SmashMouth

ESPN pays $2 billion a year to the NFL for Monday Night Football and one NFL wild card playoff game. I’ve written for the past couple of years that as ESPN’s business collapses that ESPN’s decision on whether or not to bid to keep Monday Night Football would be the first big test of how rapidly that business is deteriorating.

What’s a deteriorating business look like? In the month of October ESPN lost over 15,000 subscribers a day in October per the latest Nielson estimates.

15,000 a day!

Last year I wrote this about ESPN’s challenges as it pertained to Monday Night Football:

“ESPN presently pays $1.9 billion a year for Monday Night Football. (This is a wild stat, but did you know that every cable and satellite subscriber who has ESPN is paying $21.50 a year just for Monday Night Football games? That’s whether you ever watch those games or not. That’s the NFL tax that ESPN passes along to consumers.)

What will the NFL want from ESPN for Monday Night Football in 2021? More money, right? The NFL has gotten used to television revenue only going up. Even if, as is the case this year, its Monday Night Football ratings are plummeting. Will ESPN be able to afford to keep the NFL and pay more money despite having lost nearly 30% of its subscriber base in the ten years of the existing MNF contract? That seems highly unlikely doesn’t it? But can ESPN exist as a network without NFL games? Remember, it’s not just the NFL games, it’s all the ancillary content that ESPN builds around the NFL games, think about the hours of studio programming that ESPN devotes to pro football. ESPN justifies its sky high cost per month to cable and satellite companies based on the games it provides exclusively on cable, can ESPN extract an increase in subscriber fees from cable and satellite companies when its deals expire without the NFL games? So how much more money will the NFL be able to extract from ESPN? Or will this be the moment in time when the entire sports industry finally realizes that the bubble has popped?

This is the biggest contract to watch in sports, will ESPN bend to economic reality or will Disney let the worldwide leader in sports spend money it doesn’t have?”

Now we have our potential first answer to these questions from the man, Jim Miller, who literally wrote the book on ESPN. It appears the worldwide leader in sports is now aware that there are many tech companies likely to be able to bid much more for Monday Night Football than they can.

The Hollywood Reporter featured an article from Miller today that laid out ESPN’s Monday Night Football decision.

“First, quietly, ESPN has been able to pull off a dramatic judo move in recent agreements with its affiliates, one whose importance cannot be overstated: There is no longer specific contract language that requires the cable giant to have NFL games in order to earn its lofty (and industry-envied) subscriber fees, currently more than $7 per household. This means the network would not face automatic decreases in that vital artery of its dual revenue stream. Sure, distributors would be aghast, demanding to negotiate lower fees probably immediately, but the point is, there would be negotiations, enabling ESPN to do everything it could to keep those numbers as high as possible.”

It’s important to note what is going on here — Miller is sourcing specific language in ESPN’s cable and satellite contracts. That suggests incredibly high level sources, probably the highest possible level sources.

Effectively ESPN is tossing up a trial balloon letting Wall Street know they probably can’t afford to keep Monday Night Football rights past 2021 when its current deal expires, but they’re trying to make it seem as if this is their decision and it’s a good thing for the company.

And they’re simultaneously letting Wall Street know that their business won’t completely collapse without the NFL either because, how convenient, their executives are geniuses who negotiated language that protected them in case they couldn’t afford the NFL.

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lee909

Streaming will continue to get a vice like grip on these TV networks.

With people having less and less disposable income what do you expect.

Look at NFL players salaries
Top QB 25ml plus
Average QB 15ml plus

Its not sustainable with most workers income

jeanpierre

Really don't like mixing my politics and sports as I get enough politics during the week to p*ss me off; but this is some serious Schadenfreude for me to watch this network die a slow spiraling death...

It's not so much whether I agree or disagree with these talking heads employed by ESPN; it's the uneven application of penalties and consequences by ESPN management upon its talent for what they say public and whether it fits within the preferred office politics narrative...

I'd really like to see these executives outed for their applying their personal politics on a publicly traded corporation...

But there's so many of them in this group think that they don't care to see their bias has alienated their viewing audience...

It's not that my way is the right way, I just make the right way my way...

SmashMouth

ESPN Lost 480,000 Subscribers in October - Breitbart

dam1953

Consider that players income includes a sizable chuck of revenue sharing:
40% of local revenue
45% of sponsorship money, post season, etc.
55% of media deals

Viewership and ratings drops are going to cost the league and the players..biggly.

I expect that we will soon see how much the players are willing to "spend" on their protest. Seems like a lose - lose proposition to me. Continue the protest and loose money that you could donate to the cause or stop the protest and donate the money to solving the problem. My opinion is that they have already pushed the issue too far and many fans won't return any time soon. So, the money's gone. Period.

ESPN's projected problem is likely to happen much, much faster. Considering that NFL football was a cash cow they may not survive to see 2021. Politicize a business at your own risk.

”It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Charles Darwin