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.
NBCSN works much the same way. At $0.31/month in 80 million homes, NBCSN collects $298 million per year. The NHL currently accounts for $200 million of that, and MLS accounts for $10 million. That leaves $88 million in subscriber fees — enough to cover the $83.3 million that NBC will pay the Premier League for the next three seasons. In order to cover those costs with its online-only service, NBC would have to find 278,000 EPL fans in the U.S. willing to pay $300/year for it. Considering that FOX couldn’t find roughly more than 60,000 people willing to pay $15/month, that plan probably won’t work.
Also, having such a high-value property also allows NBCSN to demand a higher subscriber fee and get cable and satellite services to offer the channel to more subscribers, thus increasing the channel’s revenue. Since Comcast owns the channel, extracting a few more pennies per month from 22.3 million subscribers shouldn’t be too big a hassle. In addition, everyone who gets NBCSN likely gets all those other NBCU-owned channels, meaning more money for Comcast.
This is how the pay TV game works, and since cord-cutting is not yet a serious threat to sports networks, it’s not going to change anytime soon. “TV Everywhere” services like NBC Sports Live Extra are designed specifically to keep customers attached to cable, because that’s where the money is for these corporations. On the bright side, if you do end up subscribing to cable, you can get just about all the soccer you’ll ever want. You’ll just have to decide if that’s enough to make you pay for all that other stuff you’ll never watch.
Dave Warner is a former soccer writer for the AOL sports blog Fanhouse and the founder What You Pay For Sports, a website that explores the relationship between sports and television and shows consumers how their cable and satellite bills subsidize major pro and college sports.
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