Google Bidding for Sunday Ticket??

[PBRme]

http://www.cnbc.com/id/100977900

Very interesting

[ChicosBailBonds]

They aren't bidding for Sunday Ticket...at least not yet.  We are in an exclusive negotiating window right now.  It is interesting to the public because it is coming out now, but something we've known about for over a year...old news, surprised it has taken this long to get out.  Apple in on it as well and has been for a long time. The NFL isn't stupid, this only helps their negotiating leverage during the window.  At the end of the day, the NFL has to decide what they want to do, what risk they want to put to their other deals and DIRECTV has to decide if it is worth.  With only 15% of customers on NFL, many fun decisions to be made by both sides. 

[Benny B]

With MLB, NBA, NHL all being in control of their own out-of-market packages... how long before the NFL realizes that they can build their own OOM platform?

Unless DTV is overpaying for the Sunday Ticket rights (and thus the NFL will re-up with them), the underlying message in the article is to short DTV.

[GGGG]

With MLB, NBA, NHL all being in control of their own out-of-market packages... how long before the NFL realizes that they can build their own OOM platform?

Unless DTV is overpaying for the Sunday Ticket rights (and thus the NFL will re-up with them), the underlying message in the article is to short DTV.

Couple of things...

My guess is that DTV doesn't "need" Sunday Ticket as much as they did in the past.  It was a great way to get an exclusive product and draw customers, but do they still use that? 

And with regards to their own OOM platform, I think the NFL doesn't need to do that since they have others that will pay through the nose to do it for them. 

[Canned Goods n Ammo]

With MLB, NBA, NHL all being in control of their own out-of-market packages... how long before the NFL realizes that they can build their own OOM platform?

Unless DTV is overpaying for the Sunday Ticket rights (and thus the NFL will re-up with them), the underlying message in the article is to short DTV.

Let's face it, the NFL is simply an "entertainment company" that provides content.

Now, if Directv and the networks are willing to overpay and use the NFL as a loss-leader, then the NFL should stick with the current model. If they aren't overpaying, then the NFL could/should start distributing it's own product.

[ChicosBailBonds]

With MLB, NBA, NHL all being in control of their own out-of-market packages... how long before the NFL realizes that they can build their own OOM platform?

Unless DTV is overpaying for the Sunday Ticket rights (and thus the NFL will re-up with them), the underlying message in the article is to short DTV.

If it happens, it happens.  Everyone has their walking away price, and we know what ours is.  The math works or it doesn't, not really that complicated.  Been modeling this stuff for well over a year.  Whether to short it or not, who knows...I see Warren Buffett just bought a ton more for DTV just last week.  I'm thinking he smells consolidation.   

[ChicosBailBonds]

Like I've said a million times, the technology isn't the issue, it's the cost of the content and those making it.  Disney having conversations with Google, but they (Google, Sony, etc) will have to pay the same (or MORE) for the services that cable, satellite, etc pay.  No one offs (meaning no a la carte).  No way is Disney, Fox, HBO, etc going to take less money.  They are the linchpin.



http://www.bloomberg.com/news/2013-08-21/disney-s-espn-holds-preliminary-talks-for-web-based-pay-tv.html

John Skipper also comments about NFL Sunday Ticket via Twitter

https://twitter.com/Ourand_SBJ

[forgetful]

If it happens, it happens.  Everyone has their walking away price, and we know what ours is.  The math works or it doesn't, not really that complicated.  Been modeling this stuff for well over a year.  Whether to short it or not, who knows...I see Warren Buffett just bought a ton more for DTV just last week.  I'm thinking he smells consolidation.   

I saw that Buffett made a big investment in Dish Network ($20+ million), but didn't see him increase his investment in DTV.  Maybe I missed it, I know he has a stake in DTV, but the Dish play was new.

[ChicosBailBonds]

With MLB, NBA, NHL all being in control of their own out-of-market packages... how long before the NFL realizes that they can build their own OOM platform?

Unless DTV is overpaying for the Sunday Ticket rights (and thus the NFL will re-up with them), the underlying message in the article is to short DTV.

Or this analyst who believes DTV investors would relish DTV losing the NFL because it is a money loser.

http://finance.yahoo.com/news/google-nfl-meet-sunday-ticket-182327028.html

[forgetful]

Or this analyst who believes DTV investors would relish DTV losing the NFL because it is a money loser.

http://finance.yahoo.com/news/google-nfl-meet-sunday-ticket-182327028.html

Although a money loser as far as the bottom line Sunday Ticket brings in subscribers.  There is value there, how much I don't know. 

With the launch of Sunday Ticket on PS3/XBOX, that mitigates the need for DTV, but how much is DTV bringing in from those 'alternative' subscribers.

May be time to let it go if the $$ is too high.

[ChicosBailBonds]

I saw that Buffett made a big investment in Dish Network ($20+ million), but didn't see him increase his investment in DTV.  Maybe I missed it, I know he has a stake in DTV, but the Dish play was new.

