Philip Badger’s plea to NBC Sports Network to let Premier League fans pay for NBC Sports Live Extra separately covers a few of the reasons why the online service will be available only to cable subscribers, but it ignores some key facets of cable TV economics that play a role in NBC’s decision.
As Philip mentioned, NBCUniversal is owned by Comcast, and Comcast is a cable company, and gee, why would Comcast ever want to give you a reason not to subscribe to cable? On the other hand, while Comcast is the largest cable company in the U.S., it only has 22.3 million cable subscribers, or roughly 30% of the market share for cable TV. That 30% share does not include the 37 million or so people who have satellite dishes, or the rising number of people ditching cable in favor of fiber TV services from AT&T and Verizon.
Still, Comcast-owned NBCU has a stake in all those subscribers, and not just for sports. That’s one key reason why NBCSN is only offering its online service to cable subscribers: NBC wants you to pay for all its other cable channels, too.
Those channels include:
- USA Network ($0.55/month)
- CNBC ($0.29/month)
- SyFy ($0.21/month)
- E! ($0.20/month)
- Bravo ($0.19/month)
- MSNBC ($0.16/month)
Those six channels account for $1.60 of your monthly cable bill. If all of those channels reach the same 80 million homes as NBCSN, NBC collects an additional $1.53 billion in subscriber fee revenue. That $10 million or so that FOX Soccer 2Go collects is a pittance in comparison.
Also, if you live in Philadelphia, Chicago, San Fran, Houston, D.C., Baltimore, or any part of New England, you’ll be chipping in for the Comcast SportsNet channel in that area. Regional Sports Networks account for at least $2.50 of your monthly cable bill. Some RSNs can cost up to $4/month.
This is just one form of bundling in the pay TV ecosystem, and it’s largely a result of media consolidation. Five corporations control the rights to nearly all the sports you see on U.S. television: CBS, Comcast, Disney, News Corporation, and Time Warner. These same five companies also own a huge portion of the channels on your pay TV service. Bundling all those channels together allows these corporations to collect revenue for all sorts of news, sports, and entertainment programming. The end result, though, is that customers end up paying for dozens of channels they don’t watch.
In addition, individual channels can serve as bundles, too, especially for sports. This explains why News Corp. is launching FOX Sports 1. By moving high-cost properties like the UEFA Champions League, NASCAR racing, and UFC from three niche channels (FOX Soccer, Speed Network, and Fuel TV) that collect less than $0.60/month combined to one general sports channel that’s expected to command at least $0.90/month, FOX Sports can not only shift the costs of those contracts off to consumers, but it can also collect enough money to pay for more high-value properties like Major League Baseball, and top college conferences like the Big East, Big 12, and Pac-12 — not to mention the FIFA World Cup and other major international soccer events, starting in 2015.