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Will Sports Network Advertising Revenue Mirror Subscriber Losses?

October 29th, 2019   ||    by Callie Wheeler

It’s only logical to assume sports network advertising revenue will fall in step with overall subscription numbers, and if that’s the case, perhaps we should expect a decline in future ad spend. A closer look at the state of sports networks reveals troubling issues resulting in a decline in viewership, valuation, and, more than likely, ad revenue.

Declining Viewership

A decline in subscription numbers for sports networks isn’t exactly new; Variety reported national network ESPN lost 2 million subscribers last year. But New York’s MSG Network, a regional sports network (RSN) covering New York Knicks and New York Rangers games, registered a loss that could portend worse news than expected. The cable TV group lost 6.5 percent of its viewers, about twice the rate of other cable TV networks’ subscriber losses, according to MediaPost.

One possible reason for the exodus is cost, as consumers look for less expensive alternatives to these add-ons. Another could be cord-cutting, with viewers migrating to streaming platforms over cable packages.

Declining Valuation

With these viewership declines in mind, the value of RSNs is declining, too. This summer Sinclair Broadcasting Group purchased all of Fox’s RSNs for less than half of their initial $20 billion valuation. Ad Age pointed out the price’s implication for the industry: inflated carriage fees and subscriber losses have made the networks nearly unsustainable in the current environment.

A Decline in Ad Revenue?

So, will sports network advertising revenue follow suit? Probably. But a broader view of the issue provides some helpful insights for advertisers.

  • Regional sports fans still have a reason to subscribe, a reality weighed heavily by Dish when considering whether to do business with RSNs. To see every game, an add-on may be a necessity.
  • Broadcast networks provide a viable alternative for many fans. Live games are a big draw for broadcast viewers, and there are plenty of games to be found through more traditional channels like Monday Night Football.
  • Streaming platforms are offering an alternative, with some like Hulu offering local channel packages and live TV options.

No One Size Fits All

Ultimately advertisers will need to determine whether sports networks are offering a unique opportunity to reach viewers. For some brands, diehard fans who are willing to pay high prices for additional sports networks, regional or otherwise, are the target audience they value. But for others, they can find most of their audience another way: watching broadcast TV or streaming the game.

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