He has a huge investment in DTV and made another one recently.  Yes, he made his first foray into Dish, that's why I think he smells consolidation between the two.

http://www.mediapost.com/publications/article/206900/could-buffett-drive-a-dish-directv-combination.html#axzz2cfEs0SqF

[ChicosBailBonds]

Although a money loser as far as the bottom line Sunday Ticket brings in subscribers.  There is value there, how much I don't know.  

With the launch of Sunday Ticket on PS3/XBOX, that mitigates the need for DTV, but how much is DTV bringing in from those 'alternative' subscribers.

May be time to let it go if the $$ is too high.

Sunday Ticket has never existed on XBox and we pulled the plug on it for PS3 this year....very few people bought it....very few.

http://www.joystiq.com/2013/08/14/ps3-wont-get-nfl-sunday-ticket-this-year-does-receive-live-eve/

Yes, there is "value", but it costs a ton of money and is a loss leader to be sure.  

Personally, I think the worst that happens is DTV has it non-exclusive at a lower price tag, but what do I know.  A lot of DTV subscribers are rural based with no broadband access so the NFL would lose those customers if it went exclusive to a broadband product.  All fun to speculate.  

Interesting times.  We'll see how it plays out.  

[Benny B]

He has a huge investment in DTV and made another one recently.  Yes, he made his first foray into Dish, that's why I think he smells consolidation between the two.

C'mon Chicos... you're brainier than that.  Do you honestly think:

A) The cultures of Dish and DTV are conducive to consolidation, but more importantly
B) The Feds are going to allow the only two sat distributors to merge when they're fighting the merger of two of the remaining five major airlines?

[ChicosBailBonds]

C'mon Chicos... you're brainier than that.  Do you honestly think:

A) The cultures of Dish and DTV are conducive to consolidation, but more importantly
B) The Feds are going to allow the only two sat distributors to merge when they're fighting the merger of two of the remaining five major airlines?

I went through all this many years ago when it got shot down the first time.  Do I think the cultures are the same, absolutely not.  Charlie Ergen is one of the cheapest men on the planet and his company routinely ranked worst place in America to work at.  They go after different types of customers, they are a value play.  All that being said, they own 14 million customers and more importantly, a crapload of Ku and Ka capacity that is valuable.  

Whether the gov't says yes, that's a great question.  When they said no last time, the internet tv possibilities didn't exist, neither did FiOS and UVerse.  Much more competition now than then.  Still a tough road, but much more possible now than back 8 to 10 years ago when we went through that lovely exercise.

I'd give it a 60-40 shot of approval.

http://www.deadline.com/2013/08/dish-network-directv-wall-street-merger-pressure/

http://www.deadline.com/2013/07/john-malone-to-charlie-ergen-merge-dish-with-directv-for-the-industrys-sake/

[ZiggysFryBoy]

Insider Trading with ChicosBailBonds. 

[The Lens]

I went through all this many years ago when it got shot down the first time.  Do I think the cultures are the same, absolutely not.  Charlie Ergen is one of the cheapest men on the planet and his company routinely ranked worst place in America to work at.  They go after different types of customers, they are a value play.  All that being said, they own 14 million customers and more importantly, a crapload of Ku and Ka capacity that is valuable.  

Whether the gov't says yes, that's a great question.  When they said no last time, the internet tv possibilities didn't exist, neither did FiOS and UVerse.  Much more competition now than then.  Still a tough road, but much more possible now than back 8 to 10 years ago when we went through that lovely exercise.

I'd give it a 60-40 shot of approval.

http://www.deadline.com/2013/08/dish-network-directv-wall-street-merger-pressure/

http://www.deadline.com/2013/07/john-malone-to-charlie-ergen-merge-dish-with-directv-for-the-industrys-sake/

Can't the argument be made that consumer only have 1 cable choice so why is the customer owed multiple satellite choices?  And to you point there is now many other forms of delivery.

[ChicosBailBonds]

Insider Trading with ChicosBailBonds.  

LOL

I'm posting articles about everyone else's speculation...which happen to be no different than mine.  For the record, I do own stock in both companies, but have for many years.  Just as I own stock in At&T and Verizon.  Consolidation will happen at some point, someone will buy someone....well that's my guess.  I actually thought it would happen about 3 or 4 years ago, but I have to think at some point it does.  Certainly Buffett, Malone, etc all think so and who am I to disagree with their opinions.   

[Benny B]

LOL

I'm posting articles about everyone else's speculation...which happen to be no different than mine.  For the record, I do own stock in both companies, but have for many years.  Just as I own stock in At&T and Verizon.  Consolidation will happen at some point, someone will buy someone....well that's my guess.  I actually thought it would happen about 3 or 4 years ago, but I have to think at some point it does.  Certainly Buffett, Malone, etc all think so and who am I to disagree with their opinions.   

Yeah, nice try... ask Martha Stewart how that excuse played out for her.

[ChicosBailBonds]

Interesting article....a few things I categorically disagree with, but some are spot on.


Why Google \ You Tube aren't getting Sunday Ticket from Forbes


http://www.forbes.com/sites/markrogowsky/2013/08/22/5-reasons-nfl-sunday-ticket-isnt-coming-to-youtube/

[ChicosBailBonds]

Yeah, nice try... ask Martha Stewart how that excuse played out for her.

