Or why your cable bill is going to increase
Why did the BCS leave Fox and head for ESPN/ABC? Of course money was the big reason. ESPN paid $125 million per year, and Fox offered only $100 million. However, there is more to the story. On-air broadcasters have seen revenue decline, while cable (or pay-tv) properties have seen revenue remain stable even during the economic downturn.
From the AP (you can read the entire story embedded in this post below), “With both advertising and fees, ESPN has seen its revenue grow to $6.3 billion this year from $1.8 billion a decade ago, according to SNL Kagan estimates. It has been able to bid for premium events that networks had traditionally aired, such as football games. …That, plus a growing number of channels, has given cable a bigger share of the ad pie. In 1998, cable channels drew roughly $9.1 billion, or 24 percent of total TV ad spending, according to the Television Bureau of Advertising. By 2008, they were getting $21.6 billion, or 39 percent.
“Having two revenue streams — advertising and fees from pay-TV providers — has insulated cable channels from the recession. In contrast, over-the-air stations have been forced to cut staff, and at least two broadcast groups sought bankruptcy protection this year.
“Fox illustrates the trend: Its broadcast operations reported a 54 percent drop in operating income for the quarter that ended in September. Its cable channels, which include Fox News and FX, grew their operating income 41 percent.
“Analyst Tom Love of ZenithOptimedia said he expects the big networks will end the year with a 9 percent drop in ad revenue, followed by an 8 percent drop in 2010 and zero growth in 2011.” (read more in this post below about why your cable or DirecTV bill will surely increase in the coming years.)