Sports now account for 40% of pay-TV programming cost, SNL Kagan says

Sports programming now costs pay-TV consumers $18.37 a month, on average, according to SNL Kagan stats. Image: NFL

Sports programming now costs pay-TV consumers an average of $18.37 a month and accounts for 40% of programming costs for cable, satellite and telco video providers, according to SNL Kagan stats published by the Los Angeles Times Monday.

The Times report illustrated the steep growth trajectory of sports programming, which accounted for just $2.85 a month on the average pay-TV bill as recently as 2001. 

The concept isn’t new—programming conglomerates are paying incredibly high licensing fees to pro and collegiate sports leagues and passing the costs onto subscribers. The details, however, are interesting. 

According to SNL Kagan, ESPN is now charging subscribers an average of $7.20 a month—an amount that partly offsets the $1.9 million parent company Walt Disney is paying the NFL for Monday Night Football rights. 

Meanwhile, CBS Corp. (paying the NFL $1.4 billion a season), 21st Century Fox (paying the league $1.1 billion a year) and NBCUniversal (paying nearly $1.2 billion for pro football) are also passing along costs through broadcast retransmission licensing. 

All told, sports programming is generating $30 billion a year in revenue for programmers, which collectively increased the amount of live-sports coverage by 160% from 2005 - 2015. The NFL collected $7.5 billion in broadcast licensing fees all by itself. 

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Regional sports networks add a whole other layer of complexity, driving sports programming costs in individual markets like Los Angeles to as high as $25 a customer. 

Dennis Deninger, a former ESPN production executive who now teaches sports communications at Syracuse University, told the Times that he believes the steep growth curve began in 1993, when 21st Century Fox—eager to spark growth of its upstart FOX Broadcasting Network—outbid CBS by $100 million and paid $395 million a season for NFL rights. 

“That’s when the rights fees started to soar into the stratosphere,” Deninger said.