    I'm not saying anything that isn't public knowledge, we take that stuff very seriously.    http://www.hollywoodreporter.com/news/ceo-charter-was-a-mess-426271

We'll see how this all plays out, certainly has created a nice buzz the last few days, that's for sure.  

[PBRme]

C'mon Chicos... you're brainier than that.  Do you honestly think:

A) The cultures of Dish and DTV are conducive to consolidation, but more importantly
B) The Feds are going to allow the only two sat distributors to merge when they're fighting the merger of two of the remaining five major airlines?

They let Sirius and XM "consolidate"

[Benny B]

They let Sirius and XM "consolidate"

Sirius/XM competes with terrestrial radio much differently than the way Dish/DTV competes with terrestrial TV distributors.  For one, satellite radio's competition doesn't cost anything for a subscription, so it's much more difficult to make argument that a monopoly for satellite radio is disadvantaging to consumers when the vast majority of consumers already get their radio "needs" via other methods.  In other words, when Sirius acquired XM (or vice versa), you reduced by one the total number of what could be dozens of radio providers available in any given part of the country.

When you look at Dish and DTV collectively, they have a combined 40% of the entire US cable/sat/IPTV market... moreover, their 34M subscribers would not only make them #1 in the entire country, they would have over 1.5x the number of subscribers as 2nd place (Comcast - 22M).  And this is nationwide... consider the fact that Comcast, TWC, Charter, FIOS & UVerse aren't available everywhere in the country, but satellite is.  Not so much in the metropolitan areas, but most rural parts of the country are going to have three options for subscription TV: the local cable provider (be that Comcast or someone else), DTV and Dish.  Let two of those merge together, and you've reduced competition by a third.

Chico's is probably right that Buffett started taking positions because he saw an opportunity to create a quasi-monopoly... and who could blame him?  For the past couple decades, we've been in a corporate/government environment that has become quite accepting when it comes to consolidation and mergers of large companies.  In hindsight, there's no way Delta and NWA should ever have been allowed to merge, but it did.  And based on that precedent alone, there's no way that the FTC should ever have blocked AA and US Air, but they did. 

One other lesser, but significant, consideration.... the concept of "too big to fail" still gives heartburn to people on both sides of the aisle; unfortunately, that's not an issue that rests solely with the banks, insurance companies, etc.  Delta, for example, only employs 80,000 people directly, but their vendors, partners and customers might bring that into the hundreds of thousands or more who could have their lives drastically impacted by a failure of that airline.  You and I might not be affected by Delta going Chapter 7, but that's not something lawmakers in places like Georgia ever want to face.

[ChicosBailBonds]

Late yesterday, Citigroup’s Jason Bazinet ran some numbers on new negotiations, finding that a victory for Google might not be a bad thing for DirecTV shareholders: “When we run sensitivity analysis, we estimate that at $1.50 billion a year, DirecTV would be more rational to walk away than to renew The Sunday Ticket. At $1.50 billion a year, the NFL would capture all the Sunday Ticket revenue ($770 million), all the pre-tax profit DirecTV generates on Sunday Ticket subs from non-Sunday Ticket content ($610 million per year) and all of the pre-tax profit DirecTV generates from having incremental scale when it negotiates programming contracts for non-Sunday Ticket content ($135 million a year). If Google is willing to pay more than that, we believe DirecTV investors should welcome the prospect of DirecTV management letting it migrate to the web.”

[Canned Goods n Ammo]

Late yesterday, Citigroup’s Jason Bazinet ran some numbers on new negotiations, finding that a victory for Google might not be a bad thing for DirecTV shareholders: “When we run sensitivity analysis, we estimate that at $1.50 billion a year, DirecTV would be more rational to walk away than to renew The Sunday Ticket. At $1.50 billion a year, the NFL would capture all the Sunday Ticket revenue ($770 million), all the pre-tax profit DirecTV generates on Sunday Ticket subs from non-Sunday Ticket content ($610 million per year) and all of the pre-tax profit DirecTV generates from having incremental scale when it negotiates programming contracts for non-Sunday Ticket content ($135 million a year). If Google is willing to pay more than that, we believe DirecTV investors should welcome the prospect of DirecTV management letting it migrate to the web.”

It makes sense... I mean, eventually, it's not going to be worth it for DTV.

NFL Ticket is a great loss-leader that generates subscriptions. However, at some point you reach relative market saturation, and NFL Sunday ticket isn't bringing in enough additional subscribers and revenue to make it worth it.

Google is an entirely different animal. BUT... in theory, could Google eventually use the NFL to launch google fiber in every market? Probably not ready for that yet... but it would be an interesting technique.

