Currently distributed in just under 100 million U.S. homes and commanding $7 billion annually in pay-TV subscriber fees, Disney's ESPN has the most to lose if the traditional program bundle gets disrupted away.
Or does it?
Sports Illustrated talked to leading analysts and media consultants in an effort to decipher the future of sports television in an a la carte world. Their conclusion puts an approximation on what ESPN might cost in an unbundled model and how it might fare.
With obligations to every major American sports league save for the National Hockey League, not to mention parent-company shareholders, Scalar Media Partners, a Manhattan consulting firm, estimates that a standalone ESPN product would have to charge in the neighborhood of $30 a month per subscriber to meet its obligations.
This price also takes into account the diminished advertising reach the World Wide Leader would experience in an a la carte model, given much of its current distribution would not sign on.
"That's what ESPN would need to get back to the current positive cash flow that supports all the rights fees they're paying, and the dividends they pay to [parent companies] Disney and Hearst," Frank Hawkins, a founding partner of Scalar, told SI. "And I think they could get it."
Regional sports networks, meanwhile, would suffer far more. Scalar used Root Sports Rocky Mountain as an example. Out of a Denver market that has 1.57 million pay-TV households, the RSN only draws an average of 37,000 viewers for Colorado Rockies games, or about 2.7 percent of the market.
Put the network in an a la carte model in which more than 1.5 million non-Rockies fans aren't paying more than $2 a month to subsidize the channel, and those that do follow the team would have to pay more than $1,000 a year to support the channel.
"That whole business model is going to explode," says Tom Spock, another Scalar founding partner.
- read this Sports Illustrated story
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