New Numbers Suggest Cord-Cutting Revolution Not Imminent
Ratings news were a mixed bag for Major League Baseball over the past few weeks. The Home Run Derby was the number-one rated cable show of the week and saw a significant increase from the previous year with more than seven million viewers. The All-Star Game itself was a disappointment in the ratings, as the broadcast was at its lowest-viewed level of all-time — although it did have more viewers than any other program that week, and the ratings were in line with the past few years. The best news MLB received in the ratings department came in the form of local broadcasts, which are once again dominant. The most troubling item over the last month was the news that ESPN had lost more than seven million subscribers in the past four years, perhaps a sign of the crumbling cable model.
Breaking each one down:
All-Star Game and Home Run Derby
The Home Run Derby was a clear success for MLB after a disappointing rain-delayed derby last year. The derby did a 4.9 rating, a big increase over the 3.9 from 2014 and aided by the excitement of a new timed format that kept the event lively. The show averaged another 75,000 viewers digitally over the WatchESPN app, per Forbes, with more than 250,000 unique viewers. The derby’s viewership nearly doubled the second-highest rated cable show of the week (TNT’s Major Crimes) and was the seventh-most watched show of the week when including broadcast network shows.
A Jeter-less All-Star Game hurt television ratings in New York, and overall the ratings suffered a drop from 7.1 last year to 6.6 this season, the lowest in history for the All-Star Game. While the drop is discouraging, it is in line with its fairly steady ratings over the last five seasons. The All-Star Game won the ratings for the week, both in the 18-49 demographic and overall viewership with roughly 11 million people tuning in for the exhibition. One of the more interesting pieces from the All-Star Game ratings is thatits competition held fast to their typical ratings, meaning people were specifically turning their televisions on for the event.
Local Television Ratings
The biggest argument in favor of MLB’s continued health and popularity are probably revenue and attendance, but likely not far behind are the television ratings baseball delivers in some of the biggest markets in the country. With a presence in the 18 largest television markets and 25 of the top 35 markets in the country, baseball does very big ratings. At the halfway point of the season, MLB broadcasts ranked first or second among cable programs for 26 of the 29 United States-based teams, and first or second among all programming for 13 teams — with 10 teams ranking in first place, per Forbes. The full ratings are in the graph below.
Kansas City has captured the attention of the city with their World Series run and competitive season, leading the way in television rankings. The Dodgers remain an embarrassment, with millions of households in Los Angeles unable to get Dodgers’ games due to failed negotiations between Time Warner Cable Sportsnet LA and cable providers. Not all markets are the same, so the ratings points above show how popular each team is within its particular market. Average total-viewer numbers are shown in the graph below (data also from Forbes), where unsurprisingly, the Yankees’ local broadcast has more viewers than any other team.
While the Rays are often the butt of jokes for their attendance problems and poor stadium environment, they are much closer to the middle when it comes to ratings and viewers, an indication that the stadium is the problem, not the team or the market. While MLB can broadcast just 15 games per day, the reach of each games is very wide due to each team producing a broadcast of the game. Adding up the numbers from the last graph, there are nearly 2.5 million people watching local baseball on a near-nightly basis. Those figures also do not include the number of people watching games in secondary markets nor do they include the nationally televised broadcasts from ESPN, Fox, FS1, or the MLB Network. All told, there might be more people watching professional baseball every night than the Tonight Show, and baseball fans are watching for three times as long. As long as the current cable model is alive, baseball should continue to see large local television deals. However…
ESPN Losing Millions of Subscribers
Potentially most harmful to MLB’s current revenue streams would be a threat to cable’s current bundling model where consumers buy a big package of channels for one price as opposed to picking and choosing the channels they wish receive. ESPN’s recent news that they have lost more than seven million subscribers over the last four years, including three million over the last year, per the Wall Street Journal, is discouraging news for those who hope for continued megadeals to broadcast local MLB teams.
While the ESPN losses at this point represent just a small percentage of their subscriber base and, for the most part, the losses have more to do subscribers leaving cable altogether rather an issue specific to ESPN’s programming, if the numbers represent an irreversible trend, the cable model could evaporate rather quickly. An article at Awful Announcing by Dave Warner, who also writes at What You Pay for Sports, a site whose mission is to keep consumers aware of how much their local cable bill goes towards sports programming, paints a difficult road ahead if the loss of subscribers keeps increasing at current rates. If the losses keep increasing, Warner writes, ESPN will have lost more than half of its current subscribers by 2020 and face a significant downturn in revenue. If losses go at that rate, the current bundling model will die a very swift death, likely benefiting consumers who will then be able to pay for what they choose to watch.
On the other hand, Comcast just reported minimal cord-cutting in their last report and we do not yet know whether losses will grow or remain steady as people seek other digital entertainment options. If ESPN continues to lose 3.5% of their subscribers every year at a steady rate and continue to increase their per-subscriber charge like they have been, their revenue will continue to grow over the next five years just as it has over the last five. For ESPN’s part, they continue to invest heavily in live-game broadcasts, and those broadcasts continue to provide solid ratings and the resulting advertising revenue.