[ChicosBailBonds]

Basically what I said yesterday, if Google gets it doesn't mean DTV doesn't also keep it.

http://www.forbes.com/sites/mikeozanian/2013/08/22/a-google-nfl-tv-buy-does-not-mean-directv-must-exit/

[ChicosBailBonds]

Hmmm

From today's Sports Business Daily


FUTURE OF SUNDAY TICKET UNKNOWN: The more pressing concern for Bornstein, who is leaving the NFL following the Super Bowl, is the Sunday Ticket out-of-market package. The NFL and DirecTV currently are negotiating to renew that deal, which expires after next season, and Bornstein said talks "are going well." "The timing of all this stuff is not anything I want to comment on because I honestly don't know," he said. NFL officials have spoken with alternate platforms, like Google, about the out-of-market package. But Bornstein dismissed the idea of a company like Google competing for existing rights. "To me, 'compete' is not the word; it's 'complement,'" he said. "We believe that the network package, along with the two cable packages that we have currently, along with what we do with our out-of-market package and how we¹ve developed the RedZone, is all complementary to the experience and rises all boats."

[ChicosBailBonds]

Yesterday's conference.....


"Brian Rolapp, COO of the NFL spoke about Sunday Ticket and was very quick to basically say at this time an OTT (Google, Netflix, etc) competitor for Sunday Ticket was not realistic.  He said its a combination of say Google not being in the subscription business and for the ones in it they are not in the live TV subscription business, so if 25M people watch a game on TV, no one can handle 25M concurrent streams.  "


Ding ding ding...we have a winner

[ChicosBailBonds]

Very interesting


http://www.reuters.com/article/2013/12/12/us-nfl-directv-idUSBRE9BB1CW20131212

[ChicosBailBonds]

http://www.cnbc.com/id/100977900

Very interesting

It's over.....for a long time

http://finance.yahoo.com/news/the-nfl-only-cares-about-money--green-bay-packer-josh-sitton-202227058.html?.tsrc=applewf

[Canned Goods n Ammo]

It's certainly a good deal for the NFL, but I wonder if this is the bloated contract that finally slows everything down.

Obviously directTV is betting that ratings are going to continue to be huge, and that football demand will help drive their business.

But, there is a saturation point with every product (Coke, Marlboro, Kraft Mac&Cheese, Budweiser, etc.) and there will be a regression at some point.

[ChicosBailBonds]

It's certainly a good deal for the NFL, but I wonder if this is the bloated contract that finally slows everything down.

Obviously directTV is betting that ratings are going to continue to be huge, and that football demand will help drive their business.

But, there is a saturation point with every product (Coke, Marlboro, Kraft Mac&Cheese, Budweiser, etc.) and there will be a regression at some point.

A lot of very smart people been working on this for a long time.  I think the market has reacted accordingly along with the analysts.  I was chuckling when the first stories coming out the way they did last year because it just wasn't going to go away any time soon.  Even though I'm on the digital side now, linear is going to be around a long long long time and will dominate on the dollar front for a long long long time. 

A regression at some point....in what sense?  Popularity...sure....but that doesn't mean revenues slow down, etc.   MLB isn't as popular as it once was, but the revenue growth has been very high.  It comes down to what the consumers of that specific product want to buy and what are they willing to pay for it. 

[Canned Goods n Ammo]

A lot of very smart people been working on this for a long time.  I think the market has reacted accordingly along with the analysts.  I was chuckling when the first stories coming out the way they did last year because it just wasn't going to go away any time soon.  Even though I'm on the digital side now, linear is going to be around a long long long time and will dominate on the dollar front for a long long long time. 

A regression at some point....in what sense?  Popularity...sure....but that doesn't mean revenues slow down, etc.   MLB isn't as popular as it once was, but the revenue growth has been very high.  It comes down to what the consumers of that specific product want to buy and what are they willing to pay for it. 

Well, put it this way: The market can't just grow indefinitely.

Networks cannot wait to get into bed with the NFL right? It's a can't lose proposition. They pay HUGE dollars for live NFL coverage, and the NFL delivers TONS of eyeballs and ad revenue.

At some point in the future, viewership is going to level off, or even decline. At that point, advertisers might put there money elsewhere, in which case the networks won't be able to generate enough ad revenue to justify the high cost of NFL programming.

I'm not saying it's going to happen overnight, but there is only so much football people will be willing to watch. At some point, it's going to slow down.

Football will still be huge. It will still be #1. But, at some point, one of the networks is going to overpay for the rights, struggle to have NFL programming make sense, and then you might see the contract prices come back down.

[ChicosBailBonds]

Well, put it this way: The market can't just grow indefinitely.

Networks cannot wait to get into bed with the NFL right? It's a can't lose proposition. They pay HUGE dollars for live NFL coverage, and the NFL delivers TONS of eyeballs and ad revenue.

At some point in the future, viewership is going to level off, or even decline. At that point, advertisers might put there money elsewhere, in which case the networks won't be able to generate enough ad revenue to justify the high cost of NFL programming.

I'm not saying it's going to happen overnight, but there is only so much football people will be willing to watch. At some point, it's going to slow down.

Football will still be huge. It will still be #1. But, at some point, one of the networks is going to overpay for the rights, struggle to have NFL programming make sense, and then you might see the contract prices come back down.

