NY Times: Paying a ‘Sports Tax,’ Even if You Don’t Watch

[chuckster_dude]

Well, there is now a scrolling barren on TW's feed of MSG stating that TW subscribers might be losing MSG after 1/1. So another contract dispute with MSG. Only this doesn't involve Dish. I can see the repercussions in WNY if the talks fail.

In WNY, if MSG is dropped from TWC, a ton of people will be going to DirecTv. And it's going to be the only option for many who are not in Fios territory. So basically, for alot of people, there will be 1 only choice to watch the Sabres -- DirecTv.

And I believe if THAT happens, Sen. Chuck Schumer will get involved in this. And maybe that will put some heat on the Dolans/Cablevision

 

[dwarren2]

TW sent out an email about the situation today.. Tehy stated that MSG wanted a 53% increase.
WHEC (NBC 10) here in Rochester mentioned this on their noon newscast
Time Warner pledges to keep Sabres games | www.WHEC.com

 

[dstoffa]

We're all forgetting that most of our RSNs were at one time a subscription fee, on cable. I know that when DirecTV and Dish launched they gave them as basic channels. Growing up, everyone in my neighborhood paid for Disney (when it was a subscription service) except my parents, they paid for the little descrambler box that the cable company provided to let us view NESN and the old Sports Channel America. I'm talking back when we the only movie channels were 1 HBO and 1 Cinemax, and they had to come to your house and climb the pole to change the channel from a snowy picture with HBO or Cinemax's audio to allow you to get the video. The prehistoric times of cable.

Funny I read this now.... I was just talking to a buddy of mine about the old days of Cablevision on Long Island.

Sportschannel sent in the clear on Channel 3. HBO sent in the clear on Channel 6. Premium subscriptions, controlled via filter on the drop.
MSG Network on Channel 30, Disney on Channel 31, AMC on Channel 32, Bravo on Channel 33, The Movie Channel on 34, Cinemax on 35, Showtime on 36, and Playboy on 37, all premium subscriptions controlled by a daughtercard on your old 3-level JERROLD cable clicky box... 36 channels and nothing on...

There wasn't much in way of networks available to choose from. We used to get WTBS, WSBK, WTAF, and WVIA as out of market stations. We were also able to get Nick, FNN, CNN, CNN-HN, CHN, CBN, TWC, ESPN, VH-1, and MTV. The bandwidth really wasn't there. I think the one network I wanted (USA) wasn't offered on CV until CV couldn't carry out-of-market TV anymore... (sans SuperStations).

My parents got cable TV so mom could watch the Mets.

So people should quit crying about having to pay extra for ESPN. I enjoy ESPN's sports programning, but I think enough is enough for people who couldn't give a damn. If they want a price increase, then they should be ready for providers to put it in higher tiered packages. Like 200 or 250, or a la carte.

ESPN has no sports programming that I want to watch. I rarely make efforts to be in front of my TV to watch a game, period. I either go to the game or watch it elsewhere. I'd rather not have the network and use this as an excuse to go to the pub to watch the occasional game...

That being written, I wonder how much a typical bill would drop if ALL sports programming was sold on its own tier (ESPN + family, VS, RSNs, NHL, NFL, MLB, NBA, etc....) I would think $20 less per month...

Cheers!
-Doug

 

[mike123abc]

I can tell you this from a cynical point of view based on other fights Dish has had with sports programmers,if Dish refuses Disney and ESPN disappears from Dish, ESPN is NOT coming back.
The resulting exodus of subscribers will be very painful for Dish and may just bring Dish to it's knees. However, I think Charlie is willing to take that gamble as many of his subs are locked into agreements that customers may find cost prohibitive to get out of. Dish will be fine as they can then trumpet their "victory" over "greedy sports leagues and programmers".
Dish can then tout itself as the "non sports purveyor of pay tv"..
On a personal note, I am holding off getting any new Dish equipment as I am not in a contract. If ESPN goes away, so will I.

It is quite possible that if Dish does that with ESPN another major player may threaten to do the same thing. All it would take would be Dish and another big one like lets say Comcast to break ESPN. ESPN might be able to get by without Dish, but if another major does the same thing, ESPN would be in deep trouble. While I realize Disney owns ESPN and Disney probably has some deep pockets, they would not want to sustain such large losses. If they lost 20% of their business their business model would collapse. This is why I believe ESPN would cave before Dish would cave. ESPN would know that they would be bankrupt if a few major providers dropped them at the same time. There is no way ESPN would allow Dish to drop them for a prolonged period. They would give Dish the terms Dish wants.

