Kagan: Sports Costs Keep Growing

Sports costs, the bane of pay TV providers across the country, are only getting costlier and will continue to outpace the surcharges some operators have implemented to curb them, according to a new report by SNL Kagan.

Kagan estimated that the number of channels available to pay TV customers has increased substantially in the past 20 years – from 27 channels to more than 100 today – and charges have increased a reasonable 2% annually over that time from an average of 26 cents per channel per month to 39 cents. But in that subset, sports channels are by far the costliest. According to Kagan sports networks – skewed by the $6.04 per subscriber per month charged by ESPN – average about $1.03 per customer per month. That compares to 81 cents for film channels, 39 cents for general and variety networks and 29 cents for family/kids’ channels. Sports network costs have risen at about a 5.1% annual clip between 2000 and 2014, according to Kagan, but with the price of sports rights continuing to climb, the research house estimates fees will accelerate at a 7.3% annual rate between 2014 and 2018.

More and more distributors are implementing sports surcharges to offset the high costs of sports, particularly regional sports networks. DirecTV was the first to test the waters in 2012 – with a $3 monthly surcharge for subscribers in select markets. They were followed by Verizon Communications, Cablevision Systems (which has a Sports and Broadcast TV surcharge), Mediacom, WOW, Time Warner Cable, Comcast, Cable One and RCN.

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