Media Update: The Rise of Women’s Sports and the Future of the Cable Bundle

Viewership for live sports far outpaces other programming and the schedules of the major leagues (NFL, MLB, NBA) are integral in planning advertising campaigns. Traditionally, there has been less focus on women’s sports because they do not draw the same audience as men’s. However, over the past year or so women’s sports have made major strides in attracting audiences.
With cable audiences declining and streamers on the rise, the sports industry has become more open to smaller sports. To name a couple, Formula 1 racing and Major League Soccer have scored major contracts with streamers and posted decent to strong increases in viewership YoY. While the rise in women’s sports viewership has been boosted by streaming, the rise is primarily coming from linear television.
The most salient evidence of this is the NCAA women’s basketball tournament. The women’s final averaged 9.9 million viewers, 2-3x the viewership over the past decade. Viewership has risen each year from 2018 (excluding 2020, when the season was canceled), despite the challenges of the pandemic and the increase of cord-cutting. In recent years, ESPN has invested in promotion of the women’s tournament and featured it in premier television windows – this was the first year since 1995 that the title game was broadcast on network television (ABC). Other factors – such as record scoring, the electric performance of Iowa’s Caitlin Clark, and branding the tournament as “March Madness” (this title was reserved for the men’s tournament until 2022) – undoubtedly had an impact. However, it was bringing the championship to network television, meeting the apparently strong demand for women’s hoops, that likely had the greatest effect.
Further examples include:
This greater viewership means more opportunities for advertisers. However, the future of women’s sports is a bit unclear. There is some concern that the women’s leagues will not be able to secure lucrative broadcast rights deals that have become prevalent in the streaming era. Unfortunately, one of the primary drivers of the increased popularity of women’s sports, ESPN, is beginning to struggle with revenue. The rights deals of the WNBA, NWSL, and NCAAW are set to expire in the next two years and ESPN and networks might not have the cash to meet the terms these leagues want. This is all to say that women’s sports could remain on linear TV, move to streaming, or some combination of the two. In any case, this is an area that advertisers should pay close attention to because it is changing the industry of live sports.
If we think of the cable bundle as supported by three types of content (live sports, live news, and live entertainment), it is easy to understand why the fall of any of these pillars would be catastrophic to the model. In the story of live sports, we’ve seen how streaming companies chipped away at linear TV’s exclusive hold on sports content: DirecTV lost NFL Sunday Ticket to YouTube TV, TNF is on Amazon Prime Video, the regional sports network system is in major trouble, and Apple TV+ owns the broadcast rights for MLS for a decade. The sports marketplace has become more fragmented than ever as leagues and media companies are experimenting with different strategies to capture the revenue lost from cord-cutting.
It is not completely surprising that ESPN has begun talking with its cable partners and securing flexibility in its deals to bring the channel directly to consumers. While there is no timeline yet, it is not self-evident that this would mean the death of the cable bundle – it is more than likely that ESPN would still remain a part of the bundle, and cord-cutters could access the channel via ESPN+. But to be sure, this would represent a monumental shift in the television industry and would tip the scales towards streaming.
It is important to note that ESPN is not just another cable channel. It is so valuable that cable providers pay nearly $10 per subscriber per month in carriage fees to include it in the bundle. This is 20X the average that other cable networks earn. Moreover, with ESPN, Disney is able to negotiate for its whole family of networks, which has been very profitable for the company. But without the draw of ESPN exclusivity, both the cable bundle and Disney could be in trouble.
The challenge for Disney and other media companies is that the economics don’t clearly make sense for streaming. Streamers have found that their investments in sports broadcast rights were disproportionately large, and the gain in subscription revenue has not sufficiently offset the investment. Hence the bundling and consolidation that has rapidly occurred in the streaming space.
The cable companies are already preparing for a world in which linear television is obsolete. In the second quarter Comcast launched a cable-lite streaming package, which includes Peacock Premium and some FAST channels, in addition to 40 linear channels. Coming in at $20/month, it lacks popular channels like CNN, ESPN, and TBS. Comcast may be looking to cater to customers who are increasingly seeking flexible and customizable options – but it is not evident that there’s a market for this product. In fact, virtual multichannel video programming distributors like YouTube TV, Sling, Hulu Live TV, and Fubo all launched around $20-$40, but hiked prices as they improved their offerings to meet market demand.
While we are still very much in the “wait and see” phase, of all the dominos that could initiate the end of cable as we know it, ESPN is the most important to watch. Given that cable subscriptions continue to plummet with no obvious floor in sight, we can expect to see the proliferation of cable-lite bundles that offer better targeting and tracking options, because they are digital products.