BTW if you look at $5/month for ESPN Dish's ESPN payments represents about $840 million a year to Disney's bottom line... ESPN pays the big players like NFL a fixed price contract, fewer viewers does not save them money. In fact fewer viewers costs them even more since they also lose GRPs for their advertisements. Dish dropping EPSN could be 10% less profit to Disney... If another major dropped them they could be looking at 20% to the bottom line. If then you include other Disney channels in the dispute Disney shareholders would have their heads spinning.

 

[SamCdbs]

1 - The NY Times needs to stick to making up the news. Or take some remedial English courses. A "tax" is something a government, at the point of a gun, under treat of jail and of exclusion from the economic system, involuntarially takes from a citizen. When misused, it is the most repugnant thing society does to its members. No one forces anyone to have cable or a dish. Especially among the NY Times' constituancy where one can receive 18 channels OTA, for free.

2 - What DISH is trying is a total gamechanger (no pun intended). ESPN simply will never agree to it. Really that simple. Now, if DISH, with a history of being a service aimed at the "thrifty" wants to ply the waters totally free of sports and see how that works, there may indeed be a market niche there.

3 - This, boys and girls, is why in every sports labor conflict, it is the owners, as represenative of everybody, vs. the players alone. Always support the owners. The less the players make, the less you pay.

 

[mdonnelly]

...
3 - This, boys and girls, is why in every sports labor conflict, it is the owners, as represenative of everybody, vs. the players alone. Always support the owners. The less the players make, the less you pay.

The benevolent owners looking out for the common man ... yeah, right. The less the players make, the more the owners put in their own pockets. This is a showdown between two groups of 1%'ers. The super rich team owners, and the uniquely talented athletes. One cannot survive without the other, and neither one gives a cr*p about any of the rest of us.

Rant off.

 

[Yespage]

The benevolent owners looking out for the common man ... yeah, right. The less the players make, the more the owners put in their own pockets. This is a showdown between two groups of 1%'ers. The super rich team owners, and the uniquely talented athletes. One cannot survive without the other, and neither one gives a cr*p about any of the rest of us.

Rant off.

Technically I'd say the 0.1%'ers vs the 0.01%'ers

1 - The NY Times needs to stick to making up the news. Or take some remedial English courses. A "tax" is something a government, at the point of a gun, under treat of jail and of exclusion from the economic system, involuntarially takes from a citizen. When misused, it is the most repugnant thing society does to its members. No one forces anyone to have cable or a dish. Especially among the NY Times' constituancy where one can receive 18 channels OTA, for free.

There is irony to your statement, because ESPN can go all bonkers with their bidding for programming because they know that Cable/Sat providers would be insane to kick their channels off of the lineup... so they are bidding and spending the customers' money because they know they have no alternative, even if the customer doesn't even watch sports.

Also, MNF was on OTA until Disney moved it from ABC to ESPN.

 

[jimdandyvi]

ESPN maybe to tough a nut to crack. Need to go after the more vulnerable Fox channels.

The Dec 19th SI explained how the Angels could afford to pay Pujols and C.J. Wilson $335.5 million.

The Angels renegotiated their contract with Fox. They were receiving $50 million a year. The new contract will pay them $150 million a year for the next 20 years.

If I were a broadband provider in the Angel's market when Fox came knocking asking for another buck or two a month I would tell them I would be willing to carry them ala carte and charge $3.95 a month for the channel in HD to subscribers who wanted it. If Fox wasn't willing to go for the deal I would explain to my subscribers what the problem was, cut their bill by the amount that I was paying Fox and offer all my customers in the market a coupon for an off air antennae so if they wanted Fox they could get if for free.

Since customers can in many metropolitan markets can receive Fox, ABC, CBS, NBC off air they wouldn't lose any programming they wanted. With ESPN you have no option but to switch providers and pay their higher rate that includes ESPN.

If this happened in a few markets and Fox had difficulties in passing on the ridiculous amounts being paid for sports there would be more restraint on the amounts bid for rights fees.

 

[cubsfan34]

BTW if you look at $5/month for ESPN Dish's ESPN payments represents about $840 million a year to Disney's bottom line... ESPN pays the big players like NFL a fixed price contract, fewer viewers does not save them money. In fact fewer viewers costs them even more since they also lose GRPs for their advertisements. Dish dropping EPSN could be 10% less profit to Disney...

And what would happen to DISH's bottom line? I would guess the majority of viewers watch ESPN (and DISH knows what that number is), and I would guess a very high percentage of them would consider another provider, which already offers a comparable product, if you removed the most popular cable network.

Can DISH afford to lose 20% of their customers? 30%? 40%?

