Kokomo Tribune; Kokomo, Indiana

Columns

October 1, 2013

JEFFREY McCALL: TV sports costs blitz consumers

Price spikes 20% higher than on other premium channels.

(Continued)

Media corporations pay enormously to acquire sports broadcast rights. The NFL gets more than $5 billion a year selling its rights to eager broadcasters. Major League Baseball gets $1.5 billion. The television companies, however, simply pass the costs along to viewers in higher subscriber fees and advertising costs (which ultimately, the customer also pays for). As the old college economics professor might say, in the end, the consumer always pays. Thus, athletes make outrageous salaries for playing games, rich team owners rake in piles of money and mega-media corporations fatten their bottom lines — all on the backs of consumers, many of whom don’t even watch the sports telecasts.

The financial model generating the surging costs of television sports can’t go on forever, and there are signs on the horizon that should alarm the sports-media business. Consumers, fed up with the high costs of subscription television, are cutting the cord in growing numbers. More than 300,000 customers canceled their pay-TV subscriptions in the second quarter this year. ESPN has lost a million subscriptions in two years, leaving the remaining viewers to shoulder the costs.

Some cable viewers in Los Angeles are suing Time Warner Cable. The cable giant signed contracts totaling $11 billion to broadcast the Lakers and Dodgers in coming years, planning to charge all subscribers for the costs. The class action suit seeks to allow individual subscribers to opt out and pay only for channels they want.

Warnings about the growing costs of television sports are now coming from executives friendly to the industry. Former FCC chairman Michael Powell is head of the National Cable and Telecommunications Association. He said last winter the NFL’s rights fees for ESPN’s “Monday Night Football” were “astonishingly insane,” and he warned high sports program costs could invite government regulation. Longtime cable executive John Malone said in a published interview there is “quite a bit of distortion in the valuation of sports rights,” essentially creating a tax on consumers who don’t even watch sports television.

Following sports is a great American tradition, but even hard-core football fans can’t really watch the 450 college games on ESPN this season. The sad thing is that we pay for all of them.

Jeffrey M. McCall is a professor of communication at DePauw University in Greencastle. Contact him at jeffmccall@depauw.edu.

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