TV Business

In the Wake of the Disney-Charter Deal, What Networks are Living on Borrowed Time?

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Last month the Walt Disney Company and Charter Communications reached a landmark carriage agreement that included Charter dropping all but three of Disney’s general entertainment networks, including networks that were still airing original programming and, in the case of FXX, pretty popular original programming at that. As I wrote earlier this week, it’s a major landmark in the linear television bundle being refocused on what linear television is good at, live events such as sports and news, with other networks serving primarily as a platform to premiere content at designated times in advance of appearing on their true streaming-service home, as well as distinct brands to organize such content, while potentially serving as a stepping stone to such streaming services becoming the true heart of the cable bundle. It’s fair to wonder what other networks could be at risk of being dropped by providers if distributors insist on similar terms from the other major programmers.

Although I made my post a month after the whole thing went down, this post is surprisingly timely: earlier this week, after I made my post, S&P Global Market Intelligence put out a report listing the networks they see as being at risk from the major programmers if they end up taking similar deals to Disney-Charter. I actually think they’re way too pessimistic about some channels, but also overlook a number of channels that would seem to be very much at risk, in my view. I’m going to make my own analysis, separate from theirs, about which networks are relatively safe and which ones are at risk. To assist in this endeavor, I’m going to refer to this table from TVNewser showing how many viewers each network averaged in total day and primetime for 2022; for numbers in the 18-49 demo, I’ll be referring to this Variety article which contains more incomplete data, and only includes the top 50 networks across broadcast and cable in primetime. 

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How Charter Took On Disney’s 800-Pound Gorilla and Won – and Redefined the Cable Bundle in the Process

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For decades, carriage disputes have been a way of life for those still immersed in the cable bundle – a source of frustration as popular networks have been held hostage in staring contests between pay TV providers and major media companies, ending, inevitably, in rates going up for all customers. But what happened for ten and a half days at the start of September was unique, indeed unprecedented, in two different ways. First, this was the first time, at least in recent memory, a carriage dispute directly affected me. Second, and far more importantly, for all that these disputes have become more contentious over the years as providers have positioned themselves as trying to hold the line on increasing programming costs and keeping customers from paying for channels they don’t want, the company more responsible for both of those things than any other – Disney, and specifically ESPN – has been largely immune to such clashes, with cable providers too fearful of the blowback from losing the 800-pound gorilla in the sports world to risk losing it even for a moment. This, though, was the first time, possibly ever, that any major cable provider was willing to lose ESPN and the other Disney networks for as long as a week. And though the sides ended up making up just hours before a highly-anticipated Monday Night Football showdown, the much-anticipated debut (and, as it turned out, possible swan song) of Aaron Rodgers with the New York Jets, in the end Charter Communications and its Spectrum-branded services managed to win some significant concessions from Disney – concessions that could ultimately define the future of the cable bundle. 

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What does the future of broadcast television look like?

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If there’s one tweet that sums up the conundrum broadcast television has found itself in for going on 15 years now, it’s this:


As I’ve been writing about for years, most notably in Chapter 7 of my book, this dynamic has led broadcasters to neglect their own nominal medium in the years since the dawn of the modern retransmission consent era – not merely to collect more money than they could get from advertising alone, but at least before cord-cutting caught on, as an existential lifeline allowing them to hope to compete with cable networks that could extract subscriber fees from cable operators without having their leverage undermined by the ability of people to watch their content for free. Even as cord-cutting has ramped up, the broadcast industry has remained sufficiently dependent on retransmission consent that they have not only done little to take advantage of the phenomenon, they’ve crippled any efforts to help them do so, from killing Aereo and Locast to at-best hesitantly embracing the stopgap technology allowing broadcast signals to be received by mobile devices directly.

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What Does the WarnerMedia-Discovery Merger Mean for Sports (At Least Stateside)?

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Earlier this month AT&T announced it was ending its involvement in the media business after only three years from the closure of its merger with Time Warner. The assets now known as WarnerMedia would be merged with Discovery to form a new entity with no AT&T ownership and with Discovery head David Zaslav in charge of the merged company, which might sound an awful lot like Discovery buying WarnerMedia (and AT&T would get plenty of compensation in the form of cash and absorption of debt obligations, albeit amounting to pennies on the dollar from the original Time Warner acquisition), except AT&T shareholders would own nearly three-quarters of the new company. WarnerMedia’s diverse portfolio of adult and children’s entertainment networks, plus news networks and sports content, premium cable, and the HBO Max service launched under AT&T, would now be joining forces with Discovery’s documentary, reality, and other nonfiction programming.

A number of analysts in the aftermath suggested this would be a “game changer” for sports with “one more bidder entering the market” for sports rights, with one analyst claiming it would have “profound implications” as the new company could create a “must-have sports streaming service”, but considering that WarnerMedia already had high-profile sports rights and Discovery didn’t have any US sports rights whatsoever, nor does either company have a broadcast network presence, it’s hard to see how the new company is any more of a factor in sports rights negotiations than WarnerMedia already was. To be sure, before this year it had been a long time since Turner had been much of a factor in trying to acquire rights they didn’t already own and that were in any way competitive, the main exception being a run with the UEFA Champions League that only ended up lasting a year and a half and didn’t particularly impress soccer fans.

