Press-Republican

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March 17, 2014

How local sports could change all of television

WASHINGTON — Whether or not you care passionately about baseball, you should care about the Los Angeles Dodgers. The future of television may depend on them, and on teams like them. Cable companies are betting that local sports will justify big price increases - and they may have overreached. Wars over the rights to local sports broadcasting are breaking out across the country, and their outcomes may bring the cable business model to its knees.

Over the past 30 years, sports have driven the entire cable business model, and local sports have played a disproportionately big role. Landmark battles over the broadcasting rights to the Dodgers and other franchises - the Houston Astros and Rockets, the New York Knicks, and more - have created turmoil and increased service costs in the cable distribution model. Now cable providers are passing those costs onto you, the subscriber, whether you're a sports fan or not.

Before we get to the Dodgers, let's state the obvious: Cable television is expensive, and getting more expensive every year. The average monthly cable bill in the U.S. climbed from $40 in 2001 to $86 in 2012. Market research firm NPD Group says it could go as high as $123 by next year, and north of $200 by 2020. Such a dramatic rise could place cable outside the reach of many U.S. households and force others to seek price-competitive alternatives. Cord-cutting, a trend already underway at a small scale, could go mainstream. To maintain their subscriber bases, cable providers will need to keep their costs under control.

ESPN, the king of sports networks, has a lot to do with those costs. It charges Time Warner, Comcast, AT&T and other providers 20 times the licensing fee that most other cable networks do. As columnist Ravi Dev points out in Medium:

The History Channel costs roughly 22 cents per month [per subscriber]. ESPN, you might be wondering? That comes out to $5.13 per month. … The ESPN subscriber fee is more than CNN, MTV, FX, TBS, CNBC, AMC, Nickelodeon, Comedy Central, the Food Network, and the Discovery Channel … combined.

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