ESPN seems to be the big loser in the latest trends for cable pricing plans, analysis shows.
As the cable industry struggles with customers “cutting the cord” and ending their relationship with cable television, the industry is toying with a new way to sell cable by offering “skinny bundles” of networks. The new plans of fewer networks will sell at a lower price point than the more expensive, all-inclusive plans presented to customers since cable came on the scene.
But, cable networks that have high overhead costs like ESPN just don’t fit in with bundles of cheaper programming, meaning that the nearly 40-year-old sports network is on the losing end of the stick with the new pricing plans. This complicates the future of a network already groaning under the loss of millions of viewers.
Cable companies look to offer smaller bundles of networks to viewers that hope to get away from the $200 and higher cable bills. The new bundles range in price from $50 to $100 depending on the package.
But, networks like Nickelodeon and ESPN, with their high production costs, are not included in these cheaper bundles because cable providers can’t make back their costs by including them.
For its part, ESPN warns that it may go to court to force providers to add the sports network to the cheaper bundles. As The Wall Street Journal recently reported, “ESPN said that if those bundles grew in popularity to become the operator’s most or second-most distributed packages, ESPN would have to be included contractually.”
Clearly, ESPN believes its current contracts would force providers to add the sports network into its new, low-cost packages. But, will that set the two entities up for a court fight? Perhaps so.
The Journal reminds readers that as ESPN owner Disney finds the number of lost subscribers growing, the entertainment giant is already working to offer cheaper sports alternatives:
After Disney reported a slightly increased pace of subscriber declines at ESPN, Disney CEO Bob Iger promised new streaming services focused on certain sports or teams. Given that ESPN’s flagship programming won’t be offered, those services are “likely to be a niche offering, which may limit the benefits,” wrote Barclays analyst Kannan Venkateshwar in a research note.
In the meantime, it appears that ESPN is being left behind again as the cable industry tries to change to serve customers better.
It only makes ESPN’s future seem murkier than ever. This year the network has lost over 10,000 subscribers a month. The report came just ahead of several rounds of layoffs that hit the Connecticut-based company, the latest of which claimed over 100 jobs.
Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com.