Then sports media watchers were blindsided when Turner came seemingly out of nowhere to take the half of the NHL package Disney hadn’t locked up, effectively saving the league from having to take significantly less money than they were hoping for after NBC was lukewarm at best to continuing their involvement, Fox set a ceiling on how much they would pay, and CBS wasn’t interested at all. The rights could be said to have fallen into Turner’s lap, but it’s still impressive that Turner was able to pay pretty close to what the NHL was looking for and beat out all other comers (including the possibility that Disney might have simply taken the whole package), and as incredible as it was that ESPN, the outfit more responsible than any other for keeping two Stanley Cup Final games on cable over the past two decades, would be the outfit to finally put every Final game on broadcast, it was even more incredible to find out that the other three Finals over the course of the deal would air entirely on cable, after the great care NBC took in the latter portion of their relationship to ensure NBCSN wouldn’t air a Game 4 where the Cup could be awarded. Zaslav’s comments that he’d been working on the merger for months before word got out (and had been badgering AT&T about a deal pretty much from the instant the Time Warner merger was completed) could serve as fuel for speculation that he was the driving force behind the NHL deal all along, and suggests that if the only impact a WarnerMedia-Discovery merger has on the former company’s sports operation is an infusion of resources (even though the merged company is probably smaller than AT&T as a whole during the WarnerMedia era), that’s still going to be enough to shake up the sports landscape.

But there aren’t a whole lot of high-value rights left. MLS rights, currently shared by ESPN and Fox, expire in 2022, but the value of those rights are a shadow of even the NHL. The NBA is the only one of the traditional four major sports that hasn’t locked up new rights deals in the past few months and Turner will be playing defense there when those rights come up by 2025. The NFL hasn’t settled the future of NFL Sunday Ticket, and SportsBusiness Daily’s John Ourand thinks DiscoverWarnerMedia might become a player there, but it feels like an odd fit without holding any exclusive or linear rights.

With ESPN picking up CBS’ SEC contract, there aren’t any major college conference rights up for renewal before 2024, when the Big Ten and Pac-12’s deals expire, with the Big 12 and Big East following suit the following year; the NCAA’s deal with ESPN for less-prominent sports expires then as well, and those deals could be an opportunity for DiscoverWarnerMedia to deepen their relationship with college sports and the NCAA (whose web site they already run) and avoid simply parachuting in for March Madness. But both ESPN and especially Fox are likely to spend profusely to defend their Big Ten rights, and the Pac-12 right now is in a place where they’re in danger of becoming the clear fifth conference of the Power 5, while the Big 12 has the least valuable demographics of the Power 5 and the Big East has no football and hasn’t moved the needle for FS1 as much as they thought it would. The College Football Playoff, whose current deals run through the 2025 season, is likely to come up at this point as well, but I doubt they have much interest in continuing to be a cable-only enterprise given their popularity and the direction media is headed, and they certainly won’t go with an outfit without any other college football rights (covers ears and sings loudly to drown out people bringing up the BCS on Fox). That’s not even getting into the notion of a large-scale shakeup of college football that might come mid-decade (one that, depending on the players involved, could yet see DiscoverWarnerMedia benefit).

NASCAR comes up for renewal in 2024 as well, but Turner seemed like an odd relic last time they had those rights with a handful of early-summer races, both they and ESPN pretty much didn’t want anything to do with the sport anymore by the time that deal ended, and NASCAR ratings didn’t finish crashing through the floor until a few years into the Fox/NBC era. On the other hand, the shutdown of NBCSN means NBC could be vulnerable to a concerted effort from a determined rival, which, given their portion of the schedule coincides with football season, would mean either Turner or ESPN. Everything else that could move the needle, including the World Cup, SEC, and ACC, are all locked up for the rest of the decade, and anything else that is coming up in that time isn’t likely to move the needle very much.

What Discovery does bring to the table that might make an impact on WarnerMedia’s sports operations is their Eurosport network, and a lot of the excitement surrounding the merger concerns the possibility of blending the Turner networks’ sports rights with Eurosport’s to form an unbeatable sports streaming service. But Eurosport’s slate of rights is singularly unimpressive, at least from an American standpoint, which might be surprising given its prominence; in fact Turner’s rights slate might benefit Eurosport more than the other way around. (Also, the opportunities for synergy are limited given Eurosport broadcasts in each of Europe’s many languages.) What rights Eurosport does have that would be relevant to Americans – the Olympics and PGA Tour – are among the rights already locked up stateside into the next decade (and Turner’s efforts to pick up PGA Tour rights were simply embarrassing, talking about converting one of their networks into a duplicate of what NBC already had), and everything else is a hodgepodge of rights.

It has plenty of soccer, but not much of it applies throughout its territory (in fact very little applies outside Scandinavia and Romania) and what does apply tends to be decidedly lower-tier; they technically have domestic rights to the German Bundesliga (extending to much of Central and Eastern Europe) but resold those rights (as well as those in Austria and Switzerland) to DAZN (which led to DAZN launching German linear channels only reluctantly and while griping about how they shouldn’t be necessary, once again overlooking the true value of linear television). Both outlets would likely be interested in acquiring Premier League rights for as many territories as possible, but that seems to be NBC’s top priority now that Sky Sports, the outlet arguably responsible for the Premier League’s very existence, is a corporate sibling. Eurosport also has rights to the three Grand Tours of bicycle racing, and the Tour de France might be up for the taking with NBCSN shutting down, but it’s not like being on TNT or TBS is actually any different than being on USA.

What stands out to me, looking at Eurosport’s slate of rights from the perspective of the Turner networks, is tennis. Eurosport has pan-European rights to the French and US Opens (excluding rights to the US Open in the UK and Ireland, where Amazon holds rights), to the Australian Open in the vast majority if not all of Europe, and Wimbledon in a majority of countries they serve. They also hold rights to the ATP Tour in France, Russia, Scandinavia, Romania, and Hungary, and the WTA Tour in Denmark and Russia. In the United States, rights to most events outside the Grand Slams are held exclusively by Tennis Channel, which just locked up a deal to become the exclusive home of ATP Tour events, including the most prominent events in North America, for an indeterminate amount of time, though the similar deal with the WTA expires after 2023. Tennis Channel is also the main rightsholder at the French Open, with ESPN holding rights to the other three Grand Slams, though I haven’t seen anything indicating that they’ve reached an agreement with the Australian Open extending past 2021. Their deal with Wimbledon runs through 2023, while the US Open deal runs through 2025; Tennis Channel’s deal with the French Open runs through 2023, with NBC’s deal ending the following year. DiscoverWarnerMedia could be a surprisingly motivated bidder for rights to each of the four Grand Slams, at minimum, over the next four years. Anything else would likely require a relationship with Tennis Channel, and Sinclair Broadcast Group likely doesn’t see a reason to part with it (and certainly not to have the whole company being acquired if it means they don’t get to spread conservative propaganda on their broadcast stations anymore, and DiscoverWarnerMedia likely doesn’t have much stomach for running broadcast stations anyway). Still, this might be the biggest immediate impact of the merger.

