Pay TV subscribers who don’t want ESPN are still paying over $4.5 billion annually to have the channel in their packages. In fact, the majority of people who have ESPN don’t even care to have the channel, but due to the nature of pay TV packages, they’re still paying for it.
Here’s how we arrived at this number.
A recent survey found that 53% of people don’t care whether or not their TV package includes live sports channels, like ESPN and ESPN2 which are included in nearly every basic pay TV package.
According to the most recent estimates, 87,349,000 people have ESPN and ESPN2 in their pay TV packages, and those channels make up $8.11 of a pay TV bill (ESPN is $7.21 per subscriber per month, while ESPN2 is charged at a rate of $0.90).
Given that 53% of pay TV subscribers don’t care if they have ESPN or other live sports channels, that means 46,294,970 of ESPN/ESPN2’s subscribers don’t really want the channels. At $8.11 per subscriber, that’s $375,452,207 people are shelling out every single month despite not wanting those channels. That’s $4.5 billion a year!
Sports-Free TV Packages Draw Interest
As the pay TV industry continues to struggle with losing subscribers, one idea that’s gaining traction is to offer a low-cost, entertainment-only package of channels that helps subscribers save money by not paying for sports networks.
Last month, Viacom CEO Bob Bakish said his company is seriously considering launching creating a sports-free, entertainment package of channels that would be offered as a streaming service for between $10 to $20 a month. The offering could be very tempting for consumers who aren’t sports fans and don’t want to spend an exorbitant amount for those channels they don’t care about.
Rich Greenfield, BTIG media analyst and longtime critic of ESPN, has said “the price/value of ESPN and ESPN2 is simply too high for a majority of US consumers today.” He also recently told Business Insider that “sports is what’s holding the whole linear bundle together; you attack sports and this whole thing shatters.”
Also worth noting, Greenfield’s BTIG ran a survey last year where they found similar results, that 56% of pay TV subscribers would drop ESPN if they could save $8 on their monthly cable bill.
Would entertainment-only TV packages accelerate ESPN’s subscriber losses? It seems likely, though it’s difficult to say to what extent. And would ESPN finally be forced to launch its own standalone streaming service?
Greenfield has argued in the past that it’s just not financially viable for ESPN to have its own all access streaming service, saying “The reality is that ESPN would likely have to charge dramatically more than $20/month/sub in a direct-to-consumer model, given the dramatic reduction in penetration rates. The math [for a standalone ESPN streaming service] does not work.”
Simply put, the forecast for ESPN continues to look gloomy. Many believe the network has seriously overspent on live sports rights (ESPN spends billions to air NFL, NBA, college football, and other sports), and they’ve been forced to layoff dozens of reporters and on-air talent in an attempt to reduce costs and right the ship. After years of happily relying on rising cable subscriber fees, ESPN needs to make some changes if it wants to maintain its place as the worldwide leader in sports.