Jeremy Laura: A very unexpected ESPN update and potential sponsorship issues

Your reporting on this is top notch and very well done and explained so a layman.. or lame like me can understand it.. .

If as you predict streaming is the future - I will be watching way less sports..

Your reporting on this is top notch and very well done and explained so a layman.. or lame like me can understand it.. .

If as you predict streaming is the future - I will be watching way less sports..
- dozerD10

I don’t think you’re alone. If you get a chance and want a headache, see if you can pull up the entire list of issues on the Writer’s strike (and upcoming actor’s strike). One is that studios aren’t releasing streaming numbers so no one knows if the pay scale is correct. The only reason not to release are because they are through the roof or dismal. Either way costs money (stock vs scale and royalties)

Anheuser Busch?

A big part of the reason that pro sports have gotten so big and so rich over the last ~30 years is from TV rights deals, which are heavily subsidized by people who are not sports fans.

The way the system is "supposed" to work is that regional sports networks pay tons of money to teams for broadcast rights, then charge pay TV carriers a fat fee to carry the channel, and the carriers then pass on that cost to subscribers.

But of course, if you're a traditional pay TV subscriber, you can't pick and choose which channels to purchase and pay for. You're paying a monthly fee to an RSN (and, minus markup, to your local pro teams) even if you hate sports and have no interest in watching or supporting them whatsoever.

Really rough ballpark numbers here, but consider that it's been estimated that Bally Sports Detroit pays the Red Wings something like $25 million per year to broadcast games. They can (or at least could) afford this because they charge TV providers roughly 7 bucks per month per subscriber to carry the channel, which translates to something like $10 million per month in carrier fees if you figure BSD has something like 1.5 million subscribers.

This despite the fact that, out of those 1.5 million or so BSD subscribers, probably only ~50,000 TV sets are actually tuned into a typical Red Wings game. So out of that ~$25 million the Red Wings are getting from BSD, well over 90% of it (maybe even over 95%) is being funded directly by people who aren't even hockey fans.

As a sports fan you can see the potential coming crash of league revenues, team revenues, salary cap implications, etc. as a tragedy. And it certainly is for people suddenly staring at losing their jobs or taking big pay cuts.

At the same time, though, the record growth and profits that sports leagues have raked in over the last 30 years have been propped up artificially by people who just want to watch Nickelodeon or Lifetime or MTV or whatever non-sports programming they care about. So is that really reasonable or fair? Is the NHL really entitled to that revenue forever?

Part of the cord cutting realignment means that sports leagues can't rely on getting tens of millions per year per team in free money from non-fans anymore. Which they arguably never deserved in the first place. The contraction process will obviously be painful, but you could also see it as a correction rather than a collapse.

Jeremy Laura: A very unexpected ESPN update and potential sponsorship issues
- Jeremy Laura

The name of the game for streaming is lean and efficient production. Hbo only became profitable last year under Zazlov amid all the cuts he had to make. Netflix had to slash on whatever it decided to greenlight and get smart about when and how to produce content. Heck, even with a few hit shows under its belt people doubt the survival of Paramount.

Disney/Espn is simply following a similar curve.

Part of the cord cutting realignment means that sports leagues can't rely on getting tens of millions per year per team in free money from non-fans anymore. Which they arguably never deserved in the first place. The contraction process will obviously be painful, but you could also see it as a correction rather than a collapse.

You are 100% right. It gets even weirder. For hard line cable (as opposed to dish) most cities only allow one provider. As recently as 2015, Wyandotte Cable was its own entity. (I haven’t checked to see if they finally sold). That means that Comcast, Charter or WOW at the time couldn’t come in. I was trained in sales by a former engineer and it helped a ton. First, look up at telephone poles. Those poles are literally still owned by the phone companies so any other company has to pay them to put a line on there (even though analog phone service is almost gone, it all converts to VOIP at some point in the call). If you see a cable with a wire that dips into a rectangle shape near the post, that is cable. That “curve” is slack that adjusts for changing weather and is where the copper can be checked. If there is a “horseshoe” that is fiber optic cable. For those, trucks with backs that have scissor lifts work on fiber under completely closed condition. Techs have to wear goggles. I met one who had an equipment failure and sees a tiny point of light even after closing eyes. Fiber is a powerful material.
To become the provider of a city, a “fee” was added to the bill that sounded official but was just income that went straight to the municipality. An a la carte bill was crushed in the early 2000s due to what you’re talking about. People felt that they shouldn’t have to pay for 100 channels they’ll never watch just to see the few they do. And, popular channels would be moved into a higher pricing tier. So you paid even more for just one channel. Then you had FSD or Bally Sports as an add on. You could get to 200 per month just to be able to watch your team play.
Streaming does get rid of “artificial ratings”, but it also reduces overall revenues. It will inevitably become “law of the jungle” unless legislation forces carriers to include content or adds new taxes and fees. I think we’ll see a lot more consolidation and trimming as spending habits continue to change.

