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Politics doesn’t explain ESPN’s subscriber decline

ESPN is able to negotiate such a high fee from cable providers because it has purchased exclusive licenses to many major sports events.

Live sports draw the largest U.S. television audiences: Sports programs delivered nine of the top 10 U.S. television audiences in 2016. Even in an era of DVRs and video on demand, live sporting events remain “must-see” viewing. Realizing the importance of ESPN’s programming to many viewers, cable and satellite providers paid steady increases to maintain ESPN. The thinking goes that if they can’t offer ESPN, they’ll lose subscribers to competitors that do.

ESPN also earns considerable revenue from advertising, with opportunities for in-game sponsorships, in addition to the usual commercial breaks.

So over the past decade, while much of the rest of the television industry has grappled with losing viewers, advertisers, and revenue to disruptive new ways to watch shows on demand, ESPN seemed immune to the changes.

ESPN had 94.4 million subscribers in 2015 who paid an estimated average of $ 6.61 per month. Multiplied by 12 months, that produced yearly subscriber revenue of more than $ 7.48 billion. ESPN banked on that revenue when it established multi-year licenses with professional sports leagues, including a $ 15.2 billion deal for rights to NFL games through 2021, an eight-year, $ 5.6 billion agreement with the MLB and a $ 12.6 billion deal for NBA games that runs through 2025.

ESPN made these deals thinking that subscriber revenue would never decrease. But it has.
Television’s evolution
The television industry has been undergoing considerable changes for over a decade, but the pace and scale of these changes have escalated since 2015.

Source: Salon: in-depth news, politics, business, technology & culture > Politics

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