There’s one more wrinkle to consider here, albeit one that’s only incidentally related to the merger itself. Though AT&T’s regional sports networks were acquired through the purchase of DirecTV, after the Time Warner merger they were placed in the same part of WarnerMedia as Turner Sports in the News and Sports division under Jeff Zucker, actually separate from the rest of the TBS and TNT networks in the Studios and Networks division. I haven’t seen any mention of the RSNs in any discussions of the deal, and there were rumors for a while that not all of the WB Games division would make the transition to the new company so it’s not a sure thing the RSNs will, but I would normally assume the RSNs will in fact make the transition. Certainly the RSNs were long subject to rumors that AT&T was hoping to unload them in some way, arguably predating the AT&T-DirecTV merger but shifting into overdrive as the RSN market seemingly collapsed, with the prospect of a reunion with their former Fox Sports Net bretheren at Sinclair being particularly floated. With the NHL deal, though, WarnerMedia now has national rights to each of the three sports that make up the backbone of most RSNs, and while ideally you’d want a larger group than just four RSNs (not counting the separate feeds for Utah and Nevada) for this, there’s an opportunity to create some form of synergy between the RSNs and the national outlets, if Zaslav wants it. At the very least, if the RSNs aren’t part of AT&T anymore they’ll probably need a change of name.

In short, there are a lot of obstacles to a combined Discovery-WarnerMedia being a bigger player in sports rights than either company alone, not the least of them being that there isn’t a single package of rights held by both Turner and Eurosport as it stands, other than Russia-specific rights to the NHL, which means there’s not a lot it can do at the moment to create a streaming service that would be fundamentally the same on both sides of the Atlantic. The ability to offer international rights in Europe would certainly help in WarnerMedia’s negotiations with sports leagues, but the entities that would be most interested in that are either locked up for the next decade, already with Turner, or have limited appeal, and Eurosport has shown little interest in the European leagues and competitions that would be interested in a stateside presence, so it seems doubtful the American sports consumer would notice much of a difference. Tennis is probably the only sport where joining forces with Eurosport would pay dividends for the Turner networks in the short term, but even there the impact is likely to be limited. So while this merger is likely to have a significant impact on rights to American sports leagues in Europe, could impact stateside rights to tennis and cycling, and gives both entities an infusion of cash and the ability to bid for trans-Atlantic rights to fuel the pursuit of more sports rights, hyperbolic claims about its impact on the sports landscape are probably unwarranted in the short term; if anything, a good chunk of the impact may have already happened. Still, it’ll be worth keeping a close eye on NBA rights negotiations in the next few years if the deal gets approved; to the extent DiscoverWarnerMedia can launch a trans-Atlantic streaming service, NBA rights will probably have to be the linchpin for it.

A Blast from the Past that will Shape the Future: What Does the NHL’s Return to ESPN Mean for the Future of Live Sports Video?

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In 2007, after ESPN had screwed over Fox (who had reportedly been thinking of putting the entire Stanley Cup Final on broadcast television) in taking control of the entire NHL broadcast contract and proceeded to barely promote it at all (especially after taking over the NBA contract a few years later) and bump it to ESPN2 if just about anything and everything could be put on ESPN ahead of it, most infamously poker, then turned down a $60 million option to extend the contract in the wake of the lockout leaving the league to turn with their tail between their legs to the outfit then known as the Outdoor Life Network, then made NHL highlights virtually persona non grata on SportsCenter to the consternation of hockey fans who felt ESPN, then at the seeming height of their monopolistic power, was sticking it to any league or entity that didn’t bother to sign a contract with them… if you told hockey fans that ESPN would end up being the entity responsible for putting every game of the Stanley Cup Final on American broadcast television, would they have believed you in a million years?

But indeed, that’s what will happen in four out of the seven years, including (presumably) next year, of ESPN’s new agreement with the NHL announced Wednesday, a deal that will reportedly pay the NHL $400 million a year, close to twice what NBC was paying for only half the national television contract. Perhaps no other recent sports rights deal better captures the shifts in the video (it seems gauche to call it “TV”) business in recent years, and it’s hard to think of one that will have more of an impact (the reported move of Thursday Night Football to largely being exclusive to Amazon feels like more of a paradigm shift but hasn’t been announced yet and may have less relevance to defining the role of linear television going forward). In something that would have been unthinkable, certainly for ESPN, maybe five years ago, this appears to be a deal largely about ABC and ESPN+, with linear ESPN largely an afterthought. 

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What to Make of the NFL’s Experiment with Putting the Draft on Broadcast, Part 2

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Last year, after the NFL Draft aired on broadcast for the first time ever, I wrote a blog post looking at the resulting ratings and what it meant for the NFL’s desire for “presidential election”-style coverage of the draft on every major network. This year, ESPN agreed to air all three days of the draft on ABC, with the first two days being college-focused coverage from College GameDay that aired on ESPN2 last year. This was somewhat surprising to me, because last year Grey’s Anatomy significantly outpaced Fox’s coverage in the 8 PM ET hour, and ABC was hosting what amounted to side coverage alongside the existing coverage on ESPN and NFL Network. I figured the league would want to repeat last year’s experiment another year, and if ESPN did decide to put the draft on ABC they would put it on only ABC, making pre-empting Grey’s more palatable and allowing both ESPN and ESPN2 to air NBA playoff games on Friday if needed. Still, it is understandable; ESPN is desperate to maintain their relationship with the league entering contract renegotiations, including pumping up ABC as a broadcast outlet for the league, while still preserving whatever impact the draft still has on their carriage fees.

