/// Sports Programming Dominates the Living Room
Image copyright Jonathan G In the era of digital media, content is king, and sports content is the king of kings. The sports industry reaches a larger market than music, movies and episodic television combined. Sports content also plays a major role in consumers’ choices about television service providers, the checks they write each month to pay for their broadcast content, as well as the decisions to upgrade the televisions in their homes. Recent developments have cast a spotlight on the ever-increasing value of sports content. First, sports are more popular than ever. According to a Kantar Sports Media study in 2012 , 170 million adults — 71 percent of the U.S. population — identify themselves as sports fans. Second, given heavy competition from the increasing number of content providers, major networks, such as CBS, ESPN, Fox and NBC, are looking for additional content that can drive advertiser-friendly demographics — read: Sports, in significant numbers. Third, TV service providers, fearful of consumers “cutting the cord” in favor of services such as Netflix, Amazon and Hulu, realize they can get a competitive advantage with both live and differentiated content — again, chiefly sports. This new sports-centered media landscape has shifted the balance of power between sports broadcasters and TV service providers. Those who hold the rights to broadcast sports programming enjoy tremendous negotiating leverage that they use to extract an increasing amount of money from the television service providers. For example, in the recent public feud between CBS and Time Warner Cable, a dispute over broadcast fees led to a lengthy blackout of CBS content for Time Warner customers. Although a broad swath of CBS programming was at stake, it was clear that the ultimate bargaining chip all along was NFL programming, which CBS held the rights to broadcast. TWC had no choice but to bow to the pressure of CBS before the NFL regular season started. The TWC-CBS dispute illustrates a larger trend: The sports bill has gone way up for the television service providers, and there’s no apparent end in sight. TV providers collectively will be paying over $17.2 billion for access to sports content this year from the rights holders (source: SNL Kagan). Even more notably, these deals are structured to last multiple years, sometimes decades, so the total liability for providers is well beyond $100 billion. In one well-documented example, DirecTV shelled out $4 billion to the NFL for the exclusive rights to Sunday Ticket for only a four-year term extension. The price for sports rights continues to escalate as these contracts come up for renewal.
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Sports Programming Dominates the Living Room
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