×

Would You Pay $30 Per Month for ESPN?

A la carte would decimate the pay TV industry, resulting in loss of $70 billion in revenue, Wall Street analyst warns again

If pay TV providers were forced to sell channels a la carte, retail prices would skyrocket — with ESPN costing in the ballpark of $30 monthly — and the industry overall would lose half its revenue, or $70 billion, according to one Wall Street analyst.

Cable and satellite companies and their programming suppliers have for years fought a la carte, warning that it would only result in higher prices and fewer choices. Needham & Co. analyst Laura Martin, who subscribes to the same school of thought, weighed in on the topic again in a research note Monday.

“We can find no math where unbundling is the best economic answer,” she wrote. Martin cited declines in the value of newspaper and music industries, which have been disrupted by Internet distribution models, for her analysis.

According to Martin, only about 20 cable channels would survive in an a la carte world. Industry execs have repeatedly raised the specter of niche-oriented and minority-targeted channels becoming unsustainable in such a marketplace.

SEE ALSO: McCain: Pay TV Business Is Rigged Against Consumers

With a la carte, ESPN’s audience would shrink by about one-fifth, to 20 million “super fan” homes, and the cost of the network would rise to $30 monthly because ESPN would need to recoup lost subscriber fees and ad revenue, according to Martin.

In a statement ESPN said, “The report underscores what economic studies have said time and time again — that the cable package presents an undeniable value and the consumer would pay more and get less with a la carte.”

As a political issue, a la carte TV plays to a populist base — appealing to consumers’ feeling that they should pay for only what they want, and nothing more. Sen. John McCain (R-Ariz.) in May introduced a bill that would require cable and satellite TV to offer channels on an a la carte basis; however, the legislation has no cosponsors and is not expected to make headway.

McCain and other advocates of a la carte say bundled channel pricing forces people who aren’t interested in certain kinds of programming to subsidize it — as in the case of relatively expensive channels like ESPN and regional sports networks.

At a Senate subcommittee hearing in May, National Cable & Telecommunications Assn. chief Michael Powell argued that government-mandated a la carte would be highly disruptive to the industry and would be unlikely to benefit consumers.

“It’s a very serious question mark whether consumers would have lower bills or cheaper service as a result of a la carte,” he said, citing past studies including one by the Federal Communications Commission in 2004.

More Biz

  • Here’s How Much Money 10 Artists

    Here’s How Much Money 10 Artists Are Owed by PledgeMusic

    For eight years, PledgeMusic was a success story: A direct-to-fan platform where artists worked directly with their audiences to fund their albums, tours and all stripes of merchandise, with fans able to purchase everything from custom guitar picks to private concerts. Yet last June, Variety broke the news that the company is struggling to pay [...]

  • Korea's CJ CGV Switches Turkey CEOs

    Korea's CJ CGV Switches Turkey CEOs as It Battles With Local Industry

    Yeun Seung-ro has been appointed as CEO of CGV Mars Entertainment, the Korean-owned company that operates Turkey’s largest cinema chain. He replaces Kwak Dong Won, another veteran of the CJ-CGV group. The change of personnel may reflect two ongoing battles within the Turkish film industry. CJ-CGV, which bought Mars for some $650 million in 2016. [...]

  • China Video Streaming Giant iQIYI Loses

    Chinese Video Giant iQIYI Loses $1.3 Billion in 2018

    Chinese video streaming firm iQIYI lost over $1.3 billion in 2018, as revenues and subscriber numbers ballooned. The deepening losses reflected ever higher spending on original content production. Announcing its first full-year financials since a March IPO that launched it onto the NASDAQ, iQIYI said that it lost $1.3 billion (RMB9.1 billion) last compared with [...]

  • Lisa Borders Time's Up

    Time's Up CEO Resigned After Son Was Accused of Sexual Assault

    Time’s Up has announced in a statement posted to Instagram that its former president and CEO Lisa Borders, who resigned Feb. 18, did so after her son was accused of sexual assault in a “private forum.” “Within 24 hours, Lisa made the decision to resign as President and CEO of Time’s Up and we agreed [...]

  • Louis Tomlinson Signs With Arista (EXCLUSIVE)

    Louis Tomlinson Signs With Arista (EXCLUSIVE)

    One Direction’s Louis Tomlinson has signed with Arista, sources tell Variety. While the singer was formerly linked with Epic Records in 2017, he is signed directly to Simon Cowell’s Syco label and will move within the Sony Music family to Arista. Tomlinson teased a new single on Feb. 2, posting on Twitter, “Just heard the [...]

  • Jussie Smollett

    Jussie Smollett's Bail Set at $100,000, Must Surrender Passport

    UPDATED: A Chicago judge set a $100,000 bond for Jussie Smollett on Thursday, as the “Empire” actor made his first court appearance. Smollett faces one felony count of filing a false police report. Police allege that Smollett staged a Jan. 29 attack, telling detectives that he was accosted by two men who used racial and [...]

More From Our Brands

Access exclusive content