Tuesday, November 8, 2011

How Far Can Sports Programming Costs Escalate?

Sports cost per channel 2008
The major sports networks combined pay about $3.1 billion a year for the rights to the 16-game National Football League season, up 35 percent from their last deal. Although the NFL's contracts with CBS, Fox, NBC and ESPN still have two years to run, the league would like to have new deals wrapped up by the end of this season, in February. 

Sports programming costs matter greatly for leagues, sports networks, video distributors, consumers and the future of online video. 

The biggest question is how much further sports programming costs can rise, since those costs are passed along almost directly to end users, who are starting to show resistance to the annual price hikes on video service. 

The three broadcast networks could end up joining ESPN in paying 10-digit dollar figures per season in their next contracts. Testing the limits of rising sports programming rights fees - Los Angeles Times:
Video costs keep climbing

"It's not for the faint of heart," said Fox Sports Chairman David Hill when asked about the next round of NFL negotiations.

Already, ESPN and the regional sports channels are the most expensive basic cable channels on the dial — often costing distributors such as DirecTV Inc. and Comcast Corp. three times more than what they pay for news or entertainment networks such as USA, TNT and Discovery. Distributors worry that continuing to pass along sports costs to their customers could drive more away.

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