Expensive sports channels are pushing cable bills to levels that make Internet-only subscriptions seem ever-more appealing. After its earnings report, Time Warner seemed to be in a bit of denial over the cable exodus as we discussed yesterday. At least one reason for the rise in cord cutting has to do with cost. As commenter TooDiesel lamented, cable packages don't come cheap. "I think part of the problem is the ridiculously high price of TW cable too. I live in Charlotte, can't get TW for less than $75 no matter what package I select," he wrote. Well, TooDiesel a lot of that has to do with sports packages driving up those prices, as data offered by AllThingsD's Peter Kafka confirms.
Looking at Kafka's chart of 2012 wholesale prices for each channel (below), we see that sports channels rank as the number one and two most expensive offerings, with a smattering of rankings in the top 25, confirming the fears cable execs had expressed back in December as they came to deals with these channels.
ESPN gets that top spot because viewers value sports. Thus ESPN and Disney can charge as much as they like. Cable companies are therefore obliged to carry them—and pass the spending onto consumers—because they're convinced the networks lure customers. Comcast even signed a deal to lock in this relationship with ESPN for the next 10 years.
The people ditching cable for the Internet don't quite agree. Many don't care about sports, or at least don't care enough to pay premium prices to have it in their living rooms. While Comcast has reupped its contract with these expensive networks, other execs didn't sound too excited about these rising prices a few months ago. "What happens to the bundle of cable if you keep pushing [the price] higher and higher," wondered Liberty Media CEO Greg Maffei a month ago. The answer is obvious: Subscribers leave.
Image via Shutterstock by B Calkins.