Did we learn anything more about the future of the draft on broadcast? Let’s find out. This is going to be significantly shorter than last year’s analysis, and I’m going to assume, for the most part, you already read last year’s post for context.

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Does Cartoon Network Hold the Key to the Distribution Paradigm of the Future?

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Since Netflix started putting out its original series by releasing every episode of each season of each show all at once, a move inspired by the phenomenon of people “binge-watching” numerous non-original series on the service they hadn’t originally watched as they came out, there has been debate over what the best strategy is for releasing serialized scripted content in the Internet age. Certainly it would seem that, freed from having to meet the needs of a linear television schedule, there’s no reason not to release content on any schedule you want; most online video series on places like YouTube, both before and after Netflix came along, have been released on a TV-like weekly schedule (or less), but they tend to be made by individuals with low budgets and without the backing of a large company like Netflix, and so need to release episodes pretty much as they’re made in order to maintain revenue to make the next episode. Whether or not Netflix’s strategy is the best strategy, with or without the constraints of a linear network, is another matter entirely.

Certainly, if the series themselves aren’t that important to your business model other than as content to fill out the service, and the main goal is simply to maintain engagement with your product, the binge-release method makes sense; it ensures that you have a large batch of content, presented as a single unit, that people can then consume over an extended period and eventually finish the season without needing to be reminded to come back. On the other hand, Netflix’s main source of revenue comes from its subscription fees, and so what would seem to be best for Netflix’s bottom line would be to keep people subscribed to its service for as long as possible, especially since, like most streaming services, Netflix offers a one-month free trial, thus opening the possibility of people binging an entire season of a given show in a single month and then quitting without paying one cent. (And that’s a very viable proposition; Stranger Things has only eight or nine hour-long episodes in a season, meaning you only need to watch two episodes a week to catch up within a month. It’s entirely viable to catch up in just two nights, or even one day if you can spare the time.) And while Netflix shows are often subject to a burst of intense buzz right around when each season comes out, it quickly dies down as people finish the season and move on to other things, meaning Netflix shows don’t get the same sort of sustained buzz over a period of months as week-by-week shows like Game of Thrones do.

From a creative standpoint, the Netflix model probably does better justice to intricately-plotted shows that in the past might have been deemed better on DVD, where individual episodes don’t necessarily hold up all that well on their own, except in terms of their contribution to the larger narrative of the show, and so their momentum and the immersion in their world is better maintained by watching them in larger chunks. Indeed, since the length of each episode isn’t fixed by the needs of a linear television schedule either, the only criterion for where to place episode breaks at all is to identify good stopping places for people to break at in the likely scenario that they can’t consume the whole season as one really long movie. But this can be a double-edged sword: for truly compelling shows, especially those with lots of plot twists and mysteries inviting speculation as long as they remain unsolved, the week-by-week wait for each episode only strengthens the anticipation. There’s a reason the cliffhanger and other devices borne of the serialized format have such a long and time-honored history. For particularly complex, multilayered shows, the lack of answers drives fans into endless speculation, poring over scenes for clues, rewatching the series in lieu of any new episodes, and generally gaining a deeper appreciation of the series than would be apparent in a one-time surface-level viewing. With a binge-release model where everyone is watching at their own pace, discussion of the show on online forums becomes nearly impossible, with the need to accommodate people at every level of progress through the season. As good as Netflix’s shows may be, they can never truly amount to “water-cooler talk” if not everyone is at the same point.

Of course, the sort of show that creates this sort of constant, edge-of-your-seat anticipation for each episode is also the exact same sort of show that is best suited to a slot on linear television in the Internet age. A show that doesn’t have people feeling they have to watch it the instant it comes out, lest they be left behind in or spoiled by the discussion, is probably also a show that doesn’t lose much by being released all at once and may be better consumed that way, so it’s not clear that there’s a situation where Netflix gets a show that’s better consumed in a serialized format. Still, what this suggests is that the best strategy will ultimately depend on the show. Some shows may work better with a week-to-week release schedule to heighten the anticipation for each episode, others may work better released all at once so they can be consumed as a unit right away, and that’s not even getting into purely episodic shows that would be fine in either format. (I talked about some of the factors going into either strategy, in another context, nearly a decade ago.) It’s not even like you’re bound to one release strategy or the other. You could release episodes in batches, breaking at a point you feel is a good place to leave off and leave the fans wondering, or at any frequency you like that best balances anticipation, attention, and the momentum of regular releases.

Which brings me to, of all entities, Cartoon Network.

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What to Make of the NFL’s Experiment with Putting the Draft on Broadcast

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The NFL Draft this past weekend aired on broadcast television for the first time ever. The first two nights of the draft saw NFL Network’s coverage simulcast on Fox, which will be NFLN’s Thursday Night Football partner next season. ESPN, which had long resisted the league’s calls to put its draft coverage on ABC, acquiesced to simulcasting its coverage of the third day on ABC.

For the league, the hope was that this would just be the beginning. The league made noise about the draft potentially being treated as an event on par with the presidential election, with coverage on every network, earning widespread mockery and being held up as more evidence of the league’s hubris. Even at its most popular, the draft has but a fraction of the popularity of election coverage, or even of most regular season games. Simulcasting the Super Bowl across several networks might theoretically make sense, though that would potentially cause it to lose its status as the premier advertising showcase if several different networks were running their own ads, as well as diluting its status as the biggest lead-in of the season. But most networks bail out of putting on anything people might actually want to watch against the Super Bowl; no one ran scared from the NFL Draft, except possibly Fox itself. Besides, splitting the draft across every network is a terrible idea in its own right. The league is highly concerned about tipping picks and pressures reporters not to do so on social media, but the best way to minimize the impact of tipping picks is minimizing the time between when the pick comes in and when it’s announced. That’s already a challenge with two draft productions that need to synchronize their ad breaks and need to have each of their reporters interview draft picks after they come out of the green room. Can you imagine how bad it could be with four or five?

