanding cash for their broadcast signals and using sports as leverage.

And higher fees are raising concerns across the industry that cable bills may be reaching the breaking point for some consumers who are short of money.

The N.F.L. contracts announced this week “will surely enrich N.F.L. owners and players just as much as it will impoverish all pay TV subscribers, particularly those who will never watch an N.F.L. game,” said Matthew M. Polka, the president of the American Cable Association, which represents small cable operators. His group wants government officials to step in and make it harder for channel owners to demand higher fees for carriage and drop the channels when operators disagree.

Publicly expressing the private sentiments of others, Greg Maffei, the chief executive of Liberty Media, recently called the monthly cost of the media empire ESPN a “tax on every American household.”

Patrick Flynn personifies the consumer challenge. He and his wife, who pay Comcast $170 a month for television, Internet and a home phone in Beaverton, Ore., are keenly aware that part of their bill benefits the sports leagues that charge networks ever-increasing amounts for the TV rights to games. Save for one regional sports channel, he said, none of them are worth it.

“For the two or three games a year that our Washington Huskies are on ESPN, we can arrange for someone else to host the party,” he said.

But there are also millions of viewers like Russell Tibbits, of Dallas, who says, “If you eliminate sports channels from cable packages, I literally would not own a TV.”

Television and league executives argue that the vast majority of viewers not only want sports, but are, like Mr. Tibbits, willing to pay to watch a favorite team. On Sunday night, about 25 million people watched the New York Giants play the Dallas Cowboys on NBC — by far the highest-rated show on television for the night, more than tripling NBC’s average audience. ESPN, which broadcasts “Monday Night Football” and floods its week with football programming, is typically found by surveys to be the most valuable cable channel among subscribers.

But ESPN is also far costlier than any other channel, earning about $4.69 a month for each cable and satellite household in the United States, according to the research firm SNL Kagan. Next year the firm expects ESPN to cross the $5 a month threshold for the first time (the next highest is TNT, at $1.16 this year). On Thursday, ESPN announced its latest rights deal, one that extends through 2024 with the N.C.A.A.

“Sports is hugely popular in America,” said Edwin M. Durso, an executive vice president for ESPN, “and I think the prices that we and others pay for programming clearly reflect that.” Mr. Durso noted, accurately, that ESPN does not set retail prices for its content. But together with siblings like ESPN2 and ESPN Classic, the ESPN networks take in about $6.50 per subscriber each month, according to SNL Kagan. Other sports channels like Fox Sports Net, N.F.L. Network and Versus, soon to be renamed the NBC Sports Network, account for at least an additional $1.50 or so.

In the last few years broadcasters like CBS and NBC have started to posture for monthly fees from cable and satellite providers, and indirectly, those fees pay for sports programming, too.

Eventually, subscribers feel the pinch; “if you look at the whole media food chain, the last guy on it is the consumer,” said David Bank, an equity research analyst at RBC Capital Markets.

Article source: http://feeds.nytimes.com/click.phdo?i=c5576cdce42f4e7523ca65b60fd61a28

News Analysis: For Pay TV Clients, a Steady Diet of Sports

You are paying for it regardless.

Although “sports” never shows up as a line item on a cable or satellite bill, American television subscribers pay, on average, about $100 a year for sports programming — no matter how many games they watch. A sizable portion goes to the National Football League, which dominates sports on television and which struck an extraordinary deal this week with the major networks — $27 billion over nine years — that most likely means the average cable bill will rise again soon.

Those spiraling costs are fraying the formerly tight bonds between the creators and distributors of television. Cable channels like ESPN that carry games are charging cable and satellite operators more money, and broadcast networks are now doing the same, demanding cash for their broadcast signals and using sports as leverage.

And higher fees are raising concerns across the industry that cable bills may be reaching the breaking point for some consumers who are short of money.

The N.F.L. contracts announced this week “will surely enrich N.F.L. owners and players just as much as it will impoverish all pay TV subscribers, particularly those who will never watch an N.F.L. game,” said Matthew M. Polka, the president of the American Cable Association, which represents small cable operators. His group wants government officials to step in and make it harder for channel owners to demand higher fees for carriage and drop the channels when operators disagree.

Publicly expressing the private sentiments of others, Greg Maffei, the chief executive of Liberty Media, recently called the monthly cost of the media empire ESPN a “tax on every American household.”

Patrick Flynn personifies the consumer challenge. He and his wife, who pay Comcast $170 a month for television, Internet and a home phone in Beaverton, Ore., are keenly aware that part of their bill benefits the sports leagues that charge networks ever-increasing amounts for the TV rights to games. Save for one regional sports channel, he said, none of them are worth it.

“For the two or three games a year that our Washington Huskies are on ESPN, we can arrange for someone else to host the party,” he said.

But there are also millions of viewers like Russell Tibbits, of Dallas, who says, “If you eliminate sports channels from cable packages, I literally would not own a TV.”

Television and league executives argue that the vast majority of viewers not only want sports, but are, like Mr. Tibbits, willing to pay to watch a favorite team. On Sunday night, about 25 million people watched the New York Giants play the Dallas Cowboys on NBC — by far the highest-rated show on television for the night, more than tripling NBC’s average audience. ESPN, which broadcasts “Monday Night Football” and floods its week with football programming, is typically found by surveys to be the most valuable cable channel among subscribers.

But ESPN is also far costlier than any other channel, earning about $4.69 a month for each cable and satellite household in the United States, according to the research firm SNL Kagan. Next year the firm expects ESPN to cross the $5 a month threshold for the first time (the next highest is TNT, at $1.16 this year). On Thursday, ESPN announced its latest rights deal, one that extends through 2024 with the N.C.A.A.

