For pay-TV operators, fast-growing sports program licensing costs are about to expand even faster.
According to new data released by SNL Kagan, the cost of licensing sports networks will rise by 7.3 percent over the next five years. That compares to a 5.3 percent expansion over the previous five years.
The cost increases are being driven by the biggest pay-TV sports entity, Disney's ESPN, which now commands affiliate fees averaging out to $6.04 per pay-TV customer per month. But the emerging presence of ESPN natonal rival Fox Sports 1 is also driving up costs, as are myriad regional sports networks (RSNs).
"There's been a flurry of new network launches. Now we're hearing that Time Warner Cable (NYSE: TWC) might bid on the Clippers and you'd have another RSN based only on one team," Kagan analyst Derek Baine told the New York Post. "It seems a bit out of control. How much can the market bear?"
Sports, of course, isn't the only programming getting more expensive. SNL Kagan also found that general interest/variety cable networks will see their annual content cost grow by 7.2 percent over the next five years.
SNL Kagan says the average cost per customer per cable network is now 39 cents a month, up from 37 cents a month at the end of 2013. It's expected to grow to 48 cents a month in four years.
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