CNBC Sport: The death of cable TV may be the birth of streaming sports aggregation

Published Thu, Jul 31 202510:00 AM EDT

Alex Sherman @in/alex-sherman @sherman4949

Key Points

When ESPN launches its direct-to-consumer service (likely next month), for the first time ever, Americans will be able to consume all major sports without having to subscribe to cable.
Charter and Comcast both reported stemming cable TV customer losses for the second quarter.
Cable TV may effectively morph into the primary aggregation video service for sports.

A version of this article first appeared in the CNBC Sport newsletter with Alex Sherman, which brings you the biggest news and exclusive interviews from the worlds of sports business and media. Sign up to receive future editions, straight to your inbox. For about a decade, media executives have heavily invested in live sports as the primary value proposition for consumers to keep subscribing to traditional pay television. While tens of millions of Americans have ditched cable for a variety of streaming services, ESPN's marquee live sports have remained exclusive to cable subscribers. The broadcast networks (CBS, NBC, ABC and Fox) have been able to charge increasingly high fees to pay TV operators because they've invested in NFL games and college football, the most-watched American programming. When ESPN launches its direct-to-consumer service (likely next month), for the first time ever, Americans will be able to consume all major sports without having to subscribe to cable. (By the way, Disney — ESPN's majority owner — reports earnings next week. Sources suggest to me and my colleague Mike Ozanian that would be a logical time for ESPN to announce not only the DTC launch date but also the finalized details of its deal for NFL Media assets, which I reported on in last week's newsletter . Spokespeople for the NFL and ESPN declined to comment.) The changes in the pay TV landscape have led to one question that's dominated the strategic choices of the biggest media companies for the last decade: Will traditional pay TV die off completely, or will it level out and exist for decades to come as a profitable, albeit smaller, business? There was an interesting data point last week in Charter Communications' earnings report that suggests the answer could be the latter. Charter's earnings results weren't good. The stock fell 18% after the company reported it lost 117,000 internet customers during the quarter. Companies like Charter and CNBC's parent company, Comcast, have largely traded on residential broadband additions (or subtractions) for many years. Still, a bit hidden in the Charter numbers, the second-largest U.S. cable company reported a decline of just 80,000 video customers in the quarter. A year ago, that number was 408,000 in the same quarter. That's a five-fold improvement. There may be two reasons for plateauing losses. First, Charter has aggressively added "free" access to streaming services for customers who pay for the full bundle of cable networks. It's, of course, not actually free – consumers are still paying for it, but it's included in the cost of the bundle. This has probably made cable subscribers less likely to cancel their plans. Now, if a customer cancels cable, that household is also giving up access to Disney's Disney+ and Hulu, NBCUniversal's Peacock, Paramount Global's Paramount+, and Warner Bros. Discovery's ( soon to be just Warner. Bros. ) HBO Max. When ESPN's direct-to-consumer application launches in the coming weeks, a cable customer would also lose access to that. Charter CEO Chris Winfrey noted in last week's earnings conference call that those offerings add up to "over $100 worth of programmer apps." "That's going to be the stickiest product," Winfrey said. "It's going to be the best for customers and for programmers, us, and it's going to be the best for our broadband churn as well." Second – and this one's the biggie to look out for – it's at least possible that pay TV losses are finally subsiding after more than a decade of losses. Comcast posted its earnings release Thursday morning and reported video customer losses of 325,000, an improvement over 419,000 losses in the year-earlier period. It's possible most of the U.S. households that want to cancel cable have now canceled, and the ones remaining plan to stick around for a little while. If that's the case, cable TV may effectively morph into the primary aggregation video service for sports. You may remember Venu, the never-launched sports streaming application from Disney, Fox and Warner Bros. Discovery. For $42.99 per month, Venu planned to give customers all sports owned by Disney/ESPN, Fox and WBD's Turner Sports. Experts estimated the offering included about 60% of all sports on TV. Over time, Venu hoped to add Paramount Global and NBCUniversal to the mix, according to people familiar with the matter. That would have given consumers most sports, outside of regional sports networks and the NFL and NBA packages on Amazon. Venu's value proposition was its price – $42.99. I highly doubt we'll see a service like Venu come to market at that low of a price. Fox is getting ready to launch its new streaming service, Fox One, which will give non-cable customers access to all of Fox's pay TV programming. While Fox hasn't revealed the pricing for the service yet, it won't be cheap. "Pricing will be healthy and not a discounted price," Fox CEO Lachlan Murdoch said in May. Fox doesn't want you to cancel cable TV, so it won't incentivize churn by coming to market at a low price. "We do not want to lose a traditional cable subscriber to Fox One," Murdoch said, bluntly. Other pay TV operators have debuted skinny bundles of sports, such as DirecTV. Its MySports offering costs $69.99 per month , but it includes more than Venu would have. Comcast followed this year with a $70-per-month version of its own. The future of cable TV may slowly morph into something that resembles these skinny sports bundles. Sources tell me that once Skydance formally merges with Paramount Global next month, incoming CEO David Ellison plans to heavily invest in sports because pay TV economics still justify the spending. If video subscription losses are flattening, broadcast networks can continue to raise retransmission fees as long as they have premium programming – and sports are the most premium programming. How will he balance spending on sports when he's already promised more than $2 billion in cuts when the merger closes? What's likely to go is spending on anything that isn't sports or hit primetime (between 8 p.m. and 11 p.m. ET) programming. See: "The Late Show with Stephen Colbert" as Exhibit A, which fits the