The result of this year’s experiment might give the league pause about its “presidential election” ambitions. The league boasted the most-watched draft ever, but that was mostly attributable to the move to broadcast, and given that the boost in ratings was fairly modest (especially given how top-heavy the first round was with quarterbacks from name schools and the presence of both New York teams picking in the top three). Fox failed to win the night either on Thursday or Friday, which makes any “presidential election” talk seem downright ludicrous, at least for now. Given that, what’s the best path for how the league should handle the draft going forward? The way I see it, there are three broad options, which can be arranged on a scale:

  • The “presidential election” approach with every network broadcasting the draft.
  • Something like the status quo, with ESPN, NFLN, and a broadcast network showing the draft, with the latter either simulcasting an existing feed or providing its own production.
  • Giving the draft exclusively to a single network, like how ESPN handled the draft on its own before NFLN started muscling in.

Let’s look at the ratings for each day of the draft and see what it tells us about what the best approach is for the league going forward.

Day 1: For the night, Fox’s coverage of the NFL Draft drew a 1.1 rating in the lucrative adults 18-49 demo, good for second place for the night behind CBS and barely edging out ABC. If you’re Fox and the league, you point to the fact that, despite one’s expectation that numbers would erode as the night wore on and you got away from the early, star picks, numbers not only remained mostly steady throughout the night but actually rose as the night went on, from a 1.1 at 8 PM to a 1.3 at 10 PM before crashing back down to a 1.0 at 10:30, suggesting more people discovered the draft was on broadcast at all as the night wore on and the numbers earlier on would be higher in future years. Certainly that’s what you say if you want to convince ABC to give up its Thursday night for the draft, including Grey’s Anatomy, which earned a 1.5 in the demo at 8 PM. But it’s hard to imagine CBS giving up its Thursday night, including the wildly popular Big Bang Theory (2.0 in the demo), for the draft without exclusivity. CBS was willing to move BBT to Mondays during Thursday Night Football season, but that was an actual game taking up multiple weeks; pre-empting BBT a single week for something drawing noticeably lower ratings is a nonstarter. If you gave CBS a captive audience for the draft, and the entire 4.04 demo rating the draft drew on all three networks (and possibly also the .04 ESPN2’s college-centric coverage drew), it might be a different story.

The previous week, Fox’s lineup of Gotham and Showtime at the Apollo drew .6 demo ratings, last place among the Big Four, so Fox would seem to be on board with doing it again next year under the status quo.

Day 2: Fridays typically draw a smaller audience than Thursdays, so the inevitable decline in ratings for the second night of the draft wouldn’t necessarily kick it off a broadcast network. Unfortunately, Fox’s .6 demo rating tied it with NBC for second behind CBS, and NBC was propelled by Dateline‘s .7 from 9 to 11 more than Blindspot‘s .5 at 8. NBC would be crazy to air the third round of the draft instead of that, at least not without exclusivity. All three of CBS’ shows outpaced the draft at the same time – MacGyver at 8 only drew a .7, but Fox drew consistent .6’s all night until 10:30 when it slipped to a .5. Even Fox itself might not be happy with these numbers; the previous week, MasterChef Junior actually won the night with a .8. It might make sense for Fox’s proposed refocusing of its network towards sports and news programming once its deal with Disney to sell its studio goes through, but who knows if that would actually herald the departure of a reality show like MasterChef. (It’s worth noting that the numbers are more forgiving in 18-34, where a .4 rating tied for the highest-rated show of the night.)

ABC would seem to be the only network willing to give up its Friday primetime for coverage of the second night of the draft, which raises an interesting prospect. Suppose ESPN tells the NFL it’s willing to put its entire draft coverage on ABC if the league doesn’t simulcast NFLN’s coverage on another network again, or in general gives another broadcast network an in. That could mean putting ESPN’s coverage of the second night of the draft on ABC… and only ABC, leaving ESPN to cover the NBA Playoffs and allowing a third or fourth playoff game that night to air on ESPN2 without getting bumped to ESPNEWS. Of course that’s likely to give ABC marks significantly higher than .6, and the temptation on ABC’s side would be to do the same thing with the first night and make it easier to swallow pre-empting Grey’s Anatomy. By my reckoning, coverage of the second night on ESPN and ESPN2 averaged a .59 for the night, though it’s doubtful all of that would devolve to ABC if NFL Network still had its own coverage, especially with an NBA Playoff game on ESPN2 drawing higher numbers than on ESPNEWS. It does show that giving exclusivity would again be enough to convince any network to show the second night; a 1.2 would be the highest-rated show of the night by a significant margin even before adding NFLN’s .39.

Day 3: The third day of the draft appeals mostly to hardcore NFL nerds who are actually willing to do a deep dive into the remaining players and who’s likely to actually make an impact in the league. It doesn’t have the sort of broad popularity the earlier days do; while ESPN and NFL Network have gotten better at treating the fourth round close to on par with the third, NFLN especially tends to devolve into regurgitating the earlier rounds, presenting offbeat and human-interest stories, engaging in frivolous games with the personalities on set, and generally just killing time until Mr. Irrelevant. ESPN is better, but honestly the best coverage of the third day for those who actually care about who’s still getting drafted might be the live stream NFL Now does on NFL.com; it covers the later rounds almost to a fault, delaying and re-airing the pick announcements if they come during a break rather than simply getting caught up like ESPN would.

There’s a case to be made for airing the first three hours on a broadcast network to take care of the fourth round, but while ABC didn’t have anything else to do the rest of the day and could show the entire final day, CBS or NBC would need to air golf coverage starting at 3 PM ET, and Fox might want to show NASCAR racing as they did this weekend. On this occasion there were actually conflicts earlier, as NBC was showing a Premier League game and Fox was showing Monster Energy NASCAR Cup Series qualifying from Talladega.