There are other options for ESPN, there are no other options for MNF, 30+ College Bowl games, Major NCAA basketball, NBA, and that just covers the programming options in the next few weeks.

 

[jimdandyvi]

There is no doubt that if Dish dropped ESPN a large number of subscribers would go elsewhere. The big unknown is how many people would desert Direct, Comcast, TW and come to Dish for a less expensive package minus ESPN.

In my opinion the cable companies would be in the best position to respond. The large MSOs have three streams of revenue; Video, Internet and Telephone. They seem to be making more on their non video businesses than video so they could better afford to eat the ESPN rate increase and not antagonize their subscriber base and force them to look elsewhere for video. They would lose some number of subs that were looking for something cheaper, but their big ticket triple play customers probably would stay with them.

Changing your ISP and telephone company is a pain so most of the subs in this bucket would try and avoid doing this.

Finally for Comcast since they own NBC what they lose on the cable side from higher retransmission fees they get back in part on what NBC collects in increased fees.

 

[Yespage]

And what would happen to DISH's bottom line? I would guess the majority of viewers watch ESPN (and DISH knows what that number is), and I would guess a very high percentage of them would consider another provider, which already offers a comparable product, if you removed the most popular cable network.

Can DISH afford to lose 20% of their customers? 30%? 40%?

Not really, but if bills were lowered and people stepped back, they may not lose quite that many. For some Dish is really cheaper than Directv and that would make them think twice before switching. And the other point is, Disney loses a bunch if they leave Dish. Neither side comes out of this very well.

There are other options for ESPN, there are no other options for MNF, 30+ College Bowl games, Major NCAA basketball, NBA, and that just covers the programming options in the next few weeks.

This isn't quite true. MNF is exclusive, and matters to many, but losing MNF isn't a deal breaker as four or five games are already available for free OTA. The Bowl Games are exclusive but that have teams with records of 7-5 and 6-6, big whoop. TNT and other networks carry NBA basketball. Other networks show baseball.

The big loss would be College Basketball/Football, as that includes games across the week.

 

[SamCdbs]

The less the players make, the more the owners put in their own pockets.

Incorrect. The historical fact is that, in my lifetime, athletes have gone from making a middle class to upper middle class income to being, to use the silly language of the today's radicals "1%ers". And the cost of sports, at the live gate, on TV, and in terms of the amount of tax outlay needed for infastructure, has exploded. The fact is that if today's athletes were making, adjusted for inflation, about what the athletes of 1965 (or pick any date you wish) you would be paying, directly and indirectly, about what people paid in 1965, again adjusted for general inflation.

The owners are not "benevolent", but the Market is. Millions of producers have gotten rich, from Henry Ford to Sam Walton to Steve Jobs by realizing the simple truth of Western Capitalism. There is a lot more money to be made selling your product to the "99%" than to the "1%". Which is why it is in the best interest of every producer to protect the customer by keeping costs low, and thus prices low. It is how Freedom works. Which is why, in every sports strike, it is all of us, every single one vs. the players.

 

[mdonnelly]

...

The owners are not "benevolent", but the Market is. Millions of producers have gotten rich, from Henry Ford to Sam Walton to Steve Jobs by realizing the simple truth of Western Capitalism. There is a lot more money to be made selling your product to the "99%" than to the "1%". Which is why it is in the best interest of every producer to protect the customer by keeping costs low, and thus prices low. It is how Freedom works. Which is why, in every sports strike, it is all of us, every single one vs. the players.

Assuming a free market, you might be right. But the fact is that the pro sports leagues are effectively a monopoly. The owners limit the number of teams in order to control the market, and keep prices up. What's worse is that the government is in on the conspiracy, and has granted anti-trust immunity to the leagues.

 

[HanoverPretzel]

The fact is that if today's athletes were making, adjusted for inflation, about what the athletes of 1965 (or pick any date you wish) you would be paying, directly and indirectly, about what people paid in 1965, again adjusted for general inflation.

That is simply not the case. What would be happening is that we would be paying exactly what we're paying now, which is what the market will bare, and the owners would be pocketing the difference between what the players are making now and what they would be making under your scenario. Businesses tend to set price points at whatever will maximize profits.

The owners are not "benevolent", but the Market is. Millions of producers have gotten rich, from Henry Ford to Sam Walton to Steve Jobs by realizing the simple truth of Western Capitalism.

That's basically mythology. In reality, capitalist economies do tend to increase overall wealth by increasing incentives for productivity, but without adequate adequate regulation and protections for consumers and employees,and a social safety net it also in the long run creates a small ruling class with immense wealth and a very large impoverished underclass. As monopolies worsen under such scenarios (i.e. lack of regulation), in the end the overall wealth production comes down too. It's regulated capitalism with protections for the lower classes that produces prosperity. Unregulated capitalism leads to gross inequality and ultimately deep economic depressions just the same way communism does. It's the countries that thread the middle that are prosperous.

