Cable’s ESPN Dilemma: Wildly Popular—but Costly

Of the 20 most-watched programs ever on cable TV, 16 were episodes of Monday Night Football—a show that Walt Disney’s ESPN sports network didn’t begin broadcasting on cable until 2006. ESPN is also the only cable channel ever to have more than 20 million households watching a regularly scheduled program at once—a feat it’s accomplished four times. That ratings strength is the reason most cable operators believe carrying the world’s No. 1 sports network is essential to keeping 99 million U.S. pay-TV subscribers shelling out monthly fees.

Now system operators are being forced to figure out how much subscribers are willing to pay for sports—and at what point they’ll throw in the towel. In early September, ESPN announced a deal to broadcast Monday Night Football for eight more years. It will pay $1.9 billion a year to the National Football League, a 73 percent increase, says a person familiar with the contract details who is not authorized to speak on the record. While ESPN says it won’t add a surcharge for the new deal, the network will almost certainly make companies such as Comcast, Time Warner Cable, and DirecTV pay more for programming when contracts come up for renewal. “We’re concerned that the rising cost of cable programming, especially sports programming, is starting to price some consumers out of the market,” says Jerald L. Kent, chief executive officer of Suddenlink Communications, the seventh-largest U.S. cable carrier.