M+E Daily
Jeff Bewkes Not Feeling Very Sporting
Story Highlights
By Paul Sweeting
Time Warner-owned Turner Sports partnered with CBS back in 2010 to put up $10.8 billion over 14 years for TV and digital rights to the NCAA’s March Madness basketball tournament. But otherwise, Turner has been a middleweight in TV sports, not a heavyweight.
According to Time Warner CEO Jeff Bewkes, the heavyweights like ESPN and the broadcast networks that shell out for NFL rights are imposing a “tax” on the rest of the TV ecosystem.
Speaking at the Innovation Without Boarders event at the Paley Center for Media in New York Friday (highlights here) Bewkes warned that the spiraling cost of sports rights is putting strain on the current pay-TV business because those costs get passed on by the networks in the form of higher carriage or retransmission fees from cable and satellite providers, raising the price of TV service for everyone.
“Half of the population that doesn’t want sports is subsidizing the other half that does” Bewkes said, because the former are forced to buy expensive sports channels they don’t want as part of their cable plans. At some point, he warned, that will force the industry to adopt the ala carte pricing model it has long resisted.
Bewkes is hardly the first person to make that observation. But it’s telling that the CEO of a major content creator and network owner like Time Warner would raise the red flag.
It’s a recognition that the real stress on the current pay-TV business model based on bundled program tiers is coming from within, rather than from outside, over-the-top competitors like Netflix or Hulu. The danger is that the high cost of a small number of networks, likely driven by sports rights, will turn the current dual-revenue stream business model into a zero-sum game, in which every dollar a cable operator must pay to carry ESPN is one it cannot afford to pay another programmer. When that happens, competing networks’ shared interest in keeping the bundle intact will start to splinter, done in not by Netflix but by the NFL.