Viewership is already in decline, but revenue is already going up.  That's my point, I think you are thinking about it incorrectly.  In a fractured world with many alternative choices, viewership is going to decline.  It is inevitable.  The question then becomes, how valuable is that viewership in a world where there are 10 million other options?  For live advertisers, INCREDIBLY valuable.  So despite viewership flat or declining, the value of that viewership has actually become greater because the NFL is still diluted at a much lesser rate than anything else.

[brandx]

Or..... Maybe one thing follows the other. Contracts are already in place - so OF COURSE revenue is not gonna drop when viewership does. But what happens at the next negotiations after viewership has dropped 3,4,5 years in a row.

[Canned Goods n Ammo]

Viewership is already in decline, but revenue is already going up.  That's my point, I think you are thinking about it incorrectly.  In a fractured world with many alternative choices, viewership is going to decline.  It is inevitable.  The question then becomes, how valuable is that viewership in a world where there are 10 million other options?  For live advertisers, INCREDIBLY valuable.  So despite viewership flat or declining, the value of that viewership has actually become greater because the NFL is still diluted at a much lesser rate than anything else.

Right, so the NFL is dominating a shrinking/segmented marketplace.

That's great... but is it sustainable?

How long is (insert brand) going to pay a premium to advertise during NFL broadcasts & shows (where viewership is shrinking)?

Look, I'm not saying that the NFL is going to collapse tomorrow, but the television growth can't go forever. Eventually it's going to reach a tipping point where the ROI isn't worth it.

Superbowl ads are still expensive and popular for marketers, but they are not the magic bullet they were once thought to be.

NASCAR was the hottest thing in sports/marketing in 2001/2/3. There was a market correction 5 years later when brands realized the ROI wasn't what they thought.

At some point, the NFL isn't going to meet the ROI projections, and we'll see it come back to earth a little bit. Not a collapse. It will still be #1... but there might not be hundreds of hours of NFL programming every week of 10 different networks. (CBS, FS1, ESPN, FOX, CBS Sports, HBO, Showtime, NFL Network, NBC Sports Network, NBC).

It's just a little bloated right now (IMHO). It will look quite a bit different in 5 years. 
 

[ChicosBailBonds]

Right, so the NFL is dominating a shrinking/segmented marketplace.

That's great... but is it sustainable?

How long is (insert brand) going to pay a premium to advertise during NFL broadcasts & shows (where viewership is shrinking)?

Look, I'm not saying that the NFL is going to collapse tomorrow, but the television growth can't go forever. Eventually it's going to reach a tipping point where the ROI isn't worth it.

Superbowl ads are still expensive and popular for marketers, but they are not the magic bullet they were once thought to be.

NASCAR was the hottest thing in sports/marketing in 2001/2/3. There was a market correction 5 years later when brands realized the ROI wasn't what they thought.

At some point, the NFL isn't going to meet the ROI projections, and we'll see it come back to earth a little bit. Not a collapse. It will still be #1... but there might not be hundreds of hours of NFL programming every week of 10 different networks. (CBS, FS1, ESPN, FOX, CBS Sports, HBO, Showtime, NFL Network, NBC Sports Network, NBC).

It's just a little bloated right now (IMHO). It will look quite a bit different in 5 years. 
 

Well, for the next 9 years at a minimum, that's the deal.  That's the minimum length of the contracts and they drive it all.  Just wait until 2017, your head will spin when the wireless in market rights are up.  The $$$ is going to be off the charts.

Not an opinion....fact

[Canned Goods n Ammo]

Well, for the next 9 years at a minimum, that's the deal.  That's the minimum length of the contracts and they drive it all.  Just wait until 2017, your head will spin when the wireless in market rights are up.  The $$$ is going to be off the charts.

Not an opinion....fact

You know, I keep trying to be the wet blanket on this deal, so maybe I should flip it.

Do you see an end in sight for the NFL, or are LARGE sums of money going to keep coming indefinitely? Could the NFL become one of the largest industries in the US?

I guess I just keep seeing larger and larger and larger sums of money being invested (live programming, recorded content, merch, etc.), and I just can't see how it can go on forever. At some point, it has to level out and possibly decline.

[Chicago_inferiority_complexes]

He's making money off this, so of course it's gonna be seashells and balloons forever.

Question is, how long are lower to middle class baby boomer white males going to dominate the entertainment market?

[ChicosBailBonds]

You know, I keep trying to be the wet blanket on this deal, so maybe I should flip it.

Do you see an end in sight for the NFL, or are LARGE sums of money going to keep coming indefinitely? Could the NFL become one of the largest industries in the US?

I guess I just keep seeing larger and larger and larger sums of money being invested (live programming, recorded content, merch, etc.), and I just can't see how it can go on forever. At some point, it has to level out and possibly decline.

NBA TV rights deal just closed....$24billion for the next 9 years.....................................................

[ChicosBailBonds]

He's making money off this, so of course it's gonna be seashells and balloons forever.

Question is, how long are lower to middle class baby boomer white males going to dominate the entertainment market?

Nothing is seashells and balloons forever, but you make bets based on data, customer behaviors, etc, etc.   I think you are pigeon holing yourself by saying "middle class baby boomer white males".....look at who is consuming these sports products and paying for them, many more people than what you just described.  That's why the bet is placed where it is.

