Billions of dollars are still being spent on sports, but those shelling it out are without a return as the COVID-19 pandemic continues to force an indefinite suspension of all major leagues.
Networks are paying sports rights fees, cable companies are paying networks and subscribers are paying cable companies. There’s a chain reaction of dollars being spent while the product remains on hold. According to Josh Kosman of The New York Post, Dish Network has already attempted to break the chain, by working to get out of the $80 to $100 million in rights fees owed to ESPN for the month of April.
Dish likely won’t be the only TV provider looking for a rebate on their rights fees agreements, says a report from analyst Rich Greenfield of LightShed Partners.
“US multichannel video subscribers effectively paid ESPN $650 million in April to watch one original series with literally no live sports on TV or for their talk show hosts to even talk about,” Greenfield said in the report.
“The multibillion dollar question becomes: what is stopping distributors from invoking force majeure? We believe there has to be a tipping point where enough sports have not occurred that distributors will refuse to pay sports network programmers.”
Currently, cable companies are still charging customers for sports channels because most sporting events haven’t been canceled, just postponed. My personal cable subscription with Optimum still includes a monthly regional sports network fee of $10.47, even though RSN’s have not aired a new game in six weeks.
It’s hard to anticipate any rebates being handed out as long as sports leagues aren’t planning on canceling their seasons. Providing customers with a rebate for lost games now, might mean charging them more later, if and when those sporting events are played.
Similarly, sports teams are hesitant to offer returns on ticket sales until league’s determine how and when seasons will be played. If games are officially canceled or if seasons resume with no fans in attendance, it will be the team’s right to hold onto the money and offer tickets to a later event, essentially acting as an interest free loan.
Dish Network’s attempt to break their rights fees agreement with ESPN comes at a time when Disney has already been hit hard financially by the global pandemic. The Walt Disney Company recently furloughed a significant number of employees from their twelve theme parks, including 43,000 at Florida’s Walt Disney World alone.
ESPN reduced executive salaries by 20 to 30 percent, also asking their top on-air talent to accept a 15% pay cut during the next 90 days. If TV providers such as Dish do back out of their rights agreements, those potential nine-figure losses could certainly have additional impacts on employee salaries.
