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New Nielsen Estimates Explain Gloom At ESPN

So remember this piece I published on Monday about overestimating the impact cord cutting might be having on ESPN right now? Yeah, forget I wrote any of that.

I've got new information, man!

According to the Wall Street Journal, Nielsen has released new estimates on the number of households cable networks reach, and ESPN’s reach appears to have plummeted from 94.4 million homes in February of this year to 92.9 million homes in July.

Nielsen cable network data for July 2015 (WSJ)

 

To put this in perspective:

  • According to SNL Kagan, ESPN collects a carriage fee of $6.61/month per subscriber, while ESPN2’s carriage fee is $0.83/month.
  • According to these new Nielsen figures, ESPN has lost an average of 300,000 subscribers per month between February and July. For ESPN and ESPN2 — whose subscriber figures are practically identical — 300,000 subscribers adds up to $2,232,000 in carriage fees.
  • If we presume these losses are constant, ESPN collected $33,484,000 less in carriage fees than they would have had they kept all of their subscribers between February and July.

That last number might do more to explain why Bill Simmons and Keith Olbermann suddenly seem so expendable in Bristol. It’s not simply because they said bad things about NFL commissioner Roger Goodell, though that might have vaulted them both to the top of the sack list. Ultimately, this comes down to money. A $33 million drop in carriage fee income over a mere five-month period will put the kibosh on any million-dollar contract renewals with on-air talent. Colin Cowherd seems likely to be dropped next, and I think I speak for many when I say I can’t wait to hear Phyllis from Mulga’s response to his departure.

[youtube:https://www.youtube.com/watch?v=6n6jxMKUluE]

This carriage fee drain, however, could impact more than just ESPN’s employees. It could play a major role in the next two sports rights deals up for bid — the Premier League and the Big Ten. This upcoming season is the final season on NBC’s current deal with the Premier League, while the Big Ten’s current TV deals expire after the 2016-17 season.

We know ESPN president John Skipper expressed interest in the Premier League in the past. We also that ESPN and Fox will not submit a joint bid for the next Premier League deal. With carriage fee income dropping, however, can ESPN afford to put up the estimated $500 million needed to take the Premier League away from NBC for three years? And with the next set of Big Ten TV deals expected to cost upwards of $300 million per year, would ESPN really cede a major college conference to other networks in order to take a smaller property?

Either way, it’s clear that the current trend in cord-cutting and cord-shaving is battering ESPN’s bundle-dependent business model. What happens next depends on how many more homes decide ESPN isn’t worth it anymore.

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