Future of Cable TV

Disney's ESPN Said Planning to Eliminate as Many as 350 Jobs

The network, which commands the highest price per customer among basic cable channels, has lost more than 4 million subscribers in the past four years, according to researcher SNL Kagan.

So cord-cutting seems to be starting to take a toll on ESPN. Remember, each million subscribers is about $85 million per year in revenue from fees alone. How much longer before ESPN realizes the old days are over and looks at new models? When does it hit the point where they cannot give the NFL and others a rights fee increase when they renew?

Quote: AZDuffman

So cord-cutting seems to be starting to take a toll on ESPN. Remember, each million subscribers is about $85 million per year in revenue from fees alone. How much longer before ESPN realizes the old days are over and looks at new models? When does it hit the point where they cannot give the NFL and others a rights fee increase when they renew?

Not to mention another $50 million in advertising revenue.

The billion dollar movies have all come in recent years as the worldwide market expands to embrace a certain kind of American movie
1993 Jurassic Park $1,029.2 (includes re-releases)
1997 Titanic $2,186.8
1999 Star Wars: Episode I - The Phantom Menace $1,027.0
2003 The Lord of the Rings: The Return of the King $1,119.9
2006 Pirates of the Caribbean: Dead Man's Chest $1,066.2
2008 The Dark Knight $1,004.6
2009 Avatar $2,788.0

2010 Toy Story 3 $1,063.2
2010 Alice in Wonderland (2010) $1,025.5
2011 Harry Potter and the Deathly Hallows Part 2 $1,341.5
2011 Transformers: Dark of the Moon $1,123.8
2011 Pirates of the Caribbean: On Stranger Tides $1,045.7
2012 Marvel's The Avengers $1,519.6
2012 Skyfall $1,108.6
2012 The Dark Knight Rises $1,084.9
2012 The Hobbit: An Unexpected Journey $1,021.1
2013 Frozen $1,274.2
2013 Iron Man 3 $1,215.4
2014 Transformers: Age of Extinction $1,104.0
2015 Jurassic World $1,665.5
2015 Furious 7 $1,511.7
2015 Avengers: Age of Ultron $1,402.8
2015 Minions $1,153.1

Until the broadcast contract ended in 2013, the terrestrial television networks CBS ($3.73B), NBC ($3.6B) and Fox ($4.27B) — as well as cable television's ESPN ($8.8B) — paid a combined total of US$20.4 billion to broadcast NFL games.

From 2014 to 2022, the same networks will pay $39.6 billion for the same broadcast rights.

But it is difficult to believe that doubling rates is possible in a nearly fixed market. I think there is some expansion in interest in football overseas, but not nearly at the same rate global interest in movies is expanding.

Quote: Pacomartin

Until the broadcast contract ended in 2013, the terrestrial television networks CBS ($3.73B), NBC ($3.6B) and Fox ($4.27B) — as well as cable television's ESPN ($8.8B) — paid a combined total of US$20.4 billion to broadcast NFL games.

From 2014 to 2022, the same networks will pay $39.6 billion for the same broadcast rights.

But it is difficult to believe that doubling rates is possible in a nearly fixed market. I think there is some expansion in interest in football overseas, but not nearly at the same rate global interest in movies is expanding.

IMHO it is why the NFL went to far longer contracts than before. 9 years call it $40 billion just over $4 billion per year. $4 Billion over call it 20 weeks with post-season. $200 million per NFL weekend. Can it double for an audience that is for all intent and purposes saturated. Only domestic growth for the most part is population growth. Some people like me are tuning it out, getting tired of the NFL. it's attitude, and the changes in the game.

Compound growth doubling in 10 years is about 7%. Does the law of large numbers kick in or is that sustainable as NFL tells networks and networks tell advertisers, "so, where else you gonna go?"

Quote: AZDuffman

Compound growth doubling in 10 years is about 7%. Does the law of large numbers kick in or is that sustainable as NFL tells networks and networks tell advertisers, "so, where else you gonna go?"

ESPN's contract runs through 2021. The CBS, Fox and NBC packages expire in 2022. The different contracts went up by differing amounts. Perhaps by then the advertising sponsored business model will be declared dead and NFL network will sell rights to individual games as pay per view and as internet packages.

But you could be correct, if no new generation grows up watching the NFL, then maybe professional football will be replaced by college level football. There are many fans who only watch college basketball.

Period	1998–2005	2006–2013	2014–2021
AFC Package	CBS ($500)	CBS ($622.5)	CBS ($1,000)
NFC Package	Fox ($550)	Fox ($712.5)	Fox ($1,100)
Sunday Night	ESPN ($600)	NBC ($650)	"NBC| NBC Universo ($950)"
Monday Night	ABC ($550)	ESPN/ESPN Deportes ($1,100)	ESPN/ESPN Deportes ($1,900)
Thursday Night	ESPN	NFL Network (2nd half) ($0)	"NFL Network ($0) | NBC (Wks 1, 12) | CBS (Wks 2–8, $275, 2014–15 only)"
Total Amount	$2,200	$3,085	>$5,000

Quote: Pacomartin

ESPN's contract runs through 2021. The CBS, Fox and NBC packages expire in 2022. The different contracts went up by differing amounts. Perhaps by then the advertising sponsored business model will be declared dead and NFL network will sell rights to individual games as pay per view and as internet packages.

