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http://www.outkickthecoverage.com/e...cribers-worst-month-in-company-history-102916
The biggest business story in American sports this fall isn't the declining NFL ratings or anything that's happening on the field, court, or ice, it's the collapse in ESPN subscribers, which reflect a larger trend in the collapse of cable subscribers in general.
Yesterday Nielsen announced its subscriber numbers for November 2016 and those numbers were the worst in the history of ESPN's existence as a cable company -- the worldwide leader in sports lost 621,000 cable subscribers. That's the most subscribers ESPN has ever lost in a month according to Nielsen estimates and it represents a terrifying and troubling trend for the company, an acceleration of subscriber loss that represents a doubling of the average losses over the past couple of years, when ESPN has been losing in the neighborhood of 300,000 subscribers a month.
These 621,000 lost subscribers in the past month alone lead to a drop in revenue of over $52 million and continue the alarming subscriber decline at ESPN. Couple these subscriber declines with a 24% drop in Monday Night Football ratings this fall, the crown jewel of ESPN programming, and it's fair to call October of 2016 the worst month in ESPN's history. But this isn't just a story about ESPN, the rapid decline in cable subscribers is hitting every channel, sports and otherwise. It just impacts ESPN the most because ESPN costs every cable and satellite subscriber roughly $7 a month, over triple the next most expensive cable channel.
What does ESPN do with that money?
It buys sports rights.
Presently ESPN is on the hook for the following yearly sports rights payments: $1.9 billion a year to the NFL for Monday Night Football, $1.47 billion to the NBA, $700 million to Major League Baseball, $608 million for the College Football Playoff, $225 million to the ACC, $190 million to the Big Ten, $120 million to the Big 12, $125 million a year to the PAC 12, and hundreds of millions more to the SEC.
The total costs? According to SNL Kagan ESPN is on track to pay $7.3 billion in total rights fees in 2017. That's more than any company in America.
How does that content cost compare to revenue?
Well, let's be extremely conservative and assume that ESPN is going to lose 3 million subscribers this year. ESPN lost over 4 million subscribers last year and no month was as bad as October 2016 so this is probably being extremely generous. (The pace of decline at 621,000 a month would be nearly 7.5 million lost subscribers a year, but let's presume that this past month is just a bad outlier. The average number of lost subscribers over the past several years has been right at 3.5 million).
A loss of 3 million subscribers would leave ESPN with 86 million subscribers in 2017. That would be down roughly 15 million subscribers in the past five years alone. Given that ESPN makes right at $7 a month from every cable and satellite subscriber a year, that means ESPN's subscriber revenue would be $7.22 billion in 2017. Toss in an additional $1.8 billion or so in advertising revenue and ESPN's total revenue would be $9 billion. We don't know what the costs of running ESPN are -- employees, facilities, equipment, and the like have to cost a billion or more -- but it's fair to say that ESPN is probably still making money in 2017. Just nowhere near what they used to make.
But those sports rights costs are going up and those subscriber revenue numbers are going down.
So if we're very conservative and project that ESPN continues to lose 3 million subscribers a year -- well below the rate that they are currently losing subscribers -- then the household numbers would look
like this over the next five years:
----------
It's a too long article to paste so here is the last line.
The "Worldwide Leader in Sports" is a dead channel walking.
Yep, stick a fork in them.
The biggest business story in American sports this fall isn't the declining NFL ratings or anything that's happening on the field, court, or ice, it's the collapse in ESPN subscribers, which reflect a larger trend in the collapse of cable subscribers in general.
Yesterday Nielsen announced its subscriber numbers for November 2016 and those numbers were the worst in the history of ESPN's existence as a cable company -- the worldwide leader in sports lost 621,000 cable subscribers. That's the most subscribers ESPN has ever lost in a month according to Nielsen estimates and it represents a terrifying and troubling trend for the company, an acceleration of subscriber loss that represents a doubling of the average losses over the past couple of years, when ESPN has been losing in the neighborhood of 300,000 subscribers a month.
These 621,000 lost subscribers in the past month alone lead to a drop in revenue of over $52 million and continue the alarming subscriber decline at ESPN. Couple these subscriber declines with a 24% drop in Monday Night Football ratings this fall, the crown jewel of ESPN programming, and it's fair to call October of 2016 the worst month in ESPN's history. But this isn't just a story about ESPN, the rapid decline in cable subscribers is hitting every channel, sports and otherwise. It just impacts ESPN the most because ESPN costs every cable and satellite subscriber roughly $7 a month, over triple the next most expensive cable channel.
What does ESPN do with that money?
It buys sports rights.
Presently ESPN is on the hook for the following yearly sports rights payments: $1.9 billion a year to the NFL for Monday Night Football, $1.47 billion to the NBA, $700 million to Major League Baseball, $608 million for the College Football Playoff, $225 million to the ACC, $190 million to the Big Ten, $120 million to the Big 12, $125 million a year to the PAC 12, and hundreds of millions more to the SEC.
The total costs? According to SNL Kagan ESPN is on track to pay $7.3 billion in total rights fees in 2017. That's more than any company in America.
How does that content cost compare to revenue?
Well, let's be extremely conservative and assume that ESPN is going to lose 3 million subscribers this year. ESPN lost over 4 million subscribers last year and no month was as bad as October 2016 so this is probably being extremely generous. (The pace of decline at 621,000 a month would be nearly 7.5 million lost subscribers a year, but let's presume that this past month is just a bad outlier. The average number of lost subscribers over the past several years has been right at 3.5 million).
A loss of 3 million subscribers would leave ESPN with 86 million subscribers in 2017. That would be down roughly 15 million subscribers in the past five years alone. Given that ESPN makes right at $7 a month from every cable and satellite subscriber a year, that means ESPN's subscriber revenue would be $7.22 billion in 2017. Toss in an additional $1.8 billion or so in advertising revenue and ESPN's total revenue would be $9 billion. We don't know what the costs of running ESPN are -- employees, facilities, equipment, and the like have to cost a billion or more -- but it's fair to say that ESPN is probably still making money in 2017. Just nowhere near what they used to make.
But those sports rights costs are going up and those subscriber revenue numbers are going down.
So if we're very conservative and project that ESPN continues to lose 3 million subscribers a year -- well below the rate that they are currently losing subscribers -- then the household numbers would look
like this over the next five years:
----------
It's a too long article to paste so here is the last line.
The "Worldwide Leader in Sports" is a dead channel walking.
Yep, stick a fork in them.
