Inflation Of Sports Media Rights Is Unsustainable, JPMorgan … – Forbes

Look at this guy, playing to the cameras in Sacramento, California on Sunday. (Photo by Ezra Shaw/Getty Images)
JPMorgan issued a report last week that aggregated the sports media rights payments and revenue for network television, regional sports networks and streaming—including YouTube’s NFL Sunday Ticket, Amazon’s Thursday Night Football and Apple’s MLS and MLB deals—which total about $26 billion in rights fee spending this year.
The upshot: Sports rights inflation is unsustainable long term, say the analysts, led by Philip Cusick. That’s given the pace of linear video declines and despite strong ratings and live viewership, although they expect some sports rights could still see sizable renewal step-ups in the coming years. Another key point: Sports are likely to increasingly shift toward digital/streaming platforms in the years ahead, making it imperative that distributors evolve their digital business models to replicate linear platform monetization, without which video margins will steadily erode.
For the major programmers and sports rights distributors that JPMorgan covers, the report estimates $18.2 billion of national sports P&L operating expenses this year, growing about 5% per year over the next five years (based on existing contracts and renewal assumptions). By way of comparison, JPMorgan forecasts roughly 2% revenue growth of linear plus direct-to-consumer, based on 6% annual bundled disconnects and roughly equivalent annual affiliate fee increases.
JPMorgan writes: “We believe the ratings and viewership of sports today, essentially must-haves in an otherwise challenged linear ecosystem, will continue to justify sports rights inflation, but that inflation exacerbates what are already existential challenges for the video distribution business as a whole. Today, it is unclear how DTC/digital platforms will be able to replicate the legacy model’s level of profitability, as today’s model of low prices and easy on/off on a monthly basis with high churn looks unsustainable in general but especially for sports.”
Below are tables that show the sports media rights and revenue growth estimates and rights fees for selected events and programmers.
Big commitments
Rights fees by sport.
Selected rights by programmer.


Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top