Look at the last economic collapse, which was a direct result of de-regulation in the banking sector.

 

[mike123abc]

Sports prices are high because that is the price they have been able to command. If there are not enough viewers to pay the current price, the price would have to come down to what the market will bear...

Do you really think any player would quit the game if their pay was cut in half? Most have few other skills and the most they could possibly make is playing the sport.

 

[zim2dive]

Funny... during the NBA dispute, I fail to remember hearing any talk about the owners getting X%, the players getting Y% and giving us consumers back Z%.. they simply were deciding owners get X% and the players get 100-X%. For us its a zero-sum game, with ESPN gambling how far they can push their fees.

I'd be thrilled to see ESPN booted from the basic tier of every provider. BUT I'd also (50/50) probably be willing to pay for a Sports tier (and ultimately, I'd love to see a la carte.. I think THAT is the ultimate form of capitalism.. let's see each channel survive on its own merits)

And/or, over TIME, as ESPN loses its monopoly on subscribers (which it leverages to get a strangle-hold on so much sports broadcasting) more sports would migrate to other channels as the prices the broadcasters pay settle back down from their current "irrational exuberance".

 

[HanoverPretzel]

Not really, but if bills were lowered and people stepped back, they may not lose quite that many. For some Dish is really cheaper than Directv and that would make them think twice before switching.

At least initially, though, the cost Dish has to compete against is not the regular rate for Directv or cable, but their promotional rate they'd offer new subscribers for the first 6/12/24 months or whatever to switch. So, at least in the short-run, they'd be paying less and getting what for them is a very important set of channels that Dish would no longer be offering (Remember, with ESPN typically comes with ESPN2 and ESPNU). People may also save by being able to bundle their existing cable Internet with cable TV.

A lot of people may figure "Hey, I'll switch and get my channel at the promotional rate, and by the time my promotional rate or contract is over with the other guys, maybe Dish will have worked something out with ESPN".

You've also got to figure for people for whom television is like a steak dinner with a salad course, cutting out some of the main sports channels would be like cutting out the steak and just selling them a salad. Cutting 5 or 10% off the price isn't going to cut it for people who view it that way. They might accept just a salad- maybe- if you made it really dirt cheap and threw in some free beer and dancing girls or something, but I think the economics of television wouldn't allow Dish to do the equivalent of that. I mean, maybe, maybe if they cut the price in half and dumped a ton of awesome channels into the lower tiers at no additional charge, they might retain some people, but then how would they make any money? If I were Dish, I'd ultimately cave to ESPN and consider it the cost of doing business. I understand why Dish is posturing like they'll drop the channel, but if they actually do, it'll probably be one of the biggest mistakes a business can make. It'd be brought up in business school text books right next to "New Coke".

 

[Yespage]

ESPN's main draw is college sports. If college sports isn't a big deal to someone, then losing ESPN may be a shock at first, but then turn into a... "meh". I'd rather have ESPN, but dropping the price of my monthly bill ruled over, so I no longer have it. It is complicated. Very complicated. I'm certain both sides are aware of the gains and losses of cutting ties.

 

[zippyfrog]

http://tvbythenumbers.zap2it.com/2011/07/20/cable-coverage-estimates-of-of-july-2011/98508/

That link lists how many households each network is available in. Right now both ESPN and ESPN2 are just over 100 million homes. If Dish were to drop ESPN, and Dish has about 13 million subscribers (where almost every package has ESPN), I assume ESPN be listed as between 87-89 million homes as opposed to the 100 million homes. If that is the case, ESPN would be around 40th on the list of amount of houses it is available in. Is that something ESPN/Disney would want? Networks like TLC, Comedy Central, SYFY, FX, VH1, TV Land, Animal Planet, AMC, Travel Channel, TruTV, and Black Entertainment TV. I just can't see ESPN wanting that to happen.

 

[topcat5]

Is that something ESPN/Disney would want? Networks like TLC, Comedy Central, SYFY, FX, VH1, TV Land, Animal Planet, AMC, Travel Channel, TruTV, and Black Entertainment TV. I just can't see ESPN wanting that to happen.

I wouldn't shed any tears if all these channels disappeared. Basic "cable" channels have all been cheapened down with endless commercials and reality TV programming. Yet we are forced to pay for them which IMO, is why they get away with junking them down. If Dish offered up a deal to drop them to lower cost, I would definitely take it.