Will Dish dump Disney over ESPN?
The satellite service provider protests against the high costs of sports programming.
Disney has an upper hand in the dispute
Dish currently pays ESPN more than $5 per month for each subscriber, compared to $3.26 a month when the contract first went into effect in 2005. Dish CEO Charlie Ergen recently stated that in longer run, the pay-TV provider could offer TV service without sports channels -- and he says he is prepared to go either way. ESPN, on the other hand, made a strong point that it is helping pay-TV operators retain customers at a time when on-demand entertainment programming such as Netflix (NFLX) could provide an incentive for subscribers to drop connections.
At Trefis, we believe that there is a huge demand for sports content and media companies have an upper hand in such disputes, as evident from the case of CBS and Time Warner Cable (Trefis).
Why is ESPN important for pay-TV operators?
ESPN is the worldwide leader in sports programming and has rights to telecast major sporting events such as NFL, NBA, and the FIFA World Cup. EPSN is the golden goose for Disney and accounts for 40% of the company's value according to our estimates. The network has close to 100 million subscribers in the U.S. However, the network's true value lies in the high fee per subscriber that it charges for its sports programming. The estimated figure stood at $5.05 in 2012. ESPN's sports programming reflects high-demand content that viewers don't record on DVR and unlike other programming, it's not available from Netflix or other on-demand services.
Frustration over rising sports costs
According to research conducted by SNL Kagan, sports channels such as ESPN and regional sports networks account for 20% of fees paid by cable and satellite operators and have been the primary culprits behind rising cable bills. Nielsen estimates that apart from the NFL and the biggest games of the year in a handful of other sports, the TV audience for sports is small amounting to about 4% of the households.
Some pay-TV operators fear that sports fees could eventually drive customers away from pay-TV subscriptions. Given the fact that the demand for big sporting events is huge for now, major sports networks may still have an upper hand in negotiations. If Dish takes a decision to drop ESPN, the company risks losing subscribers. In its recent earnings, Dish saw a loss of 78,000 pay-TV subscribers due to lower gross new activations and an increase in its churn rate (Trefis).
However, the satellite company will save close to $800 million annually and this will lead to lower pricing for its packages, which may attract more customers who are not big sports fans.
A-la-carte needs to become a reality.
It's these damn over huge content providers like Disney fighting it. It's about time that any TV channel lived or died on its own merits instead of the merits of everything else around it.
PS: ESPN Sucks, may want to keep other Disney channels though.
would not care less. waste of time watching anything of pro-sports
Dump all satellite sevices until they stop the endless commericals and give us a choice of what we want.
I dumped them years ago. Why should I pay them to watch commercials ???
I really wish cable and satellite service would let is pick the channels we want to pay to receive. ESPN would not be on my list to keep, nor would the Cooking Channel, TLC, E! or a bunch of other channels that I seldom or never watch.
The bundling of channels is a way to force providers to include all sorts of channels that may not be used by a particular household. I do occasionally watch Disney channels, the ones with family programming on them. I almost never watch sports. Sports are over hyped and overrated and the big dollar world of stick and ball sports is not worth my time.
Seriously, I really do not watch ESPN. And ESPN2, ESPN News, UESPN, ESPN classic... Really?
I should not have to pay for this. I have argued this with friends and they go on the whole 'man' thing about how I'm not a real man. Lol... Screw them, screw ESPN and their fees. I love nothing better than when someone at work on Monday asks me about some irrelevant game between 2 obscure colleges I've never heard of over the weekend and I tell them I have no idea what they are talking about.
A la cart channels is the way to go...the first company to start such a program will be widely popular...I love my ESPN channels and my daughter (6 years old) loves Disney, although her favorite cartoons she watches are over the internet for free (old school Donald duck, chip and dale ect)...If Dish network dropped these channels I would cancel my satellite immediately...DISH dropped FOX last year and I cancelled it immediately...They gave me free movie channels for a year and upgraded my DVR package for free also to get me back. Don't take channels away that people paid for when they signed on, it only angers your customers.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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