ESPN lost 4 million subscribers in the past year.
Adam Rifkin stashed this in Business Facts
Stashed in: ESPN!, Monetization, Comcast, Active Users, Awesome
In the past five years ESPN has lost 11,346,000 subscribers according to Nielsen data.
If you combine that with ESPN2 and ESPNU subscriber losses this means that ESPN has lost over a billion dollars in cable and satellite revenue just in the past five years, an average of $200 million each year. That total of a billion dollars hits ESPN in the pocketbook not just on a yearly basis, but for every year going forward.
It's gone forever.
...
In the past year ESPN lost 4.159 million subscribers, that's another $350 million in lost revenue across the ESPN family of networks.
The time has come for Verizon to steal the NFL and NBA from ESPN.
ESPN presently has 88,781,000 subscribers, down from 101,000,000 subscribers five years ago. Given that the rate of lost subscribers appears to be accelerating, if we're conservative and just project ESPN loses 3 million subscribers a year for the next five years, then the worldwide leader in sports will have just 73 million subscribers in 2021.
At that point in time ESPN would be roughly break even with the amount of money its paying for sports rights and the amount of money ESPN brings in via subscriber revenue.
So where are all these subscribers going? A good theory posited by SportsTVRatings is that the loss is happening three ways, 1. death, 2. cord nevers and 3. cord cutters. Let me unpack those three: first, older people are dying off and they're more likely to subscribe to cable than younger people, second, many younger people don't subscribe to cable at all, hence they're cord nevers and third, many of you are also cutting the cord to save money. Combine all three of these factors and all are working against the cable and satellite bundle.
So let's talk about the ESPN business model.
I've written a ton about this, but on its most basic level every channel has a cost in your cable bill. You don't realize it because your cable bill isn't broken down by individual channel cost, but ESPN is by far the most expensive channel on all our cable bills. (ESPN is the most expensive channel costing $6.60 a month. The second most expensive? TNT, which costs just $1.65 a month). Every single cable and satellite subscriber pays around $80 a year for ESPN. With 88.7 million subscribers, that means ESPN pockets around $7 billion a year just in cable and satellite subscription fees.
So what makes sports on cable TV a bubble? The fact that ESPN uses the money it receives from cable and satellite subscribers to buy sports rights. And the vast majority of those cable and satellite subscribers never watch ESPN. Your Aunt Gladys, who hasn't watched a sporting event in a decade, pays the same amount for ESPN as you do.
What does ESPN do with that money from you and Aunt Gladys and its other 88 million subscribers? It buys sports rights.
Presently ESPN is on the hook for the following yearly rights payments: $1.9 billion a year to the NFL for Monday Night Football, $1.47 billion to the NBA, $700 million to Major League Baseball, $608 million for the College Football Playoff, $225 million to the ACC, $190 million to the Big Ten, $120 million -- and potentially growing -- to the Big 12, $125 million a year to the PAC 12, and hundreds of millions more to the SEC.
At an absolute minimum it would appear that ESPN presently pays out nearly $6 billion a year to sports leagues just in rights fees.
At 73 million subscribers -- our projection for 2021 based on the past five years of subscriber losses -- ESPN would be bringing in just over $6 billion a year in yearly subscriber fees. Sure, advertising money and ESPN2 and ESPNU have to be factored in as well, but you'd also have to add in every other cost that ESPN has to run multiple networks, employee salaries, technology, everything that a major corporation with thousands of worldwide employees has to keep up. And, importantly, you also have to factor in this, ESPN's Monday Night Football contract expires at the end of 2021. Right when current projections would have them hitting just 73 million subscribers.
ESPN presently pays $1.9 billion a year for Monday Night Football. (This is a wild stat, but did you know that every cable and satellite subscriber who has ESPN is paying $21.50 a year for Monday Night Football games? That's whether you ever watch those games or not. That's the NFL tax that ESPN passes along to consumers.)
What will the NFL want from ESPN for Monday Night Football in 2021? More money, right? The NFL has gotten used to television revenue only going up. Will ESPN be able to afford to keep the NFL and pay more money despite having lost nearly 30% of its subscriber base in the ten years of the existing MNF contract? That seems highly unlikely doesn't it? But can ESPN exist as a network without NFL games? Remember, it's not just the NFL games, it's all the ancillary content that ESPN builds around the NFL games, think about the hours of studio programming that ESPN devotes to pro football. ESPN justifies its sky high cost per month to cable and satellite companies based on the games it provides, can ESPN extract an increase in revenue from cable and satellite subscribers when its deals expire without the NFL games? So how much more money will the NFL be able to extract from ESPN? Or will this be the moment in time when the entire sports industry finally realizes that the bubble has popped?
If the NFL isn't making the same money it always made in the past, everyone in sports is screwed.
I've been writing about the sports rights bubble for years. Most recently doing the math to point out that the NBA's insane new television deal from Turner and ESPN means that every single cable and satellite subscriber in the entire country is paying a jawdropping $30 a year for NBA games. I beleive the NBA's TV contract represented the actual peak of the market.
600+ Reddit comments:
https://reddit.com/r/nfl/comments/4w5b93/espn_loses_4_million_subscribers_in_past_year/
1:44 AM Aug 05 2016