strategy even if Skydance wasn't involved in that decision. Maybe we should all stop thinking about cable TV as doomed to death and start viewing it in a new way – the next-generation aggregation service for sports. In this lens, it's not surprising NBCUniversal is thinking about developing a new cable sports network even while it plans to spin off almost all of its other cable networks (including CNBC). The battle may be between the cable companies, YouTube TV and ESPN's direct-to-consumer app as the go-to destination to access all sports. To quote esteemed cable analyst Craig Moffett from his note to clients last month, "Maybe, just maybe, we're finding the long-imagined bottom for traditional pay TV, where sports and news fans are all that's left." Disclosure: Comcast is the parent company of CNBC. On the record With Richard Masters , CEO of the Premier League ... This week, I spoke with Richard Masters , CEO of the Premier League. Masters is in the U.S. for the week while Premier League teams play their Summer Series – a small handful of preseason friendlies in New Jersey, Chicago and Atlanta. And yet, when I asked Masters if there's a plan in place to play regular season games in the U.S., just as the NFL has done internationally, he said there isn't. "We've got no plans to take matches abroad," said Masters, who noted U.K. soccer fans are far less tolerant of the idea than American NFL fans. "We had a look at that back in 2017. It was very controversial in the U.K.," said Masters. "The idea behind playing matches abroad is to grow the sport, to grow your league. And we've managed to do that in the intervening period by different methods, through great broadcasting partnerships, through digital technology, and through events like the Summer Series." I asked Masters about a wide range of topics, including his thoughts on the MLS, his plan to grow media rights revenue, and the league's controversial financial system. You can watch our entire conversation here . Or listen here and follow the CNBC Sport podcast if you prefer the audio version. CNBC Sport highlight reel The best of CNBC Sport from the past week: One believer in Major League Soccer is Walmart. The retail giant is becoming an official partner and sponsor for the league, reports CNBC's Rizzo. Saturday's MLB Speedway Classic between the Atlanta Braves and the Cincinnati Reds will likely generate the largest live audience in league history. More than 85,000 fans have already purchased tickets for a game that will take place at Bristol Motor Speedway in Tennessee. The current record for fan attendance is 84,587, set in 1954 at Cleveland Stadium for a Cleveland-New York Yankees doubleheader. Saturday's game will be the first MLB game ever in the Volunteer State. It could be a test run for future expansion – Nashville is one of the frontrunners to get an expansion team after 2030. CNBC's Jess Golden has more. One NFL employee was seriously wounded in Monday's shooting at the league's New York City headquarters, Commissioner Roger Goodell told employees in an email obtained by CNBC's Golden. "The employee is in stable condition and NFL staff are at the hospital supporting his family," Goodell wrote in the email sent Tuesday morning. The big number: 45.6 million There are 45.6 million Premier League fans in the U.S. – about 18% of all adults, according to data provided by the sports research firm Two Circles. For context, about 51% of the adult population in the U.K. is a fan, according to the surveyed data, but that amounts to just 27.9 million people. That delta between the U.S. and the U.K., combined with the massive amount of money U.S. leagues take from media companies, has led Masters to believe the U.S. is still a big growth opportunity for the EPL, even if he doesn't plan to bring regular season competition to the States. "It's one of the reasons we're here, and we brought four Premier League teams out to play in the Summer Series," Masters told me. "We're committed to growing the sport out here and to growing the Premier League." Quote of the week "Get the f--- out of our clubhouse." – How could this not be quote of the week? Philadelphia Phillies star Bryce Harper brazenly told MLB Commissioner Rob Manfred he wasn't wanted if he came to discuss a salary cap. Manfred's strategy on changing the league's spending rules appears to be to go directly to MLB players and around the union, which has steadfastly refused to discuss a cap. Here's what Manfred told me when we spoke two weeks ago: "At the end of the day, sports sell competition. We do have fans in a significant number of our markets who are really concerned with the issue of competitive balance and the competitiveness of the teams in their markets. It's something we're going to have to pay attention to." Still, Harper is one of the league's highest-paid players. It's the non-stars who Manfred may have more luck convincing if he's trying to make the case that their salaries will rise with a floor and a cap. Around the league Major League Baseball placed Cleveland Guardians closer Emmanuel Clase on paid leave while the league investigates a potential gambling matter. He's the second Guardians pitcher to be placed on leave, following Luis Ortiz . I also asked Manfred about how concerned he is about a major gambling scandal when we spoke earlier this month . Here's what he told me: "One of the good things about the legalization of gambling — not everything about it is good — is that we have partnerships and transparency that allows us to monitor what's going on down to really small, small bets by individuals not obviously associated with Major League Baseball. That system gives me confidence that we are in a good position to defend the integrity of the game. It's a factual question as to what happens going forward, but I do think that baseball and all of the major professional sports have taken steps to ensure that in a legalized environment that we did not create – the federal government created – that we're doing everything possible to maintain the integrity of sport." The Harlem Globetrotter-like Savannah Bananas have put some heat on MLB by drawing huge audiences of their own this year. The Bananas drew 81,000 fans to a game in April at Clemson's Memorial Stadium. This week, the Bananas announced TNT Sports will televise 19 games in August and September on TruTV and HBO Max. NBA Commissioner Adam Silver is in Europe this week meeting with potential backers for a new NBA European League, Sportico reports . Former NFL star-turned-broadcaster Shannon Sharpe is out at ESPN less than two weeks after settling an accusation-of-rape lawsuit from an ex-girlfriend, The Athletic reported.