Television's Strong-Arm Racket
The collapse of baseball's TV revenue won't come from die-hard fans. There's no indication that the sport's truest disciples won't pay more and more until there's nothing left.
The problem is non-fans, who are picking up most of the check.
Here's how it works: Just six companies control 90 percent of America's TV programming. And they won't let your local provider simply carry the channels you actually want to watch to keep your bill modest.
When Disney negotiates contracts, anyone who wants ESPN is usually forced to buy a bundle that includes lesser fare like ESPN Classic or ABC Family, whether they want them or not.
The same goes for programmers like Viacom. If you want Nickelodeon or MTV, you're also required to buy Logo and VH1 Classic, among the lowest-rated channels in television.
"It's incredible," says Matthew Polka of the American Cable Association. "If you want one popular channel, they make you take 10."
Most contracts require that all channels be included as part of a cable company's "basic" package. That's why your TV menu is loaded with shows about tow-truck drivers and women who make bras.
"It causes us to basically be forced to provide a bloated, expanded level of basic cable service," says Polka. "Our customers know that these aren't channels watched on a regular basis, but they still have to pay for the monthly subscriber fee. Because of your market power, you are essentially forcing me to carry channels I don't want."
Baseball rides comfortably in the back seat of this strong-arm game. According to the research firm NPD Group, the average cable or satellite bill will reach $200 by 2020. Half of that fee will go to sports. And everyone pays, because most providers are barred by contract from moving sports to a premium package.
That's why Fox can double its payments to carry the World Series. Though only 10 percent of America will watch, the remaining 90 percent will cover the freight.
Yet consumers have clearly tired of picking up someone else's check. During a single quarter in 2012, Comcast lost 117,000 subscribers. While such figures are cyclical, cable and satellite have lost customers nine years running.
What's worse for baseball, the largest exodus involves the young, who increasingly turn to cheaper fare like Netflix and Hulu. They're not just turning away from the game; they don't even want access.
But neither television nor baseball seems to notice these darkening skies. Take the country's most obsessive TV market, Los Angeles, where a school of piranhas has attacked the city's cable bill.
Not long ago, L.A. hosted just two regional sports channels. Soon there will be seven. The Lakers charge $4 a month. Fox bills $5.40 for its two channels. The Dodgers are expected to add another $5. And Bevilacqua just negotiated a stunning 500 percent increase for the Pac-12's media rights.
"There are no new pro or college games being created," says DirecTV's Dan York. "But what used to be delivered via two regional sports networks now seeks to be re-sliced into [multiple channels and] more costs for consumers. That's not a sustainable model."
Yes, the die-hard Dodger fan will readily fire up his debit card to cover the impending $200 tab. But the team's broadcasts average just 100,000 viewers. That means the remaining 5.6 million L.A. households with cable must be convinced to pay the same to catch such searing drama as Vanderpump Rules and Confessions: Animal Hoarding.
