ESPN has agreed to pay a 70 percent increase in fees to the NFL for an eight-year agreement to broadcast games, and early indications are that the league will also be able to bump its CBS, NBC and Fox deals 60 percent--deals that likely will push pay-TV bills higher, increase cord cutting talk and discussions about offering sports programming as separate tiers.
Maffei likened the increase to a tax on subscribers.
The increasing costs of sports programming, specifically ESPN and other live events like the National Footbal League, are being passed directly to subscribers, many of whom are looking at their pay-TV bills and, increasingly, according to analysts, opting to shave their bills by reducing the depth of their subscriptions, or to drop them altogether.
Speaking at the USB investor conference in New York Monday, Gregory Maffei, chief executive of Liberty Media, likened the increase in sports programming costs to a "tax" on subscribers and said pay TV "has been the golden goose and what does it take to choke it? It's a scary proposition."
Pay-TV companies charge subscribers $4.69 per month for ESPN, which is carried on most basic tiers. Most other networks cost far less, an average of about 26 cents. The price for those channels has increased about 24 percent since 2006; the price for ESPN has risen some 42 percent over the same span, according to SNL Kagan.
The new deals with the NFL, meanwhile, would stretch through 2021 and bring some $6 billion annually to the league.
ESPN's deal to broadcast Monday Night Football alone will cost it $1.9 billion a year, and DirecTV (Nasdaq: DTV) will pay $1 billion annually for its Sunday Ticket offering.
Will the cost of ESPN drive pay-TV to an a la carte model?
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Have pay-TV operators finally developed an appetite for a la carte?