Over the past two weeks, sports have rocketed broadcast companies to record ratings. That strong performance underscores the lasting importance of sports on pay TV, even as consumers switch en masse to streaming, and hint at a future in which live events, and not original shows, rule the broadcast world.
Two recent sporting events, the NCAA Men’s Basketball Final, which featured a down-to-the-wire game between the University of Virginia and Texas Tech, and the Masters, in which Tiger Woods won his first major tournament in more than a decade, fueled new record-high broadcast ratings at CBS. The NCAA national championship game was up 20 percent compared to last year’s final. The broadcaster’s live coverage of The Masters final round carried CBS to its highest-rated morning golf broadcast in 34 years.
Couple that with the fact that original TV shows and movies are moving over to streaming services, particularly with the recent launches of Apple TV+ and Disney+, and the reason why tech and media blogger Ben Thompson has been predicting that “the traditional cable bundle will slowly become the de facto sports bundle” becomes clear. Thompson also believes news has some staying power on pay TV.
“This is the exact bet that Rupert Murdoch made with Fox; remember that Disney didn’t buy the entire company: Murdoch kept the Fox Broadcasting Company, Fox Television Stations, Fox News Group, and the Fox Sports Media Group,” said Thompson, in a recent blogpost. “What these assets have in common is that they are perfectly aligned with the traditional TV model: news and sports are best live and drive both advertising and affiliate fees.”
Streaming companies are now competing on original programming and working to bundle as many packages as they can together to differentiate from all the others now being offered in an increasingly crowded space. On Monday, Disney became the majority owner of Hulu when AT&T sold its 9.5 percent stake for $1.43 billion. That left Disney and Comcast as the exclusive owners, with Disney’s stake increasing to 60 percent. Hulu has been expanding both original content, reruns, and live sports events. At an investor meeting last week, Kevin Mayer, the chairman of Disney’s direct-to-consumer division, said Disney will likely bundle Disney+, ESPN+, and Hulu “at a discounted price to create more value for consumers.”
Disney recently changed the name of BAMTech to Disney Streaming Services to reflect its growing direct-to-consumer presence. Disney+, which will feature content from powerhouse brands such as Disney, Star Wars, and Marvel, will cost $7 per month or $70 a year when it launches in November.
The inclusion of ESPN to Disney Streaming Services gives the company a powerful foothold across the entertainment world, with the exception of news programming. With a treasure trove of sports rights, ESPN has started to monetize some lower-tier live sporting events via streaming.
“One of the smartest moves Disney made in the last decade was going on a huge sports rights buying binge,” Thompson said. “Rights are the most valuable commodity for this business model, and ESPN tried to buy all of them. Make no mistake: traditional TV is and will remain the core business model for a very long time to come.”
Even as consumers cut the cable cord and turn to streaming, there’s still strong demand for sports on cable television. Consumers are still likely to tune in to traditional broadcasts of major events, giving ESPN a reason to stick with pay TV. While many of these big events are also offered on streaming—the NCAA tournament final and the Masters included—recent ratings show there is still life to the traditional sports broadcast.