[Canned Goods n Ammo]

NBA TV rights deal just closed....$24billion for the next 9 years.....................................................

I saw that. Seems insane to me, but obviously the demand for live programing.

I guess the question still stands: Is there an end in sight? How high can it go?

I totally understand the demand/premium, but it can't go on forever right? Seems like the growth is just too rapid.

[ChicosBailBonds]

I saw that. Seems insane to me, but obviously the demand for live programing.

I guess the question still stands: Is there an end in sight? How high can it go?

I totally understand the demand/premium, but it can't go on forever right? Seems like the growth is just too rapid.

No one knows, these are calculated bets, but they are bets made by very smart people with a lot of data.  That kind of money, you just don't do it without an incredible amount of homework behind it.  Nothing is guaranteed in life.  Ratings will wane, but the value is in those that are actually watching live which has been placed on a per watcher at very high levels.

I've been hearing that this can't go on forever since I got into this almost 15 years ago.  I agree, it can't go on forever, but I haven't seen one lick of evidence that it has slowed.  In my former gig, we tried to slow it with the Pac 12, no Dodgers deal this year, etc.  The dollars are out of control, but they still keep coming.  The TNT and ESPN announcement basically means that huge increases are coming in television rates to pay for those channels, and since Turner and ESPN are on nearly every basic offering, everyone will pay.

[Canned Goods n Ammo]

No one knows, these are calculated bets, but they are bets made by very smart people with a lot of data.  That kind of money, you just don't do it without an incredible amount of homework behind it.  Nothing is guaranteed in life.  Ratings will wane, but the value is in those that are actually watching live which has been placed on a per watcher at very high levels.

I've been hearing that this can't go on forever since I got into this almost 15 years ago.  I agree, it can't go on forever, but I haven't seen one lick of evidence that it has slowed.  In my former gig, we tried to slow it with the Pac 12, no Dodgers deal this year, etc.  The dollars are out of control, but they still keep coming.  The TNT and ESPN announcement basically means that huge increases are coming in television rates to pay for those channels, and since Turner and ESPN are on nearly every basic offering, everyone will pay.

Man, I know you are right, but this kind of thinking seems exactly like what happened in previous bubbles/over-values.

People start breathing in their own fumes, and nobody turns a real critical eye towards the outside forces, risk, and unintended consequences. It's just "Well, it's still going, and the projection looks good."

I know on paper all of this stuff makes sense, but my spidey sense tells me the growth is too rapid, and there could be a snapback.

(I know it sounds cliche... I guess we'll see what happens in the coming years).

[Benny B]

Nothing is seashells and balloons forever, but you make bets based on data, customer behaviors, etc, etc.   I think you are pigeon holing yourself by saying "middle class baby boomer white males".....look at who is consuming these sports products and paying for them, many more people than what you just described.  That's why the bet is placed where it is.

Question, Chicos... will speaking of the concept of "inertia" set off the fire alarm at your office?  As in consumers who are simply "set in their ways."

It's no secret that Boomers and, to a lesser extent, Gen X - regardless of race and socioeconomic status - love their TV sports.  Millennials, not so much.  Even so, if you look at who is consuming and paying for sports, you're going to see a lot of households who are doing so because they subscribed long ago and haven't paid much attention to the marginal increases in rates over the past decade.  These are folks who have subscribed to the same tier/package for 10+ years, and haven't done anything except pay the bill and perhaps occasionally call about a service outage.  The upside is that these customers are profitable and easy to retain because they don't rock the boat; the downside is that if you do lose these customers due to a significant event (i.e. change in employment/income, a move, sticker shock, etc.), chances are pretty good you're never getting them back (because they'll soon be set in their "new" ways).

Over the next decade, millions of boomers are expected to move, and most are going on a fixed income.  This is bad for the cable/sat companies because a) aging consumers are the most prone to "inertia" and b) they are going to face a significant event that may result in them dropping their cable/sat package.  On top of that, you have the Millennial crowd who are migrating to major urban centers where they discover that a DB-4 antenna and a wi-fi connection best serves their minimized need for TV entertainment.

The bet is being placed today because the people making the decisions (and benefiting from them) are simply getting theirs while the getting is still good.  That way they won't need to worry about moving out of their homes or going on a fixed income in 10 years, while their former employees will be looking for new jobs.

[Spotcheck Billy]

No one knows, these are calculated bets, but they are bets made by very smart people with a lot of data.  That kind of money, you just don't do it without an incredible amount of homework behind it.  

that's not how you described the media deal TWC gave the Dodgers

meanwhile trying to view my DirecTV bill online to see why I got hit with an increase this month but your website unnatural carnal knowledgeing sucks donkey balls today and won't display chit  I see now that your site doesn't play nice with IE anymore

[jesmu84]

I'm not in economics or business or any related field. But this sounds like most other bubbles that have occurred. Everyone getting theirs while they can because the projections "look good". I have no doubt that chicos knows what he's talking about all the current trends and research show things being positive. As long as that continues, everyone is going to get all the money they can until it's not.