On this front the verdicts are not good. For the entire day, ABC drew 1.008 million total viewers and just 314,000 demo viewers, less than what ESPN drew for its half of the simulcast. The good news is those numbers are still better across the board than the early competition, except total viewers for the NASCAR qualifying. It’s not as friendly to the later competition, where it lost in both measures to the Xfinity Series race on Fox and the Stanley Cup Playoffs on NBC, and in total viewers to golf on CBS.

Combined, coverage of the third day on all three networks drew 2.914 million total viewers and 1.197 million demo viewers. That would make it the second-most-watched non-NBA sports-related event of the weekend behind the actual NASCAR race on Sunday, and only the NBA would top it in the demo. That doesn’t necessarily mean the other networks would fall over themselves to air the whole day with exclusivity, but it might if the networks could get around existing contractual commitments. Of the late afternoon sporting events, the NHL game did best in the demo with 644,000 viewers, just over half of the draft’s audience, while the Xfinity Series race did best in total viewers with 1.899 million. That suggests the decline as the third day wears on would have to be pretty precipitous for bailing out of exclusive coverage to be the best approach from a pure ratings standpoint, at least in the demo. But it’s hard to see the other networks taking that bargain without using it as a lead-in for an actual sporting event.

Where does the NFL go from here? The notion of treating the draft like the presidential election is probably dead for the foreseeable future, with CBS in particular laughing the prospect out of the room. If the draft ever does become popular enough for all four networks to drop out of their Thursday primetime lineups to simulcast just the first day, it’ll probably be more because of the decline of scripted programming on broadcast than the increased popularity of the draft itself.

The NFL and Fox would probably want to perform the same experiment again next year to establish how popular the draft could be on broadcast if more people are used to it, but depending on where Fox is a year or two from now, they would probably be fine if ESPN and ABC decided to go ahead and put their entire draft broadcast on their broadcast network, with the league preferring the simplicity of not switching networks mid-draft and Fox preferring higher-rated programming on Friday nights. ESPN would lose most if not all of the benefit the draft would provide to its subscriber fees, but those benefits have been neutered anyway with NFLN carrying the draft and now showing it on broadcast without them. But given how much this draft had going for it from a ratings standpoint, I could see them wanting to see at least another year’s worth of numbers before deciding to pre-empt Grey’s for the draft.

The real question comes when the current rights agreements come up for renewal in a few years, when the league will have to consider how best to maximize the popularity of the draft. Ideally, that would involve simulcasting it on as many networks as possible, which would mean maintaining some variant of the status quo. But the days when the league could give the draft to an upstart cable outlet that doesn’t air games because they don’t see how it would make good television are over, so if ESPN decides not to re-up for Monday Night Football, I could see the league taking away the ESPN and NFLN broadcasts of the draft and offering to rotate exclusive draft rights between the three remaining broadcast partners, perhaps going to the network that’s between Super Bowls, so this past draft would still go to Fox since the last Super Bowl was on NBC and the next one will be on CBS, but then next year’s draft would be on NBC, and the one after that would go to CBS. At minimum, the network that gets the draft would have to air the first two nights, but the league could be open to at least allowing the network to show only the first three hours of the third day, with the rest airing on NFL Network (as long as all three networks do the same thing). CBS would take the most convincing to dump BBT (if it’s still on) for its own production, trotting out Jim Nantz, James Brown, Tony Romo, Bill Cowher, Gary Danielson, Tracy Wolfson, and whoever they got to be their equivalent of Mel Kiper Jr., all for something that would get barely double the demo ratings, and the league could just end up handing every draft to Fox or NBC, but given where the state of television is likely to be in a few years it still shouldn’t take much. If the league is honest with itself, that’s a far more honest assessment of the future of the NFL Draft than its ludicrous “presidential election” dreams.

Cable Companies are Disrupting the Cable Bundle – In a Way Their Streaming Counterparts Aren’t

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A little over a year ago, Verizon did something that flew under the radar, and considering how much their deployment of Fios services has slowed, wasn’t really as important as it should have been. Following ESPN’s lawsuit over its “Custom TV” service, Verizon effectively defanged the service and switched to offering two base packages, one with sports channels and one without, to comply with contracts prohibiting the biggest sports channels from being on an add-on tier. A year later, however, Verizon went to a hybrid of the old and new Custom TV packages. Today’s Custom TV service consists of seven different base packages, only three of which (Sports and News, News and Variety, and Home and Family) contain ESPN and other sports networks. It’s not quite a la carte TV, and the Verizon site gives a list price for Custom TV of $64.99/mo, but that’s for bundles containing it; if you order the slowest Internet speed that can be bundled with Custom TV, the quoted price is exactly the same as the same speed without Custom TV. The fine print indicates that you would take on only $20.88 in set-top-box rental, broadcast, and RSN fees, on par with Sling TV, and presumably the non-sports packages without RSNs would cost nearly $6 less than that. That’s pushing less than half of what streaming cable services like YouTube TV and PlayStation Vue charge.

For that price, you could get most of the most popular cable networks other than sports, news, and Discovery networks on the Action and Entertainment package, or you could regain the mainstream news and Discovery networks while losing more reality-oriented channels on the Infotainment and Drama package. Both of those packages include Disney Channel and other channels owned by the four major companies with investments in sports, so you aren’t limited to channels from a small selection of companies. A truly comprehensive lineup would require upgrading to a more expensive package with sports networks, and some combinations of networks (like both Discovery and History) would require going that route, but Verizon seems to have largely recreated the comprehensive, watch-whatever-you-want feeling cable and satellite companies tried to create in the 80s, 90s, and early 2000s without the downward spiral that created.

