In a reminder of the importance of sports programing for big broadcast media companies, Comcast’s (NASDAQ: CMCSA) NBCUniversal is discussing launching a sports cable network.
That news came from Wall Street Journal sources Thursday. The network would mainly be a vehicle for sports content that is also streamed on NBCU’s Peacock services. Cable and satellite distributors could carry the channel as part of a sports-channel package.
NBC would join Disney’s (NYSE: DIS) ESPN, Fox Corp.’s (NASDAQ: FOXA) Fox Sports and Paramount Global’s (NASDAQ: PARA) CBS Sports Network as the big boys of sports TV channels.
So why are the big broadcasters so eager to show sports? In a word: eyeballs. The numbers show that people love to watch live sports, especially U.S. football. In 2024, NFL (pro football) games accounted for 72 of the 100 most-watched TV programs in the U.S.
The massive audiences allow the networks to make money from subscription fees, advertising and sponsorships. The subscription fees are what distributors pay the broadcasters to provide the network. The distributors make that money back from their customers: TV viewers.
The economics for ESPN
For example, ESPN charges about $9.40 per month, per subscriber and has about 65 million subscribers. Then there’s ESPN+, the network’s streaming service, which has about 25 million subscribers and charges $11.99 per month.
It’s no wonder then that Disney’s Sports division – primarily ESPN and ESPN+ — generated $4.85 billion in revenue in the quarter ended Dec 28. That’s almost 20% of the company’s total revenue,
$24.7 billion.
The problem for ESPN and the others is that viewers are dropping their cable packages and switching to streaming options. ESPN’s 65 million subscriber total compares to 76 million just four years ago. While ESPN+’s audience is growing, it obviously still trails the TV network’s by a lot. And the TV network is more profitable.
As for NBCU, it’s paying $2.5 billion annually to start broadcasting NBA basketball this year. So it has a marquee product to put on a new station. Apparently it will also be a vehicle for some of the content that appears on Peacock: golf, college football, the WNBA, Olympics and Premier League soccer.
Given TV viewers’ insatiable appetite for live sporting events, the idea seems to have a good chance for success. But the economics are difficult – sports content is very expensive – and the competition is stiff. So it’s no slam dunk.
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