But you could be correct, if no new generation grows up watching the NFL, then maybe professional football will be replaced by college level football. There are many fans who only watch college basketball.

This can go may ways. The 3.2MM ESPN lost is only about 3% of their base. I don't feel like doing a spreadsheet of possible outcomes, but I figure by 2021 it will be another 10-20MM gone. I see it at the high end as cord cutting is showing all signs of being real. Some can be recouped by selling a streaming service, but not most.

The problem with "individual game rights" is it is charging for football is one rare thing that unites Congress. Local games may have to remain free, but out-of-market who knows. We now have cable-only playoff games, so the first step is here. Who will pay and how much?

Quote: AZDuffman

I don't feel like doing a spreadsheet of possible outcomes, but I figure by 2021 it will be another 10-20MM gone. I see it at the high end as cord cutting is showing all signs of being real.

I think that ESPN is the smallest problem. Yes they are showing some signs of being in a bubble, but cable networks bring in half of Disney's operating income. That's including movies, theme parks, licensing for toys for hits like Disney, and broadcasting. ESPN is still the most valuable media property in the world.

For 3rd quarter of this year
Disney Media Revenues: Cable Networks $4.140 billion | Broadcasting $1.628 billion
Disney Media Segment operating income: Cable Networks $2.078 billion | Broadcasting $300 million

Disney doesn't break out revenue from individual cable networks, but I think ESPN is $2.8-$3.0 billion of the $4.140 billion.

Outside of megahit Empire, barely anyone watches FOX broadcast network. While even with an increased football fee of $1.1 billion they can't show football on a network that goes broke. Perhaps they may have to sell their rights to NBC or CBS.

Disney (i.e. ABC) broadcasting will probably renew every show with an 18-49 rating above 1.57 . Exceptions are usually made for Friday night show and Modern Family may be too expensive to renew. Last Man Standing will now have enough episodes to syndicate, and with Tim Allen's large salary it may not be renewed.
The label (O) means the show is owned by the network and they are more forgiving when it comes to cancellation as they earn more money long term from syndication.


2.90 Modern Family
2.78 Scandal (O)
2.40 Grey's Anatomy (O)
2.28 How to Get Away with Murder (O)
2.23 The Goldbergs
2.08 The Middle
1.98 The Muppets (O)
1.98 Black-ish
1.75 Quantico (O)
1.70 Once Upon a Time (O)
1.70 Fresh Off the Boat
1.57 Agents of SHIELD (O)
1.37 Dr. Ken (friday) (O)
1.23 Last Man Standing (friday)
1.18 Castle (O)
1.13 Blood & Oil (O)
1.10 Nashville (O)

In comparison FOX's schedule has only three shows with an 18-49 rating above 1.57. They may cancel as many as five shows this year. Sunday night shows are not expected to do as well against football.

5.50 Empire (O)
1.90 Rosewood (O)
1.85 The Simpsons (O)
1.55 Gotham
1.53 Family Guy (O) - Sunday
1.48 Brooklyn Nine-Nine - Sunday
1.33 Scream Queens (O)
1.28 The Last Man on Earth (O) - Sunday
1.27 Bones (O)
1.23 Grandfathered (O)
1.13 The Grinder (O)
1.03 Bob's Burgers (O) - Sunday
0.93 Sleepy Hollow (O)
0.85 Minority Report (O)

"Mythbusters" to blow up one final season.

Has it really been on for over 12 years??

While the show ran its course several years back, it will be missed. It is a rare show that not only entertained, but made me not just question things but made me question them in a logical and scientific way. It was fun to watch the show evolve. I remember why I tuned in, saw just "Mythbusters" on the guide, decided it looked interesting, so watched. Later people talked about how "did you see this show yet?"

In an early episode they showed the guys calling the USAF for approval for something (probably to help fill time) and asked, "Who on earth are you? Never heard of the show!" to later when they were at the White House. I tuned out for awhile when it became too much about just blowing stuff up, but later returned. I was not as keen on the "build team" getting half the show no matter how hot the redhead looked, but it did make the show flow along.

Hopefully Netflix picks it up or they put it all on streaming via Roku, give me another series to wast my life binge watching again.

The debate about cable TV seems to be divided between people who feel that they are forced into a situation that they are paying too much for channels that they don't want. The second group is objecting to all the expensive proprietary equipment that modern digital cable is forcing you to buy instead of simply t-ing a coaxial cable to as many TV's as you want in the home.

In NYC, Time Warner Cable will begin experimenting with a system where they give a free Roku 3 box ($99 retail value) and you can get all the usual channels delivered over the internet,so no cable box, along with Showtime and Starz for $50 per month. I suspect that Showtime and Starz will cost additional after some time period.

Now we don't have TWC where I am, but basic cable costs $60 plus $10 for Showtime and Starz. Equipment charges are only $2 for the first TV but they escalate rapidly for multiple TVs.

It is difficult to do an exact cost comparison unless you know how long the teaser rates last and what the future costs will be. But in any rate it seems cheaper and you combine your TV screen with your computer screen (possibly of more advantage to people who live in small NYC apartments).

A new live action Star Trek series is coming in 2017...

exclusively (except for the premier) to the $6/mo (presently) CBS internet TV streaming service.

So, for all the people who wanted a'la carte cable tv channels, this is what it is going to look like.

Exclusivly on Netflix, HBO streaming, ESPN streaming, CBS streaming, Amazon streaming, priced at least $5/mo each, many of them more.