“Sports is hugely popular in America,” said Edwin M. Durso, an executive vice president for ESPN, “and I think the prices that we and others pay for programming clearly reflect that.” Mr. Durso noted, accurately, that ESPN does not set retail prices for its content. But together with siblings like ESPN2 and ESPN Classic, the ESPN networks take in about $6.50 per subscriber each month, according to SNL Kagan. Other sports channels like Fox Sports Net, N.F.L. Network and Versus, soon to be renamed the NBC Sports Network, account for at least an additional $1.50 or so.

In the last few years broadcasters like CBS and NBC have started to posture for monthly fees from cable and satellite providers, and indirectly, those fees pay for sports programming, too.

Eventually, subscribers feel the pinch; “if you look at the whole media food chain, the last guy on it is the consumer,” said David Bank, an equity research analyst at RBC Capital Markets.

Article source: http://feeds.nytimes.com/click.phdo?i=c5576cdce42f4e7523ca65b60fd61a28

Comcast Said to Be in Talks Over G4 Cable Channel

It is unclear how close the parties are to a deal, but representatives of the Ultimate Fighting Championship and Comcast’s NBCUniversal division were said to have met in New York on Wednesday, according to three people with knowledge of the talks. The people insisted on anonymity because they were not authorized by their employers to comment.

The talks were first reported by the Web site of The Wall Street Journal.

Ultimate Fighting Championship, which produces popular but sometimes controversial mixed martial arts matches, is known to be seeking an expansion of its television footprint. It is in talks with several different potential distributors, one of the people said.

Last fall, the president of Ultimate Fighting Championship, Dana White, predicted in an interview that the league would start its own network “within the next couple years.” At the time he also expressed an eagerness to bring Ultimate Fighting Championship fights to broadcast television in the United States for the first time. Presumably a deal with Comcast could also include specials on the NBC broadcast network, which Comcast also controls.

Representatives for Comcast, G4 and Ultimate Fighting Championship declined to comment Wednesday. Two of the people with knowledge of the NBC-Universal talks said that Ultimate Fighting Championship, which is privately held, could take ownership of 60 percent or more of G4, which is one of the lowest-rated cable channels in Comcast’s portfolio. Its intended audience of men ages 18 to 34 overlaps well with Ultimate Fighting Championship’s audience on Spike, a unit of Viacom, which has carried a fighting reality show for the last six years.

Spike’s deal with U.F.C. for the show, “The Ultimate Fighter,” expires in six months. Negotiations between Spike and Ultimate Fighting Championship for a new deal started almost a year ago, one of the people said, but broke down after Ultimate Fighting Championship proposed a dramatic increase in Spike’s annual payment.

Article source: http://feeds.nytimes.com/click.phdo?i=6b572a08ed8c576de88bf36dcf3f8e00

Viacom Reports 20% Rise in 2nd-Quarter Revenue

The company, which owns cable channels like MTV, VH1 and Nickelodeon and the movie studio Paramount Pictures, said that its revenue was $3.27 billion in its second quarter, up from $2.73 billion in the period a year ago. Net income for the quarter was $376 million, or 63 cents a share. That was a 53 percent gain over the same quarter a year ago, when the company had net income of $245 million, or 40 cents a share. The company generally topped analysts’ expectations.

“Viacom has never been stronger financially,” the company’s chief executive, Philippe P. Dauman, said in a conference call with investors. Mr. Dauman said Viacom, which is controlled by Sumner M. Redstone, intended to accelerate its stock buyback program and increase its dividend.

The biggest part of Viacom, its cable channel arm, remains healthy. Together, the channels topped $2 billion in revenue for the quarter, up 11 percent over the same quarter last year.

Mr. Dauman credited “phenomenal” ratings for several shows, chief among them “Jersey Shore,” the reality show about hard-partying young men and women that had its third season during the quarter. The season averaged about 7.7 million viewers, making it the most popular show in MTV’s history. With the upfront season of advertising spending now under way, Mr. Dauman indicated that MTV would seek high premiums for future seasons of the show. “Next month,” he noted, the cast of the show “head to Florence” for a season set in Italy.

Shows like “Teen Mom” have also helped MTV’s performance. Over all, Viacom said it had posted an 11 percent gain in domestic advertising revenues, the fifth such quarter of sequential improvement in that growth rate.

Viacom has also nurtured shows that are considered hits for its other channels: “iCarly” for Nickelodeon, “Tosh.0” for Comedy Central, “The Game” for BET. Mr. Dauman implied that the company was seeking ratings improvements at two other channels, VH1 and Spike.

The revenue and profit for the company’s filmed entertainment arm fluctuate depending on the performance of its feature films and the sales of DVDs of those films. In the quarter that ended in December, Viacom’s earnings declined in large part because of weakness in this area. But in the quarter that ended in March, the filmed entertainment arm had $1.2 billion in revenue for the quarter, up from $638 million in the previous quarter and $886 million in the period a year ago.Both theatrical revenue and home entertainment revenue were up in the quarter, Viacom said, thanks to ticket sales for “Rango,” which was released in March, and DVD sales of well-regarded films like “True Grit” and “The Fighter.” Referring to the later films, David Joyce, an analyst for Miller Tabak and Company, said “the strength of Oscar contenders helped most of these revenue streams.”

Article source: http://feeds.nytimes.com/click.phdo?i=b334711483f0df1bec5ad02d9e7a5604