ESPN Wants to Subsidize Smartphone Data Plans
Is this awesome or what? ESPN, aka, “The Worldwide Leader in Sports” wants to help pay for smartphone users’ monthly data plans.
The plan isn’t really a plan and no actual number crunching has taken place yet, but sentiment counts for something, right? The point, according to The Wall Street Journal, is that ESPN, a subsidiary of The Walt Disney Company (NYSE: DIS), realizes many sports fans drain their monthly data buckets viewing ESPN mobile content and they want to help.
ESPN also realizes that people who use up their data stop viewing. Ultimately this costs the network revenue once advertisers see mobile viewership has gone down because users have maxed out their data plans for the month.
The Wall Street Journal says ESPN has talked with at least one major carrier about a plan in which ESPN subsidies would mean ESPN content wouldn’t count against monthly data caps. Sadly, no deal is really in the works. According to WSJ, ESPN isn’t even sure it could put together a package that works financially in the first place.
There is also concern that subsidy deals like this might be frowned upon, or at least scrutinized, by the Federal Communications Commission, leading to speculation about alternatives, such as some sort of advertising revenue sharing plan.
While the carrier with which ESPN has talked wasn’t revealed, Verizon Communications (NYSE: VZ) Verizon Wireless Chief Executive Dan Mead told The Wall Street Journal that the company is actively seeking deals with both advertisers and content providers to pay for data capacity on behalf of consumers. AT&T Inc. (NYSE: T) previously said it was interested in such a strategy as well.
Under the “win-win” caption, carriers, like Verizon and AT&T, are looking to increase revenue without raising fees. Content providers, like ESPN, as well as advertisers, want to ensure data caps don’t become a barrier to viewership and ad exposure.
WSJ reports that, according to media and marketing information giant, Nielsen Holdings N.V. (NYSE: NLSN), the average U.S. mobile subscriber only used 0.659 gigabytes of data per month in the last quarter of 2012. Nonetheless, ESPN said at least one carrier told it that significant numbers of mobile users reach their monthly cap before the end of the month.
In attempting to find a way to subsidize viewership, ESPN is also keeping its eye on News Corp (NASDAQ: NWSA), which plans to launch the Fox Sports 1 cable sports network soon. This only adds to sports viewing competition that already includes cable sports channels by Comcast (NASDAQ: CMCSA) owned, NBC and CBS (NYSE: CBS).
At the time of this writing Jim Probasco had no position in of the mentioned securities.
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