ESPN and the ACC have announced a relationship that will create a digital offering starting in 2016 and linear — standard — TV channel in 2019. The reason for waiting so long on the linear offering is because some of ESPN’s contracts with service providers supposedly come up for renegotiation in 2019 and the new channel subscription fee can be added. The digital option can be aired on WatchESPN and ads can be sold ASAP. There is one problem with the long time frame. The ACC channel could theoretically never make it onto a cable platform.
The shift in media is continuing to push more a la carte and more digital. We have reviewed the shift and the problems it creates for traditional media companies for a while now. Like here discussing ESPN being a canary in the coal mine and the reason for company layoffs. Moody’s report — which came out yesterday — that regional sports networks may be in trouble was discussed over a year ago here as well. Obviously we are not the first, nor will we be the last people to say that the sports industry is facing a bubble of epic proportions. We also aren’t trend setters when we discussed the effect of cord cutters and the reason that a la carte needs to be taken seriously — last year.
It just seems like the industry is either lying to itself or saying they will launch linear channels to make partners happy. Clay Travis — of Fox Sports and Outkick the Coverage fame — has amped up his cord cutting evangelism in recent weeks with NBA free agency and showing how fans can watch all the football their heart desires without paying for it. Not surprisingly he had some opinions on the new ESPN/ACC deal.
If trends continue the way they are it’s probably correct that the linear channel never sees the light of day — or if it does it will be extremely limited. It’s 2016 and the PAC-12 Network still doesn’t have distribution on DirecTV — the network was launched four years ago. There is little chance the execs at cable/distribution companies can be talked into paying more — AKA having its subscribers pay more — for a channel when those companies are losing customers to cord cutting. Cord cutting isn’t a fad. The numbers will only increase.
There’s an old axiom about investing: you can go broke being correct if your timing is off. The Fields of Green, Sports Business Daily, Moody’s, and Clay Travis, can scream from the social media treetops that we are in a sports rights bubble, but no one knows when it’s going to burst. But decisions like launching a OTT/digital option three years before a linear option show that maybe the industry is learning. Companies like ESPN are essentially saying they know their business model of sub-fee heaven could be coming to an end. Three years is an eternity in our new technological age, and building in buffers allow media companies to adjust to the future.