The price of sports on TV, like it or not

The ESPN set. The channel's owner, the Disney Co., is the company with the largest commitment to sports programming.
The ESPN set. The channel's owner, the Disney Co., is the company with the largest commitment to sports programming. (JEFF SINER / MCT)
Posted: April 01, 2013

Media companies have committed to pay more than $110 billion for the TV rights to show live sports well into the next decade.

These giant financial obligations are higher than a cost estimate reported in The Inquirer in 2012 and follow two years of frenzied bidding for TV sports content, such as Comcast Corp.'s $4.4 billion cost to televise the Olympics through 2020.

Recent corporate regulatory filings detail the huge bet the nation's largest media companies - the Walt Disney Co., CBS Corp., Time Warner, and News Corp. - have placed on the continuing popularity of sports TV.

"This is an enormous business that people don't understand, and it's driving cable bills," said analyst David Bank of RBC Capital Markets L.L.C., who wrote in February a 90-page report titled "Moneyball: The Current State of the Sports Media Landscape."

Sports programming has become so valuable, media executives say, because it has retained its viewership even as the TV audience fragmented among the Internet and hundreds of cable channels.

Sports also is prized by advertisers because it is watched live as opposed to being recorded and watched later without the commercials.

But pay-TV executives and other experts warn that TV sports costs will lead to higher household bills as media companies insist on higher per-channel fees to recoup sports costs.

Already, sports accounts for about 50 percent of the progamming costs in the typical monthly bundled cable bill, according to estimates.

Verizon Communications Inc., which markets the FiOS TV service, and satellite-TV giant DirecTV have implemented sports-related surcharges to partly offset the costs of regional sports networks.

Cable pioneer John Malone told the Los Angeles Times last year, "We've got runaway sports rights, runaway sports salaries, and what is essentially a high tax on a lot of households that don't have a lot of interest in sports." He added that the Federal Communications Commission or Congress might need to intervene.

The company with the largest commitments, not surprisingly, is Disney, owner of the ESPN sports-media channels, with $40.7 billion in obligations for sports programming. Disney's 10-K filing with the Securities and Exchange Commission covered the company's fiscal year that ended in September. The figure does not itemize the contract by league or college conference but simply discloses the overall commitment.

In late November, ESPN reached a $7.3 billion deal to televise the Bowl Championship Series - the college football playoff and championship games - through the 2026 football season. That cost does not seem to be part of the $40.7 billion because of its timing.

Disney's sports obligations have grown significantly in recent years. They were $33 billion in the fiscal year ending in October 2011 and $17.8 billion for the year ending in October 2010.

Based on the most recent regulatory filing, without the BCS contract, sports rights accounted for 58 percent of Disney's contractual commitments.

Sports programming commitments include rights on multiple platforms, such as mobile phones, and extend over many years, ESPN spokeswoman Amy Phillips said last week.

News Corp., whose Fox Sports unit owns and operates regional sports networks and is launching a national sports channel - Fox Sports 1 - later this year, was second in sports programming commitments with $36.3 billion for the fiscal year that ended June 30.

Fox agreed over the summer to a new deal with Major League Baseball and recently reached a deal to televise Big East Conference basketball.

TV sports rights account for 57 percent of News Corp.'s future contractual obligations, according to its filing.

CBS, in a regulatory filing Feb. 15, says it has about $12 billion in sports programming commitments, representing 79 percent of its contractual obligations, for the year that ended Dec. 31.

Comcast/NBCUniversal has not disclosed its specific dollar figures for its sports obligations. But it did list its major sports properties: the NHL, the Spanish-language U.S. television rights to the FIFA World Cup soccer games, the U.S. rights to the English Premier League soccer games, and PGA golf events.

So far, analysts do not seem concerned about the commitments.

"If you have the bottom fall out of the ad market, that would be a real problem," said Wunderlich Securities analyst Matthew Harrigan. But he added, "The relative position of sports has never been better with mobile video and streaming."

Contact Bob Fernandez at 215-854-5897,, or follow on Twitter @bobfernandez1.

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