The name of the game for streaming is lean and efficient production. Hbo only became profitable last year under Zazlov amid all the cuts he had to make. Netflix had to slash on whatever it decided to greenlight and get smart about when and how to produce content. Heck, even with a few hit shows under its belt people doubt the survival of Paramount.

Disney/Espn is simply following a similar curve.
- Alexzanki

HBO is still having issues. They renamed part of the service “Max” and are citing the streaming model of minutes watched over viewership. I just got a call asking me to take 8 HBO related channels for free for 2 months then “cancel any time”. Apparently they’re lumping Cinemax in with it. I said no. The stock reports look at added subs but leave out “unpaid subs”. When Verizon gave Disney Plus for free and Comcast gave Peacock for free they saw huge boosts. When the subs raised rates Disney lost 4 million (300k in North America, most in Europe due to a cricket league deal gone bad). Keep watching the strikes. Someone is trying to get actual data. There were also 2 indexes added to keep stock from falling (but I’m not getting into that here). Amazon spent 1 billion on the LOTR series and only 37% of people who started watching finished the season. The minutes watched model won’t report if people are watching old content or new. Lots to be sorted through still

Anheuser Busch?
- boilermaker100

I won’t comment one way or the other on any company. You can look up stock reports on JP Morgan and see which companies have been downgraded or upgraded for sure. More than one have been downgraded, and investor meetings are getting hostile

There are a lot of factors here. One is the cost of borrowing is significantly higher and there is no end in sight, so companies are hesitant to invest in large future projects. Two, there's an incredible amount of uncertainty about the USD. Three, consumers are tiring of the perpetual advocacy, it's non-stop and jumps from one major, divisive issue, to the next. Four, inflation is hitting the younger demographics in a major way, and they have to make decisions on where they can cut spending. Sports and subscriptions are discretionary. Five, it's still easy to watch what you want without paying for it. Six, advertisers are also cutting back, especially in the age of streaming when commercials can be skipped. Seven, I get the general sense that people are down on pro sports right now. I feel it, and so does pretty much everyone I know. Eight, major sports leagues chose to enter the political fray on numerous issues, when you do that, it's a guarantee you're going to tick off a significant percentage of your customer market. Nine, it's confusing and expensive to purchase packages that get consumers what they want. Finally, they keep increasing the costs, everyone seems to have a subscription for content, and I think people are getting burned out on them.

Blue line enforcer NAILED it!!

Well done!!👍

There are a lot of factors here. One is the cost of borrowing is significantly higher and there is no end in sight, so companies are hesitant to invest in large future projects. Two, there's an incredible amount of uncertainty about the USD. Three, consumers are tiring of the perpetual advocacy, it's non-stop and jumps from one major, divisive issue, to the next. Four, inflation is hitting the younger demographics in a major way, and they have to make decisions on where they can cut spending. Sports and subscriptions are discretionary. Five, it's still easy to watch what you want without paying for it. Six, advertisers are also cutting back, especially in the age of streaming when commercials can be skipped. Seven, I get the general sense that people are down on pro sports right now. I feel it, and so does pretty much everyone I know. Eight, major sports leagues chose to enter the political fray on numerous issues, when you do that, it's a guarantee you're going to tick off a significant percentage of your customer market. Nine, it's confusing and expensive to purchase packages that get consumers what they want. Finally, they keep increasing the costs, everyone seems to have a subscription for content, and I think people are getting burned out on them.
- bluelineenforcer

Very well put. Add a final component to this. If you get a high rating in 2 categories as an organization (I won’t put them down, you can look it up) the Federal Government will allow you to borrow billions interest free. That’s quickly adding to debt and explains some “events”. There was a mock “crucifixion” at a sporting event that isn’t being received well. (Not NHL related). To your point, a poll with several categories about public perception on 100 companies came out yesterday. The Disney Company was in the top 5 of most divisive and people are looking up all of their holdings. Not good for the stock which was at 120 per share at one point last year and dipped below $89 yesterday as 2500 layoffs were also announced and departing bonuses for 2 employees have been discovered. One was 25 million, the other looks to be around 11 million and was a “settlement”.