At first blush, the land-grab around sports would seem to be a way for big media companies to deal with the new realities of TV viewing. At a time when more viewers have the ability to skip past or otherwise ignore the commercials that support their TV habit, and fewer people tune in to watch favorite programs live, sports has proven remarkably resistant. The Super Bowl, “Monday Night Football” and “Sunday Night Football” remain some of the biggest same-day attention-getters around, and marketers are willing to pay hundreds of thousands to millions of dollars to have their products appear alongside them.
But advertising isn’t the key to ESPN’s success. While the network does well in the ad-sales market, that revenue stream gushes or trickles to the tides of the economy. But because the appeal of major sporting events remains undiminished, video distributors — think Comcast, Time Warner Cable and DirecTV — are willing to give ESPN some of the highest per-subscriber affiliate fees in the industry.
Such fees are usually sewn up for years, and present a much more stable pillar of revenue. Indeed, more than 70% of ESPN’s revenue comes from affiliate fees, according to research from Credit Suisse analyst Michael Senno.