[brandx]

I'm not in economics or business or any related field. But this sounds like most other bubbles that have occurred. Everyone getting theirs while they can because the projections "look good". I have no doubt that chicos knows what he's talking about all the current trends and research show things being positive. As long as that continues, everyone is going to get all the money they can until it's not.

I agree completely. Have stated so several times here.

Philosophy has been a money maker several times.

[reinko]

Make no mistake, the NBA deal and upcoming college football deals will be on the backs of consumers.  Saddle up to higher cable costs, more fees, and like lambs to slaughter tens of millions of people will pay a few more $ a month to watch Sportscenter and live sports.  ESPN and Turner know consumers are morons, especially when it comes to sports.  They have deduced that enough people pay will pay 10-20-30% more because of football and basketball, and they don't care about 5% of people that might defect.

[brandx]

No one knows, these are calculated bets, but they are bets made by very smart people with a lot of data.

So were the bankers and investment house experts. Ammo's feeling is correct. Nothing goes up forever - contracts or not.

[ChicosBailBonds]

that's not how you described the media deal TWC gave the Dodgers

meanwhile trying to view my DirecTV bill online to see why I got hit with an increase this month but your website unnatural carnal knowledgeing sucks donkey balls today and won't display chit  I see now that your site doesn't play nice with IE anymore

The media deal that TWC gave the Dodgers was one of the worst deals ever, which is why no distributor has signed up for it.  That much money, for local programming is absurd.  This particular deal with the NBA and ESPN\TNT is much different.  It's a national platform deal, it brings product across 30 different teams and fan interest throughout the country, in includes playoffs, in includes OTT rights.  What makes the TWC deal even worse, regardless of whether TWC gets distribution for the product, the Dodgers get paid no matter what.  Absolute insanity.  They want almost $5 per sub per month for 6 months of content and on average about 3.5 hours per day of true viewership from a small niche audience in the grand scheme of things.  Far far different than what another channel delivers at that cost.  If the value was there, Charter, Comcast, Fios, UVerse...somebody....anybody....would have signed a deal.  No one has.

I can see my bill online without any problem whatsoever.  Works fine with IE8, Firefox32, and Chrome 37.  What kind of issues are you having that you can't see your bill?

[ChicosBailBonds]

Question, Chicos... will speaking of the concept of "inertia" set off the fire alarm at your office?  As in consumers who are simply "set in their ways."

It's no secret that Boomers and, to a lesser extent, Gen X - regardless of race and socioeconomic status - love their TV sports.  Millennials, not so much.  Even so, if you look at who is consuming and paying for sports, you're going to see a lot of households who are doing so because they subscribed long ago and haven't paid much attention to the marginal increases in rates over the past decade.  These are folks who have subscribed to the same tier/package for 10+ years, and haven't done anything except pay the bill and perhaps occasionally call about a service outage.  The upside is that these customers are profitable and easy to retain because they don't rock the boat; the downside is that if you do lose these customers due to a significant event (i.e. change in employment/income, a move, sticker shock, etc.), chances are pretty good you're never getting them back (because they'll soon be set in their "new" ways).

Over the next decade, millions of boomers are expected to move, and most are going on a fixed income.  This is bad for the cable/sat companies because a) aging consumers are the most prone to "inertia" and b) they are going to face a significant event that may result in them dropping their cable/sat package.  On top of that, you have the Millennial crowd who are migrating to major urban centers where they discover that a DB-4 antenna and a wi-fi connection best serves their minimized need for TV entertainment.

The bet is being placed today because the people making the decisions (and benefiting from them) are simply getting theirs while the getting is still good.  That way they won't need to worry about moving out of their homes or going on a fixed income in 10 years, while their former employees will be looking for new jobs.

As far as sports goes, I think you are looking at a lot different data than people that make these decisions are around millenials.  Furthermore, people are living longer, and though boomers are retiring, etc, etc, they are sitting on a crapload of $$$ and many of them do love their sports.   

I disagree with your last paragraph because it only implies those "getting theirs while it is good" are those on the receiving end.  You've totally dismissed the other side of the table...those PAYING for it, and paying DEARLY for it.   You don't commit that kind of money unless you think you can make it back one way or another.  The flexibility in the rights will allow that. 

[ChicosBailBonds]

Make no mistake, the NBA deal and upcoming college football deals will be on the backs of consumers.  Saddle up to higher cable costs, more fees, and like lambs to slaughter tens of millions of people will pay a few more $ a month to watch Sportscenter and live sports.  ESPN and Turner know consumers are morons, especially when it comes to sports.  They have deduced that enough people pay will pay 10-20-30% more because of football and basketball, and they don't care about 5% of people that might defect.

Of course they will, just like I'm now being stuck to help pay for the shut down of the San Onofre Nuclear Power plant and most other Californians will as well.  That's the way the world works. 

Morons....no....what they know is customers pay for things they want and like any good business people, they are going to extra maximum value they can for that.  No gun to anyone's head.  If you don't want it, don't buy it.  Pretty simple.

[Canned Goods n Ammo]

If you don't want it, don't buy it.  Pretty simple.

The problem is, that's not how cable tv works.

If I want FXX, I have to pay for ESPN. I don't want ESPN, but I'm paying for it.

