Sports Law Blog
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Tuesday, February 17, 2004

How Valuable Is ESPN?: The Comcast-Disney merger talks (see more below) have significance in the sports world mainly because of the value of Disney-owned ESPN, which many consider to be the most important cable channel. However, Meg James of the LA Times asks, has ESPN peaked? James notes that ESPN already reaches 80% of all homes and must explore new ways of generating revenue, especially as rights fees for sports programming continue to skyrocket. The costs of this programming is passed on to the cable subscribers, which does not always make the cable companies happy. Currently ESPN costs about $2 per subscriber, which although "less than a cup of coffee," is by far the highest fee for any channel.

What is the future for ESPN and other sports networks? Of course, the network thrives on live sports programming, including the NFL, Major League Baseball, the NBA and college athletics. Recently, the network cancelled its critically-acclaimed series 'Playmakers,' which many believe was in response to pressure from the NFL that if the series did not go, the league would not resell its rights to ESPN. However, there are some in the sports industry that believe that in the next decade or so, the leagues may begin to negotiate directly with cable and satellite companies, bypassing networks altogether. Already, the NBA and NFL have their own networks, and all leagues have packages with digital satellite companies that give viewers the chance to see every game played. Once cable and satellite have reached every home, or nearly every home, in the US, the leagues can keep the games on their own networks, and sell the networks to the cable and satellite companies.

So long as ESPN has high quality live sports programming, cable companies and subscribers will continue to pay the exorbitant access fees needed to get the channel. However, should ESPN lose its grip on this golden goose, it may no longer have the value it has today.


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