Regional sports networks have the current advantage of live sports programming, but they are disadvantaged relative ESPN, as much more of their revenues come from per-subscriber costs to cable companies as opposed to advertising. MLB teams are benefiting from the power of companies like Comcast and Charter and the cable-provider model to force consumers to pay for a wide variety of channels. When that model ends, so do the exorbitant local television rights fees. Some say the revolution is at hand, while others are banking on the model continuing for quite some time. MLB.tv is well positioned to get fans their baseball fix, although in a considerably less profitable manner, should the current model deteriorate. For right now, however, the model is still only showing signs of slowing. A full stop might be some time away.
Craig Edwards can be found on twitter @craigjedwards.
Could these figures hasten the long-anticipated retirement of Hawk Harrelson?
Unlikely. Jerry Reinsdorf is a very loyal guy. Sometimes to a fault.
MERCY!
He gone?
Comcast doesn’t have much loss because of monopoly in most markets. The year I spent just outside of Portland Maine (2 years ago)you could get just cable internet for $80 a month or cable internet cable and HBO for $69.99 for 6 months then $89.99 after that. Or Hughes Net. Since Comcast has many areas covered without other options their model should hold on longer, but looking at telcom trends when landlines died and 4g prevalence it won’t last forever.
Pretty much this, when its $10 more for HBO, local and a couple cable channels it’s hard to pass that up, particularly if you don’t get channels easily with an indoor antenna.
I know these articles focus on the American teams because of the availability of the data but does anyone have a sense of how these numbers compare to the blue jays tv ratings?
Well with the jays TV ratings you have to look at several factors… 1 being that they are broadcast nationally every night, but not always on the same Sports channel. There’s the 4 main Sportsnet channels (East, Ontario, West, Pacific – these are in the basic lineups depending on what area of the country you are in,) Sportsnet 1 and Sportsnet 360. 1 and 360 are not included in basic channel packages so the games that shown there generally have lower numbers than the ones that on the other 4, sicne they have lower subscriber numbers.
That being said… Recent numbers reported from
June 26 – Rangers at Jays on Sportnet 1 – 481,000
June 27 – Rangers at Jays on the main network, 752,000
June 28 – Rangers at Jays on the main network, 767,000
This article doesn’t really seem to support the headline much at all.
Agreed. Then again, there’s a lot of hedging in the headline.
Blue Jays games on Sportsnet routinely get in the 500-700K range in the national market, not sure what percentage of that is Toronto-only though.
Television consumers won’t really benefit if all the entertainment production houses close save those directly funded by four or 5 large networks. Unless you’re a huge fan of mass market friendly programming, I suppose. Maybe you really liked the network model before cable.
So I’m supposed to allow Time Warner to continue treating me like crap so we can have more reality TV? The idea is that TV networks will realize what’s going on and then sell me their content directly instead of an overblown distributor.
Who needs to cut the cord? Just yank the baby right out of the shark’s belly once you’ve re-entered the atmosphere.
Funny thing about Comcast’s numbers: They’ve been offering customers Internet+local channels at a lower introductory price than Internet-only service. Other major cable & telco ISPs have been doing the same. This is how they can claim they’re only losing ~20,000 TV customers per quarter while ESPN is losing 300,000 customers PER MONTH. Comcast also benefits twice from this, because broadcast networks get retransmission fees from cable companies, and lo and behold, Comcast owns a broadcast network. (NBC)
This is a slow decline, yes, but that doesn’t mean ESPN can blissfully ignore the trends. Comcast will do everything it can to keep TV customers. They have no explicit commitment to ESPN here.
This is almost exactly why, when we chose to cut our cable bill significantly about 18 months ago, we chose a Comcast package that still offered local channels. However the low price for their “Internet Plus” package wasn’t discounted, it was just a regular price set a few dollars above their internet-only option (at the time I believe the package deal was $69.95/month versus something like $65.95/month just for Internet).
It seems pretty obvious that Comcast set those relative prices in an attempt to hide the number of customers abandoning high-priced cable bills. In our case we went from ~ $135/month to $73/month (after taxes and fees). I like watching baseball, but it’s not worth $60/month. Nowadays I listen on the radio for the first part of the season, and then when MLB has their annual Fathers Day sale I pick MLB.tv premium for $50.
“On the other hand, Comcast just reported minimal cord-cutting in their last report ”
Yes. I believe them.
Cord cutting on the baseball side is most hampered by MLB.TV’s blackout rules.
The blackout zones are simply too big.
Even better would be a two-tier pricing, with a package where an extra $25 buys you out of the blackout rules with that money going to the “local” team. That way fans can follow out of zone pennant races and the local “wait til next year” team gets their vig anyway.
The extra $25 would be annual, not monthly.
A DNS switcher like unblockus means cord cutters can see all MLB games
DNS switchers, like proxies, are risky. I was hacked the last time I used UnBlocker. Granted, I was in Bangladesh, and I didn’t do anything to mask my network. The hacking might have just coincided with setting up UnBlocker.
This article is linear thinking at its worst
I think the most important thing is to look at demographics.
Millennials are chord cutting at the highest rate, also have a fairly low viewership for baseball. It’s like when Fox News brags about their ratings. Of course they’re high, their viewers are old white people, old white people also are the only (hyperbole) people who have cable. Baseball is viewed by older people, older people tend to have cable more.
Cable is dying and will be dead in 10 years. MLB needs to, as said, have a small buyout for the blackout restriction. I live in Texas and can’t watch Rangers or Astros games. That’s a bogus.