By the numbers: The spiraling cost of sports programming

Media analysts are increasingly talking about the skyrocketing cost of sports television — and, more importantly, the potential for that trend to undermine the pay TV model and spur a new round of cord cutting.

So just how high are those costs?

A new report from Bernstein Research senior analyst Craig Moffett notes that carriage fees for Disney’s ESPN and ESPN 2 alone account for 20 percent of the cost of a typical wholesale-priced cable subscription. The flagship channel collects, on average, $4.69 per subscriber, according to SNL Kagan (see chart provided by Bernstein Research).

Live sports programming accounts for about 20 percent of programming hours consumed in the U.S., Bernstein says. But national networks like ESPN and regional sports channels account for about 50 percent of the cost of the average cable, satellite or telco TV service bill.

“The ridiculous escalation in sports rights is getting to be an old story,” Bernstein writes. “But lately it has gone to unimagined proportions. Unchecked, it threatens to blow the entire media model apart.”

Both carriers and the consumers they serve aren’t likely to get a break soon, Bernstein adds, citing the example of Major League Baseball’s Los Angeles Dodgers. The team was sold last week to private equity for a whopping $2.15 billion sale price driven by anticipated regional sports-channel renewal fees.

Also noted is the re-transmission dispute between satellite carrier DirecTV and broadcast-station operator Tribune that was settled earlier this week. Tribune enjoyed added leverage, Bernstein says, with opening day of the Major League Baseball season unfurling on a number of its channels, and DirecTV facing the backlash of rabid local fans should games be blacked out.

Help is not coming from the courts: A three-judge panel for the 9th Circuit Court of Appeals, Bernstein notes, just upheld a lower court ruling that found content companies like Disney are not showing “demonstrated injury to competition” when they bundle channels like ABC and ESPN in indivisible packages to carriers.

Oh, and that Bloomberg report about News Corp. launching a national sports cable channel to compete with ESPN? Don’t look for competition to drive down cost, either. Even without a direct national cable sports competitor, ESPN paid the National Football League $15.2 billion to keep carrying Monday Night Football through 2021.

“One more bidder for national sports rights would simply drive rates higher,” Bernstein concludes. “And that would, in turn, drive end user prices up, not down.”