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. 

Sponsored by Google Cloud

Webinar: Remote Post Production In The Cloud

Video production companies across the world have traditionally been tethered to physical facilities, but with the advent of covid-19, remote post production capabilities are more important than ever. Join this webinar to learn more about how video producers can utilize Google Cloud infrastructure, along with partner applications, to develop a remote post production suite that brings your artists and editors together, no matter where they are.

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. 

RELATED: ESPN might use live-streaming to sell sports a la carte, better exploit rights deals, Iger says

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. 

Suggested Articles

Virtual MVPD fuboTV posted a net loss of $99.8 million during the second quarter as its subscriber count held mostly steady.

After second-quarter video subscriber losses were better than feared, UBS has adjusted its cord-cutting estimate for 2020.

Redbox said Tastemade and Cheddar are now live on its free, live TV service, which now has more than 60 channels.