What has attracted more attention is Charter’s soft-launch last week of Spectrum Choice, currently being offered only to 100,000 “hand-selected” customers, presumably primarily people who have threatened to cancel their existing Spectrum service and/or as a way to upsell current Internet-only customers. Programming appears to only be available by streaming to Roku or other connected devices (and thus, at least potentially subject to all the delays and problems of streaming), DVR service costs extra and is loaded with restrictions, and there is a confusing maze of restrictions to your ability to watch shows on other devices or outside the home. But once you get past all that, what it offers is remarkable: true a la carte TV. You get all the broadcast networks and Music Choice channels, and then you add any ten channels of your choice. Not all channels are available (and RSNs are among the channels that aren’t), but a sports fan could add ESPN, ESPN2, FS1, NBCSN, NFL Network, and all three channels showing March Madness, and still have two channels left over, having picked up every network showing the most popular national sports events.

But of course, what’s really attractive about this is the ability to stitch together groups of channels with no sports networks whatsoever. Nick Jr. is the most popular primetime network not to be offered, and Disney Junior is still available for families with young children. You could stitch together the most popular general entertainment or reality-oriented channels – USA, HGTV, TBS, TNT, Nickelodeon, Discovery, History, and maybe a handful of others to round it out. Perhaps more to the point, you could join Spectrum Choice with the Philo service, and then use your ten channels on channels not offered by Philo: USA, TBS, TNT, Hallmark, FX, Bravo, Cartoon Network, Freeform, Hallmark Movies and Mysteries, and Syfy, mixing up what channels you order based on what channels have the shows you want and maybe throwing in a news network or two if you want. You’d have access to an incredibly wide variety of entertainment – without any sports-specific networks.

The potential of this is such that to me, the biggest problem with Spectrum Choice is that there is no price feedback to your choices: you pay the same whether you include ESPN or not. This may explain why it costs $25/mo for the first two years and $30/mo thereafter, which makes combining it with Philo non-economical and arguably doesn’t even compete well with other streaming cable providers as is. It smacks of saying “we tried to offer an a la carte offering but no one took it”. Of course, if it did offer ESPN at a different price than other networks, that would smack of offering ESPN separately, as a premium service, which ESPN would probably never stand for, and the other restrictions and constraints might be necessary to appease programmers as well; Verizon may be closer to a more viable approach to shaking up the cable bundle (it’s worth noting that both Verizon’s Action & Entertainment and Lifestyle & Reality packages each contain all but one of the non-Philo networks I listed above, if you’re willing to go without major news networks). The fact that Spectrum Choice is so close to being a true game-changer, however, should not go unnoticed. They may be halting steps, but Charter and Verizon are moving closer and closer to allowing you to watch the programming you want without having to pay the sports tax.

For all the brouhaha over streaming TV services, for the most part they haven’t offered anything that truly sets them apart from the traditional cable bundle. In the name of trying to get enough programming people want to attract customers, they’ve almost all hitched their wagon to all of the Big Nine cable programmers, throwing away the one thing that could truly set them apart from the cable bundle. Even Sling, with a lower base price point and multiple smaller base packages, doesn’t offer a base package without sports networks. Philo has taken the best available approach to building a truly sports-free package and thus a package with the most potential to strike fear in the heart of ESPN. The question surrounding Philo has been whether it has enough valuable programming to attract customers without networks associated with the sports-heavy companies – without USA, TBS, TNT, FX, or Disney Channel. If the programming you want to watch is associated with those companies, you might be stuck paying the sports tax; if there aren’t enough people satisfied with what Philo offers, sports networks, especially ESPN and regional sports networks, will continue to rule the cable bundle for the foreseeable future, even as people increasingly chafe under their power. That is, assuming Disney’s pending acquisition of a large chunk of Fox, including its regional sports networks, doesn’t end up backfiring on them, as I suspect it might, by centralizing enough of the most expensive cable networks in one place that either cable operators or streaming providers decide it’s finally worth it to go without them.

But if the merger does go the way Disney thinks, then if the likes of Charter and Verizon continue to be allowed to be more flexible with their offerings – allowing people to get FX but not FS1 or Fox News, USA but not NBCSN or MSNBC, Disney Channel but not ESPN – that could finally break the stranglehold sports has on the cable bundle anyway. And in turn, that could ironically result in the collapse of the entire cable bundle if the most high-profile sports decide it’s not worth it to continue to hitch their wagon to the smaller audiences of cable networks and focus more attention on broadcast with a side of streaming, potentially starting a downward spiral of cable subscribers touched off by the departure of those that feel they need cable to watch the College Football Playoff, Final Four, or NBA playoffs, leaving the very cable networks that made it possible to either change their business models or die.

What Happens If Disney Gets Blacked Out On Altice?

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If it weren’t for the crappy state of everything else going on in the country (including Ajit Pai seemingly being about to dismantle net neutrality) it would be an exciting time for the evolution of the TV industry, as the cable bundle looks like it’s about to be on its last legs. Earlier this month, reports came out that Viacom, Discovery, Scripps, AMC, and A&E were joining forces to form their own, relatively cheap, skinny bundle called “Philo” – the inclusion of the last of which was very surprising to me, as A&E is co-owned by Disney and Hearst, which also (separately) co-own ESPN, and just the other four companies forming their own skinny bundle is the last thing ESPN wants. But Disney and ESPN have a bigger fight on their hands. Altice, the French conglomerate that now controls Cablevision and Suddenlink, hass Cablevision’s old carriage agreement with Disney expiring after this weekend. Disney has faced contentious carriage agreements with the likes of DirecTV and Dish in recent years, which have gotten certain elements of the media worked up over the possibility of showdowns with companies that had ramped up their rhetoric about the high price of sports and stood up to regional and college sports networks, but in the end the power of ESPN was too much to resist and the companies sucked up and signed up for another round of fee increases and adding the Longhorn and SEC networks. But just days before the expiration of the agreement, there seems to be no end in sight to the Altice standoff, and plenty of signs that Disney’s luck and indispensability has run out, not just with Altice but with other cable operators as well.

