Published: April 3, 2020 3:11:35 pm
by Kevin Draper
Joyce Sanz recently called Comcast hoping to reduce the $164 each month her family pays for cable television and internet. An after-school program manager at an elementary school in Miami, Sanz wanted to trim expenses in case the economic fallout related to the coronavirus pandemic lasts months.
Sanz said she asked the Comcast customer service representative for a discount or deferred payment options. No dice. She asked to be charged the prices offered to new customers. No can do.
Finally, she spotted a specific line on her bill. “I am paying a sports fee,” she told the representative, recalling the conversation later during an interview.
“Oh, we can’t take those out” was the response, leading Sanz to the obvious question:
“If you are not giving the service, why do I have to keep paying for it?”
Comcast and other cable and satellite TV companies are still providing subscribers with sports channels, of course. Sanz can still watch Fox Sports Florida, Fox Sports Sun and ESPN. But without live games featuring the Miami Heat, Miami Marlins, or other professional and college teams, those channels have been shells of their former selves.
Nobody knows when major sports might be played widely again. Games would certainly be embraced by fans, but the sports ecosystem has taken a back seat to deeper concerns of public health and the global economy.
But already sports leagues, television networks and television distributors are firing the opening salvos in what will be an exhausting war to determine who should pay for hundreds of millions — perhaps billions — in economic damages.
“You always lawyer for the thing that will never happen,” said Erin McPherson, head of consumer content and partnerships at Verizon. “And the thing that you think will never happen, happened.”
As that takes shape, most American households will have little choice but to continue paying for live sports even as sports channels are reduced to reruns of historic games, documentaries and sports video game simulations.
“They won’t throw money at their customers when their costs of goods hasn’t changed,” Craig Moffett, a co-founder of media research firm MoffettNathanson, said of TV distributors.
Television is the biggest source of revenue for American sports. When people pay their monthly television bills, their money goes to television distributors, like Comcast, which in turn pay television networks, like ESPN, which in turn pay sports leagues, like the NBA. Along the way, everybody keeps a cut.
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But even if customers do not watch a single game, the majority of what they spend on bundled television packages goes to sports networks. This is because of the structure of the bundles, where customers pay one monthly price for dozens or hundreds of channels.
Entertainment is available widely on streaming services, while news and sports programming is increasingly the only reason to still pay for bundled TV.
“Sports are the glue that holds the bundle together,” Moffett said. “Without live sports, the value proposition to most households just isn’t terribly compelling anymore.”
Television viewership, especially of news programming, is up lately, no doubt the consequence of nearly 300 million Americans under orders to stay at home. But with jobless claims reaching a record high, how many more people will look to cut the cord or, at the very least, push back on being charged for sports without getting live games?
“A lot of them are going to get very familiar with how their TV service actually works, and how they can get rid of cable once and for all,” said Dave Warner, who created the website What You Pay For Sports in 2013 to educate fans about their television bills.
Television distributors have historically felt they held little leverage in negotiations with sports networks. What networks pay sports leagues goes up each year. Sports networks raise prices as a result and pass large price increases on to distributors, who pass them on to subscribers.
One way distributors have pushed back — and tried to deflect subscriber wrath — is by listing the costs for sports as a separate line item in bills, often terming it a “regional sports fee.” It is purposefully made to look like the actual fees and taxes imposed by state or federal regulators, but it is not the same.
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The model of regional sports networks, which has been so profitable for two decades, is showing signs of strain. Satellite television provider Dish Network has not carried 16 Fox Sports regional networks for the last nine months. A new Chicago sports network is having trouble getting distribution. Comcast has been sued by a Colorado regional sports network.
In other words, the balance of the sports television ecosystem was already being disrupted before the coronavirus pandemic shut down sports. “Now imagine you have pulled out the last piece of the Jenga puzzle, which is that sports are no longer on the air,” Moffett said. “The whole foundation, the linchpin that was keeping it together, is gone, and the Jenga tower collapses.”
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