I know, I know, ala carte doesn't work, etc. etc. I get it, but what you are saying above isn't true.

I don't want 90% of the stuff I'm purchasing, but I have to purchase it.

[Chicago_inferiority_complexes]

If you don't want it, don't buy it.  Pretty simple.

Done.

[brandx]

If you don't want it, don't buy it.  Pretty simple.

What is that even supposed to mean?

I want ESPN and FS1. How do I buy "it"? Oh yeah, buy 200 channels I don't want to get the two that I do.

And the only answer our "expert" on the subject has is "If you don't want it, don't buy it"? Yeah, pretty simple. And a really brilliant answer as well.

[ChicosBailBonds]

The problem is, that's not how cable tv works.

If I want FXX, I have to pay for ESPN. I don't want ESPN, but I'm paying for it.

I know, I know, ala carte doesn't work, etc. etc. I get it, but what you are saying above isn't true.

I don't want 90% of the stuff I'm purchasing, but I have to purchase it.

Sure it works that way, it's just not finite level like you want it....I get it.  At a high level, it works. In other words you can't shed a specific channel, but you can blame Disney, Viacom, Turner, News Corp, etc or that.  If you don't want ESPN and Turner, get a package that is barebones that doesn't have it....yup, that means you won't get a lot of other stuff you want, but you won't incur that extra cost.  If you want a calling plan that has only a tiny bit of data plan, you're screwed....you have to buy a certain minimum.  No one is putting a gun to anyone's head to have data on their phone, even if you don't need the minimum you pay for each month.  Your option is to pay for it, or don't buy it.

Dish is going to come out with something in a few months where supposedly you can get ESPN, A&E and Scripps stuff for about $35 a month.  Here's the catch, Disney limited the number of subscriptions that could be sold.  Also, it is limited to one concurrent stream, meaning it is not really an option for a family.  Plus, it is broadband delivered which may or may not be high enough quality depending on your device, broadband connection, etc.  Here's an example where the "pipe" is changing and smaller bundle in place, but the conglomerates are putting in restrictions.   

Meanwhile....
In Boston, Chad Finn writes the "status quo in terms of where we will find NBA broadcasts" over the coming years -- on ESPN and Turner Sports after they re-upped this week -- "is a good thing." ESPN and TNT "do an exceptional job producing the telecasts and ancillary content." But when the deal "goes into effect two seasons beyond this one, this much is also certain: We’ll be wishing for the status quo with our cable bills, too" (BOSTON GLOBE, 10/10).

[jesmu84]

And here I thought it was the intrusive government being the ones responsible for all the restrictions and regulation in my life

[ChicosBailBonds]

And here I thought it was the intrusive government being the ones responsible for all the restrictions and regulation in my life

Problem on that side is you truly have no choice.  Don't like where your taxes are being spent...too bad, you get to pay them.  Bailouts, deficits, etc, etc...too bad, you pay.

[ChicosBailBonds]

Done.

Wasn't hard, pretty simple.  I'm trying to pare back a $250+ mobile phone bill....no one is forcing any of this on anyone.  First world problems. 

[Canned Goods n Ammo]

Sure it works that way, it's just not finite level like you want it....I get it.  At a high level, it works. In other words you can't shed a specific channel, but you can blame Disney, Viacom, Turner, News Corp, etc or that.  If you don't want ESPN and Turner, get a package that is barebones that doesn't have it....yup, that means you won't get a lot of other stuff you want, but you won't incur that extra cost.  If you want a calling plan that has only a tiny bit of data plan, you're screwed....you have to buy a certain minimum.  No one is putting a gun to anyone's head to have data on their phone, even if you don't need the minimum you pay for each month.  Your option is to pay for it, or don't buy it.

Dish is going to come out with something in a few months where supposedly you can get ESPN, A&E and Scripps stuff for about $35 a month.  Here's the catch, Disney limited the number of subscriptions that could be sold.  Also, it is limited to one concurrent stream, meaning it is not really an option for a family.  Plus, it is broadband delivered which may or may not be high enough quality depending on your device, broadband connection, etc.  Here's an example where the "pipe" is changing and smaller bundle in place, but the conglomerates are putting in restrictions.   

Meanwhile....
In Boston, Chad Finn writes the "status quo in terms of where we will find NBA broadcasts" over the coming years -- on ESPN and Turner Sports after they re-upped this week -- "is a good thing." ESPN and TNT "do an exceptional job producing the telecasts and ancillary content." But when the deal "goes into effect two seasons beyond this one, this much is also certain: We’ll be wishing for the status quo with our cable bills, too" (BOSTON GLOBE, 10/10).

I know, I know. I don't want to get into the whole bundling debate again.

But, let's face it, television entertainment is not a "buy what you want" enterprise. It just isn't.

I know that Nike doesn't let me buy just 1 shoe, but that makes logical sense to the consumer.

When I go to buy a bag of dorritos, I don't have to buy 9 different flavors that I don't like. I can just buy 1 bag. Makes sense to a consumer.

Eventually, there will be a producer/provider that figures out a better delivery system. It's the American way.