Were it not for these two stories, I wouldn’t normally think the decline of the cable bundle has reached a tipping point. Large majorities of people still subscribe to the cable bundle… but they’ve now fallen below the 80% mark, and it’s clear that things have reached a critical moment. Disney trying to add yet another high-priced regional ESPN spinoff, one with significantly less value than the SEC Network, certainly looks like an ill-timed misstep that sent things spiraling down further (and Disney wants Altice to add not only ACC Network to a fairly basic package in New York City, but SEC Network as well). On the other side, Disney has announced the launch of OTT Disney and ESPN services, with the latter being limited to events that won’t hurt the value of ESPN to cable providers too much to lose but the former being stocked by Disney pulling its movies off Netflix a relatively short time after signing a big deal to put them on. Continuing the return of sports to broadcast, Fox will air the majority of next year’s World Cup matches on its broadcast network, meaning if the United States makes it, matches that gave ESPN gerbonkers ratings in the last two World Cups will air on broadcast where they belong, possibly even on weekdays. And while I’m still, in general, skeptical of streaming services’ ability to win major sports rights while also justifying their cost, in the wake of their Thursday Night Football deal, it’s hard for me to argue against the notion that Amazon at least has the potential to overcome most, though not all, of the obstacles I worry about (the fundamental problem of streaming being inferior to deliver live events than real linear channels, which bedeviled Amazon this past Thursday, is in my view ultimately insurmountable) to become a real player for mid- to lower-tier sports events.

There’s also the recent history of carriage standoffs to consider. Before its acquisition by Altice, Suddenlink kept Viacom channels off its systems for nearly three years, with Cable One possibly still leaving those channels off their lineups, and both companies made clear that they were just fine without Viacom’s networks. Viacom is on the expensive end of the non-sports four and, at least at the time, didn’t have as many shows with serious buzz as the others, so it could have been considered more expendable than most other Big Nine members. By dropping Disney channels, Altice would be risking a significantly larger backlash, not only from sports fans but from fans of Disney Channel’s kids shows, especially with the Yankees playing their wild-card game on ESPN Tuesday. But if it coupled dropping the Disney channels with a significant drop in customers’ bills, it could gain more than that in goodwill from non-sports fans.

Meanwhile, sports and Disney fans aren’t as out of luck as in the carriage disputes of the past, thanks to online cable providers like Sling TV. No service carrying ESPN would cost less than the $10-15 that’s likely to be the most Altice would refund customers; Altice’s moves wouldn’t totally break up the cable bundle unless they dropped multiple companies’ programming. But what would hurt Altice, but is likely to hurt Disney more in the long term, is if customers dropped Altice’s TV service entirely in favor of Sling or a more comprehensive service like PlayStation Vue, DirecTV Now, YouTube, or Hulu. Based on listed prices, dropping down from a TV+Internet bundle to just Internet should save $20/month with Optimum for New York customers; throw in fees charged only to TV customers, and that could be enough to justify getting one of the online bundles for $35/month (and that’s assuming they don’t drop Optimum entirely for Verizon FiOS). Sports and Disney fans that drop Altice’s TV services entirely are no longer directly putting pressure on Altice to add them back to the lineup. If that gives Altice enough backbone to leave Disney off the lineup entirely, especially if people with no investment in those networks start telling them not to restore them and threatening to quit if they do (especially once Philo launches), it puts Disney, and ESPN more specifically, in a very tight spot financially, as well as in terms of standing up to other providers, with deals with Verizon, AT&T/DirecTV, and the old Time Warner Cable deals now controlled by Charter looming over the next two years.

In 2011, Dish chairman Charlie Ergen suggested there was room for a cable or satellite operator to position themselves as a cheaper non-sports alternative; today he thinks Altice can survive without ESPN, and he certainly must be rooting for it. If Altice is successful at saying no to Disney and ESPN, it gives other providers, as well as potential future online providers, more confidence to say the same. Altice is not one of the larger providers, but if they manage to weather the storm and spend two years or more without ESPN on their lineup, Disney will suddenly look like an emperor with no clothes, and will find it hard for their demands to be met when they enter negotiations with AT&T, Charter, and further down the line, Comcast and Dish, and will find it especially difficult to get the ACC Network off the ground. Couple that with the pending launch of Philo representing the one thing Disney hoped to avoid by staying shackled to the cable bundle, and suddenly there’s a very real possibility that ESPN goes full-on direct-to-consumer with all of their content before the end of the decade (and indeed A&E’s inclusion in Philo starts to look more understandable if Disney thinks the cable bundle is already collapsing). Sports fans would probably still need Fox, NBC, and Turner’s networks to get all the sports they want and need, at least in the short term, but a successful standoff with ESPN would also allow cable operators to show down with those companies for lower fees and lower penetration for expensive regional sports networks. It’s possible the sports four-and-a-half will start to find that clinging to the old cable bundle model will bring down their smaller and non-sports networks more than prop them up, making a sports-specific bundle an increasingly viable proposition. At that point, Disney might just bail on cable operators and even their would-be competitors and seek to salvage whatever revenue (and data) they can for themselves.

Even if Disney and Altice reach a deal, it could still be bad news for Disney, ESPN, and sports leagues. Disney wants to ratchet up its fees and restore some of the coverage lost when they gave providers flexibility to offer skinny bundles. If Disney takes lower fee increases than they’re hoping for and keeps ESPN at present levels of penetration to avoid the catastrophe of being outright dropped, they’re going to have to budget less money for production and rights fees. Look for more layoffs to come down the pike and ESPN to scale back on what they’re willing to bid for rights as they come up early in the next decade. And the ads Altice has been running have arguably already increased awareness of just how much of their cable bill is being passed on to ESPN regardless of how much or little customers watch it, meaning if a deal is reached without ESPN being dropped, there could be a deluge of customers dropping service.

Keep an eye on how this situation develops over the next couple days, because no matter what happens, it could well mark the point of no return for the sports cable boom, as well as the beginning of the end for the cable bundle as we know it, and the start of shaping whatever comes next.