July 16, 2013

THERE'S NO DEMAND SO THEY'LL CRANK THE PRICE...:

Would You Pay $30 Per Month for ESPN? (Todd Spangler, 7/16/13, Variety)

If pay TV providers were forced to sell channels a la carte, retail prices would skyrocket -- with ESPN costing in the ballpark of $30 monthly -- and the industry overall would lose half its revenue, or $70 billion, according to one Wall Street analyst.

Cable and satellite companies and their programming suppliers have for years fought a la carte, warning that it would only result in higher prices and fewer choices. Needham & Co. analyst Laura Martin, who subscribes to the same school of thought, weighed in on the topic again in a research note Monday.

"We can find no math where unbundling is the best economic answer," she wrote. Martin cited declines in the value of newspaper and music industries, which have been disrupted by Internet distribution models, for her analysis.

According to Martin, only about 20 cable channels would survive in an a la carte world. Industry execs have repeatedly raised the specter of niche-oriented and minority-targeted channels becoming unsustainable in such a marketplace.

With a la carte, ESPN's audience would shrink by about one-fifth, to 20 million "super fan" homes, and the cost of the network would rise to $30 monthly because ESPN would need to recoup lost subscriber fees and ad revenue, according to Martin.


Pay walls and subscriptions are a failure elsewhere but will succeed in tv?  Isn't it more likely that an ESPN with less money will lose the major sports to the networks and just fade away?

Posted by at July 16, 2013 6:09 PM
  

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