Last week, news broke that several cable networks were trying to put together a sports-free online TV package for less than $US20 a month.
The thinking goes like this: Sports rights are incredibly expensive, and tons of people are paying for sports they don’t watch in their cable bundle. In 2016, ESPN alone cost
$US6.10 in carriage fees per subscriber.
So why not have an option where you can chop off sports and pay a cheap rate for a good entertainment-only bundle. Makes sense, right?
The main problem is that the parent companies of the major broadcast networks — NBC, ABC, CBS, and Fox — have paid a lot for sports rights, so they want no part of a bundle that makes sports seem less vital. The cable networks they own are also out. Bye-bye FX.
Who is left in this bundle then? Bloomberg reported that Viacom, Discovery, and AMC are looking to make a deal with distributors. Rich Greenfield, a BTIG analyst and noted ESPN sceptic, told Business Insider he also thinks that Turner, which owns CNN, TBS, and TNT, would be “very interested” — even though Turner owns a fair amount of sports. Throw Scripps in there too.
Those five put together could make a pretty compelling cheap bundle. You’d get a spread of programming from CNN’s news, to AMC’s quality dramas, to Comedy Central or the Food Network. There would be some non-sports holes from cable networks owned by the broadcasters, like Fox News or USA. But you wouldn’t have to miss the marquee broadcast networks themselves, since all you need is a $US25 digital antenna to tune in. They are free, after all.
“All [the broadcasters] want to make people forget that antennas exist,” Greenfield said.
If you could keep that bundle priced at $US15-$US20, paired with a slick interface and on-demand options, Greenfield thinks 5-10 million homes could be interested. By cutting out the broadcasters, you would also avoid the complicated regional rights issues that have caused geographic headaches for services like DirecTV Now and YouTube TV.
But why are these cable networks trying to put together a sports-free package now?
Mostly it’s because they are feeling squeezed by getting left off some of the new online bundles coming out. The idea of many of these new services is to offer a lower-cost cable alternative, but that means something has to give in terms of programming. Take YouTube TV, for example, which costs $US35 a month. AMC recently got into the bundle, but all the other cable networks that aren’t tied to a broadcaster have been cut out, including Turner. And they are angry. Some of those cable-only companies will get chopped off Hulu’s upcoming service as well.
“Our conversations with investors certainly indicated a ‘have’ and ‘have not’ view of media stocks domestically, with [bigger companies] (the Haves) able to leverage their large breadth of content into something near full carriage on emerging distribution packages like YouTube TV, perhaps at the expense of the Have Not [small to medium companies],” RBC analyst Steven Cahall wrote in a note to clients Monday.
“Broadcasters try to make everyone else feel like losers,” Greenfield said. “Those losers are going to turn around and try to be winners.”
The wrath of the broadcasters could, however, spell problems for distributors that might want to sell a no-sports bundle. Some of the contracts cable and satellite providers have signed with heavyweights like Disney and Fox are loaded with fine print designed to stop new bundles like this. In 2015, Disney-owned ESPN sued Verizon over a sports-free bundle.
But if those issues can be worked out, the “loser bundle” could be a winning proposition, at least for some young people who aren’t into sports or paying $US100 a month for cable. Paying $US20 or less, they will also have a bit of room to add Netflix, Hulu, Amazon, or HBO Now to the mix depending on your preference.
The big question will be how easy it will be to integrate this bundle in with your digital antenna. In some ways, the broadcasters are right: Losing NBC, CBS, ABC, and Fox would be too much for many people. But Roku TVs already put the broadcast channels in the same interface as apps like Netflix and Hulu, and there are even ways to get a DVR without cable, though it comes with an added cost.
Still, if those hardware and software elements continue to improve, the “loser bundle” plus broadcast channels could become a viable option for people that just aren’t that into sports. But chances are it won’t happen without a fight.
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