# The cost of ESPN HDTV....



## Ken_F (Jan 13, 2003)

From the latest issue of _CableWorld Magazine_...



> At least two of the MSOs that have made deals-Cox Communications and Insight Communications-haven't finalized their strategy for distributing the new network. Although none of the parties involved will discuss the details, according to several sources with knowledge of cable network pricing *ESPN is getting 80 cents per subscriber to the HD network*. The MSOs can distribute the network a la carte or as part of an HD package.
> 
> That puts them-for now-in the group willing to help ESPN defray the high cost of producing events and shows in high definition on the theory that the technology makes it a different feed.
> 
> ...


If you think a charge of $0.80 for ESPN HDTV is reasonable, you should let your cable / DBS provider know it. That makes it roughly 1/3 the cost of the standard ESPN channel, and about the same cost to Dish Network as Toon Disney + the SOAPnet channel.


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## DChristmann (Dec 17, 2002)

> _Originally posted by Ken_F _
> *From the latest issue of CableWorld Magazine...
> 
> If you think a charge of $0.80 for ESPN HDTV is reasonable, you should let your cable / DBS provider know it. That makes it roughly 1/3 the cost of the standard ESPN channel, and about the same cost to Dish Network as Toon Disney + the SOAPnet channel. *


That's not the entire cost. What about the bandwidth costs, either on digital cable or on satellite, given that ESPN HD would require as much bandwidth as 4-6 SD channels?


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## Scott Greczkowski (Mar 21, 2002)

Take a look at COX, if they are paying 80 cents for the channel they are gining it one hell of a mark up as they are selling the channel for $5 a month. That is quite a markup.

Again my position is ESPN-HD is NOT worth it at the moment, when 98% of the shows are in SD. When 50% of the shows are in HD then it will be worth it.

Right now ESPN-HD is really ESPN-SD with a glorified name and an occational HD game thrown in every week or two.


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## Ken_F (Jan 13, 2003)

> Right now ESPN-HD is really ESPN-SD with a glorified name and an occational HD game thrown in every week or two.


Every day or two or three you mean.

Different people place different values on sports, I suppose. This year, there will be roughly 1.5 million DirecTV customers paying $179-$199 ($11.70 per day) for 17 Sundays of football, which works out to about $3 per game for those you can actually watch. And only one of these games each Sunday *may* be in HDTV next year. For these football enthusiasts with hi-definition, ESPN-HD will probably be worth the monthly fee several times over.

Personally, I think a $0.80 fee to MSOs is a steal for the NBA playoffs, NHL Stanley Cup, and other major sporting events in HDTV on ESPN-HD. ESPN has a good deal of college football as well. The baseball games (Wednesdays and Sundays, plus Fridays during NFL season) in HDTV I could care less about...

Of course, you also get significantly improved quality for the standard broadcasts and highlight shows, as the HD channel is free from the overcompression present on the standard ESPN feeds from Dish, DirecTV, and other cable providers.


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## durl (Mar 27, 2003)

I believe that comparing the NFL Sunday ticket to ESPN-HD isn't a good analogy. While it's true that Directv gives people the option of buying the package, Directv doesn't have to jump through hoops that involve other channels and increased rates in order to carry Sunday Ticket. To my knowlege there are no up-front fees that Directv must absorb or pass along to their entire customer base. Directv is able to maintain the pricing structure from year to year at an amazingly constant rate, free from contractually mandated increases. From what I've learned, ESPN-HD is tied to other channels, higher initial fees, and rate increases on other channels.

I see how people react in my office building when the snack machine vendor raises prices on candy from .60 to .75 so people DO care about price increases. A provider can carry whatever channels they want and charge whatever they want, but they know that as prices go up, those willing to pay for the product go down (Law of Diminishing Returns). Your customer base shrinks and cash flow can decrease. Some companies thrive by charging exclusive prices for exclusive products, but cable/satellite companies can't do that in this market.


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## Ken_F (Jan 13, 2003)

> Directv doesn't have to jump through hoops that involve other channels and increased rates in order to carry Sunday Ticket. To my knowlege there are no up-front fees that Directv must absorb or pass along to their entire customer base.


Are you kidding? DirecTV is now contractually obligated to pay an average of $400 million a year to the NFL for Sunday Ticket, or the equivalent of 500 million ESPN-HD subscriptions. That's a price increase of roughly 230% over their old NFL contract.



> From what I've learned, ESPN-HD is tied to other channels, higher initial fees, and rate increases on other channels.


None of the above. Contractual negotiations for ESPN-HD are completely independent of other Disney channels (for now, anyway).


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## Cheyenne (Apr 23, 2002)

ESPN-HD is NOT worth this price due to content availability at this time. IF a provider did cave in to this expense, raise your rates (all 1000 of ya), only to deliver up converted SD, then take 100 complaints/month .... would you do this as a business decision?

Seems not ready for prime-time yet.


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## Mike123abc (Jul 19, 2002)

Actually DirecTV has released numbers on HDTV subscribers and it is almost 200k. From http://www.dbstalk.com/showthread.php?s=&threadid=13731 : In a letter detailing HD happenings, DirecTV told commission officials that it has 180,000 active subscribers with HD set-top boxes. The company also told the agency about 260,000 HD set-top boxes have been shipped.

While 80 cents sounds cheap, it is not clear if this is the rate next year. It could be 80cents this year while they barely broadcast any HDTV content and scale up to $8+ when we go full time HDTV.


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## durl (Mar 27, 2003)

> _Originally posted by Ken_F _
> *Are you kidding? DirecTV is now contractually obligated to pay an average of $400 million a year to the NFL for Sunday Ticket, or the equivalent of 500 million ESPN-HD subscriptions. That's a price increase of roughly 230% over their old NFL contract.
> 
> None of the above. Contractual negotiations for ESPN-HD are completely independent of other Disney channels (for now, anyway). *


My point was that the NFL doesn't require Directv to carry other networks at a price of their choosing in order to carry Sunday Ticket. A set price is not the same as tying ancillary networks to the deal.

From the very beginning it's been my understanding that it's safe to say that ESPN-HD is tied to at least one Disney-owned network.

Still, no company...NONE...will refuse to carry a product or service that will make them money--especially if the cost can simply be transferred to the consumer. Directv didn't become a huge force in television by just arbitrarily refusing to carry channels that people want. Other scenarios must be at work here that are not being fully disclosed to the public.


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## Ken_F (Jan 13, 2003)

> From the very beginning it's been my understanding that it's safe to say that ESPN-HD is tied to at least one Disney-owned network.


Your understanding is incorrect. ESPN-HD carriage negotiations is not tied to any Disney owned network!! Whoever suggested this to you is using BS to try and justify the lack of carriage. Now, there are probably other completely reasonable reasons why the dbs providers are not carrying ESPN-HD, but attempted tying is not one of them.


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