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November 8, 2006

ESPN Power Struggles

by Brad Warbiany

This post was originally posted at The Unrepentant Individual, where I’ve been posting about college football a lot lately. It drifted over into the territory of monopolies, so I thought I’d cross-post it here.

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Over the past few years, cable companies have been battling ESPN over the cost of carrying the ESPN channel. It’s long been part of the “standard” cable offerings, but ESPN, knowing their status as the “WorldWide Leader in Sports”, have steadily been raising their costs to the cable providers. It’s gotten to the point where cable providers have been threatening to make it a pay channel.

ESPN, though, rather than taking their foot off the throttle, have kept the pressure up. ESPN GamePlan was understandable, because they were offering pay content for games that wouldn’t normally ever be broadcast nationally. That works well for fans who have left their alma mater’s locale, like I have. For a cost of $99 per season, you can subscribe to ESPN GamePlan and get all the games you desire. But ESPN decided to take it to the next level. They created a new channel, ESPNU, which is dedicated to college sports. And they’ve used this to exert more pressure on cable providers.

You see, ESPN GamePlan games are often available through local affiliates. I have had situations where I’ve caught Purdue games on CSS (Comcast Sports South), which normally would have required a subscription to GamePlan. Those games are usually broadcast locally to the school on ESPN+ channels. But ESPNU is different. It’s a channel like ESPN or ESPN2, in that games broadcast on ESPNU are only available on ESPNU. And they want all cable providers to carry ESPNU. Many have chosen not to, at this point.

Games carried on ESPNU require me to head out to a sports bar to watch. It’s actually been a little tougher than normal, because one place I would normally go to watch games doesn’t even carry ESPNU. So it requires going to certain sports bars. Granted, since I’m a fan of Purdue, a mid-level Big Ten team, I understand that it’s going to be a little tough for me to always find my team on TV. But ESPN knows that if they really want to get cable providers signed up for ESPNU, they must piss off fans of bigger programs. So earlier this year, Ohio State played a conference game on ESPNU, much to the chagrin of Columbus residents. OSU fans seem to think it’s a god-given right to watch Buckeye football on basic cable. Last weekend, I believe (I could be mistaken) that the Michigan – Ball State game was on ESPNU. ESPN is trying very hard to use their “monopoly” power to ensure local cable providers will add ESPNU to their lineups.

I use the term “monopoly” in quotes for a reason. ESPN is the “WorldWide Leader in Sports” for a reason, and that’s because they’ve done it better and cheaper than anyone else for quite some time. But they’re not a state-enforced monopoly, they’re a natural monopoly. And they’re pissing off their customers. You know what the result of that will be? As I pointed out before the season started, the result will be the Big Ten Network. In a natural monopoly, competition will arise which forces the monopoly power to change its ways, or lose its monopoly status. The Big Ten Network is the first attempt at doing just that, offering the games not carried by ESPN, ESPN2, or a major network, and putting on its own channel that may carry less of a price tag than ESPNU.

This is a real-life example of the natural breakup of a natural monopoly. And I’m not going to guarantee it’s going to be a clean fight, and I’m not going to guarantee everything will come up roses. But I think it will work itself out, and it will do so without the power of government. Not that anyone will pick up on the lesson, but I feel like someone has to point it out.


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4 Comments

  1. Please, ESPN is no more of a monopoly than is HBO. Just like there also exist Showtime and Starz to get movies on cable, there also exists Fox Sports, NBC, CBS, Fox, the Golf Channel, The Tennis Channel, NFL Network, NBA TV and countless regional sports networks available on cable and satellite to get sports.

    It’s all a matter of rights. If the Big Ten sold its college basketball rights to ESPN (which it did), guess where Big Ten college basketball WON’T appear? You guessed it, the Big Ten Network. Just as the Warner Brothers movie studio can sell rights to the Harry Potter franchise to HBO, Blockbuster video, Netflix, United Airlines, Marriott Hotels and anyone else they want to, so can the Big Ten Conference sell its sports rights to whatever TV outlets it wants to. This is why you’ll see Big Ten sports on local broadcast stations, ESPN, ESPN2, regional Fox Sports Networks and coming soon, the Big Ten Network.

    Contrary to your assertion THIS IS NOT A GOOD THING. Why do you think ESPN charges so much money to the cable operator to carrry its channels? Well I’ll tell you: it’s because rightsholders (like the Big Ten, other NCAA conferences, NFL, NASCAR, MLB, NBA, etc.) charge ESPN gobbs of dough to air their sports. The reason why competition to ESPN is not really a good thing is because as more TV networks enter the bidding for the rights to these sports the prices just go up higher!!! The leagues make out and guess what happens? The network that wins the bidding then charges the cable operators even more money to carry their channel, and the cable operators raise their rates to cable subscribers…. us!!! If NBC, CBS, Fox Sports and now, the Big Ten Channel weren’t all in the bidding arena, ESPN could get rights at more reasonable prices and keep prices down – this is one instance in which competition actually drives prices up!!!!

    Also, keep in mind that ESPN has had to pass on some premier sporting packages to keeps its rates down… that’s why NASCAR hasn’t been on ESPN for the last seven years and that’s why NHL hockey doesn’t appear on ESPN now.

    Comment by oronde warren — November 10, 2006 @ 8:07 am
  2. ESPN (Eastern Seaboard Programming Network) is a monopoly. I agree with Brad and I’m upset as he is with this ESPNU garbage. I pay $100 or so for ESPN Gameplan and don’t get ESPNU with that? What a crock! Brad is right about ESPN’s evil, manipulative plan. They put crap like poker, dog shows, and sports soap operas on ESPN or ESPN2 so they can start up a new network like ESPNU???! Why not put the poker and dog shows on some network called ESPNG (ESPN Garbage)? ESPNU in a few years may end up like ESPN2… showing poker and dog shows and sports soap operas so they can start a new network, ESPNU2. Heck, why stop with poker and dog shows and put on ping pong, Eukre, darts, and curling.

    Comment by Mike — November 21, 2006 @ 10:25 am
  3. ESPN shows darts already, Mike :-D

    Comment by Brad Warbiany — November 21, 2006 @ 10:45 am
  4. …I’ve also seen the World Championships of Curling on ESPN2. Heh.

    Comment by mike — November 21, 2006 @ 4:09 pm

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