Sports have long been considered DVR-proof. That means the unlike TV dramas or movies, sporting events are a product that hold all their value in being watched live, so viewers will watch it live and see the commercials being played during broadcast.
The benefit of being viewed as DVR-proof is evident in the huge price tag attached to broadcasting rights. March Madness alone is going for nearly $9 billion in the next 16 years.
From the article:
To a large degree, paying rights fees is an exercise in extreme speculation. In a recent example, CBS and Turner decided to pay $8.8 billion for March Madness rights that extend through 2032. By that time, the combined effects of cord cutting, a la carte, over-the-top, mobile, and other concepts we can barely conceive of (virtual reality?) will mean that the way television is broadcast, consumed, and paid for will be radically different. Agreeing to pay $1.1 billion annually—a 40 percent increase on what the rights used to cost—18 years out is a tremendously speculative bet on the idea that live sports will continue to generate vast amounts of money.
Draper points out that network failures such as CSN Houston, Time Warner Cable agreement with the Dodgers, the PAC-12 Network, the Longhorn Network, and CBS Sports Networks as evidence that the live sports bubble may have popped.
The fall in value of live sports programming should be alarming to every sports entity that the cash cow of tv revenue money might be less dependable than once expected.
FOX’s contract with the UFC ends December 31, 2018. It will be interesting to see whether the value of the deal, estimated $100 million a year, increases with the rise in popularity of the UFC or decreases as a result of live sports programming dropping as a whole in value.
Luckily, the UFC has never fully depended on revenue from putting programming on cable or network television. The biggest revenue source for the franchise results from PPV events.