This question was posed and answered by a FuboTV staffer on Reddit at the end of last year. This was their answer:
we would love to add ESPN to the bundle . . . .. However, as many of you know, neither fuboTV nor any other distributor is able to license “just ESPN” from Disney, instead, distributors are required to license the “Disney bundle”. There is no way around this.
So, if a streaming service wants to carry ESPN, not only do they have to take the entire ESPN brand along with Disney Channel, FX, National Geographic all the other networks Disney owns, except ABC. Broadcast networks work under a different retransmission fee model. According to SNL Kagan, the cost to companies like FuboTV is $16 per subscriber.
For FuboTV, 100% of this expense affects their bottom line, and they would have to be passed on to the consumer to be profitable. Furthermore, streaming services don’t distribute TV networks for their enjoyment. They would likely pass the cost plus a profit margin markup along to consumers sending the monthly price of their most affordable streaming plan above $70 per month.
And while ESPN is one of the most expensive channels on cable TV, all the network owners tend to force streaming services to take a bundle of channels for a lump sum price. Just look at SNL Kagan’s estimate for what providers pay monthly to offer consumers these channels:
- AT&T bundles TNT, CNN and TBS and more at $6.50 per subscriber
- Comcast/NBCUniveral bundles USA, Bravo, CNBC MSNBC, and others for almost $6 per subscriber
- Viacom/CBS charges around $5 per subscribers for a bundle of Nickelodeon, BET, MTV, Comedy Central CMT, Paramount Network and others
- Discovery bundles Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, OWN, Travel Channel and others for over $3 per subscriber
- Fox Corp. bundles Fox News, Fox Business, with FS1 and FS2 costs a provider around $3.50 per subscriber
- AMC Networks (AMC, IFC, We TV, BBC America, and SundanceTV) will run about $1.50 per subscriber.
If we bundle Disney’s networks with the other networks above, the cost per subscriber/per month would be close to $42. Let’s round that at $45 to cover basic cable channels not mentioned, and we can see why streaming services are priced where they are. We haven’t even factored in other operating expenses like salaries, marketing, and technology. One can imagine many live streaming services either have a thin profit margin or are operating at a loss.
We generally don’t take out our frustrations at the owners of the networks. After all, we are enjoying their content and typically pay their cost to a TV provider. So when the cost becomes a frustration, we take it out on them. However, a more in-depth look will show the real reasons live TV is so expensive.
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